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fltW  AND 


The 

Lawyers 

O^opfRATivE Publishing  0 

rRoCHCSTCR.  N.Y. 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


A  tri:atise 

ON  THE 

LAW  OF  RECEIVERS 

BY 

JAMES  L.  HIGH 


FOURTH    EDITION 
BY 

SHIRLEY  T.  HIGH 

OF  THE   CHICAGO   BAR, 

EDITOR  OF  THE  FOURTH  EDITION  OF  HIGH  ON  INJUNCTIONS 


CHICAGO 

CALLAGHAN  AND  COMPANY 

1910 


Entered  according  to  Act  of  Congress,  in  the  year  1876,  by 

JAMES  I,.  HIGH, 
In  the  office  of  the  I^ibrarian  of  Congress,  at  V/ashington. 


Entered  according  to  Act  of  Congress,  in  the  year  1886,  by 

JAMES  I,.  HIGH, 
In  the  office  of  the  I^ibrarian  of  Congress,  at  Washington. 


Entered  according  to  Act  of  Congress,  in  the  year  1894,  by 

JAMES  I..  HIGH, 
In  the  office  of  the  I<ibrarian  of  Congress,  at  Washingtotu 


Copyright,  1910,  by 
SHIRIvEY  T.  HIGH. 


(010 


E.  R.  ANDREWS  PRINTING  CO.,  ROCHESTER,   N.  Y. 


PREFACE  TO  FIRST  EDITION 


The  following  work  is  the  completion  of  a  series  of  text- 
books upon  the  principal  extraordinary  legal  and  equitable 
remedies  now  in  general  use,  upon  which  the  author  has  been 
engaged,  in  connection  with  his  professional  labors,  during  the 
past  eight  years.  The  present  volume  follows  substantially 
the  same  general  plan  of  treatment  adopted  in  the  former  vol- 
umes of  the  series,  and  is  believed  to  be  the  first  effort  ever 
attempted  to  present  the  entire  body  of  English  and  American 
law  upon  the  subject  of  receivers.  An  appendix  of  practical 
forms  is  added,  some  of  which  have  been  used  by  the  author  in 
his  own  practice,  while  others  have  been  drawn  from  approved 
precedents,  and  it  is  hoped  that  the  whole  may  lend  an  addi- 
tional value  to  the  book.  The  author  desires  to  express  his 
grateful  acknowledgments  to  his  professional  brethren  for  the 
very  flattering  reception  accorded  his  previous  works ;  and  also 
requests  them  to  direct  his  attention  to  any  errors  which  may  be 
noticed  in  any  of  his  published  works,  in  order  that  they  may 
be  corrected  in  future  editions. 

J.  L.  H. 
Chicago,  February  20,  1876. 

iii 


bt?  i   b»  b  b 


PREFACE  TO  SECOND  EDITION 


The  growth  of  the  law  of  receivers  during  the  ten  years 
which  have  elapsed  since  the  publication  of  the  first  edition  of 
this  work  has  been  very  marked.  Six  hundred  new  cases, 
which  have  been  reported  in  the  English,  Irish  and  American 
reports  during  that  time,  are  embodied  in  this  edition.  The 
principal  additions  have  been  to  the  chapters  upon  Actions  by 
and  against  Receivers,  Receivers  over  Corporations,  Railways, 
Real  Property  and  Mortgages,  especially  to  the  chapter  upon 
Railways.  The  law  of  receivers  over  railways  has  been  largely 
the  growth  of  the  last  ten  years,  and  it  can  not  be  said  to  have 
wholly  emerged  from  its  formative  period,  and  considerable 
modifications  of  existing  doctrines  may  be  expected.  This 
chapter  has  been  entirely  rewritten  and  much  enlarged,  present- 
ing several  topics  which  are  wholly  new,  including  Preferred 
Indebtedness  of  Railway  Receivers,  Actions  against  the  Re- 
ceiver and  Receivers'  Certificates.  Considerable  freedom  has 
been  indulged  in  the  criticism  of  doubtful  authorities,  but  the 
author  has  scrupulously  endeavored  to  present  the  existing 
state  of  the  law  upon  the  topics  under  discussion. 

J.  L.  H. 

Chicago,  March,  1886. 

iy 


PREFACE  TO  THIRT)  EDITION 


The  second  edition  of  this  work  appeared  in  March,  1886. 
Since  its  piibHcation  nearly  five  hundred  cases  bearing  upon 
the  law  of  receivers  have  been  published  and  appear  in  the 
present  edition.  The  entire  work  has  been  thoroughly  revised 
and  the  book  has  been  much  enlarged,  the  principal  changes  be- 
ing in  the  chapters  upon  Actions,  Corporations,  Railways, 
Judgment  Creditors,  Real  Property  and  Mortgages. 

In  the  preface  to  the  second  edition  it  was  stated  that  the 
law  of  receivers  over  railways,  while  largely  the  growth  of 
recent  years,  had  not  wholly  emerged  from  its  formative  period, 
and  that  considerable  modifications  of  existing  doctrines  might 
still  be  expected.  The  correctness  of  this  statement  is  shown 
in  the  manv  new  cases  which  have  been  embodied  in  the  present 
chapter  upon  Railways,  especially  upon  the  topics  of  Preferred 
Debts,  Actions  against  the  Receiver  and  Receivers'  Certifi- 
cates, the  doctrines  pertaining  to  which  have  been  largely  modi- 
fied as  the  result  of  the  later  decisions.  No  feature  of  railway 
receiverships  has  been  more  prolific  of  litigation  in  recent  years 
than  the  extent  to  which  the  ordinary  contract  indebtedness  of 
railway  companies  may,  in  the  event  of  a  receivership,  be  pre- 
ferred over  the  claims  of  mortgage  bondholders.  The  tendency 
of  the  later  decisions  of  the  Supreme  Court  of  the  United 
States,  as  shown  in  the  present  edition,  has  been  to  restrict  the 
right  to  a  preference  to  much  narrower  limits  than  had  been 
fixed  by  the  earlier  cases. 

Unfortunately  for  investors  in  railway  securities,  by  section 
six  of  the  act  of  Congress  creating  the  Circuit  Court  of  Ap- 
peals, approved  March  3,  1891,  litigants  in  this  class  of  cases 

V 


VI  PREFACE. 

are  deprived  of  the  right  of  appeal  to  the  Supreme  Court  of  the 
United  States,  since  in  such  cases  the  original  jurisdiction  of 
the  circuit  courts  is  ordinarily  dependent  solely  upon  the  diverse 
citizenship  of  the  parties,  and  the  judgment  of  the  Circuit  Court 
of  Appeals  is  made  final,  unless  that  court  shall  see  fit  to  certify 
to  the  Supreme  Court  questions  of  law  upon  which  it  desires 
the  instruction  of  that  court.  As  the  result  of  this  unfortunate 
legislation,  nine  different  courts  of  appeal  now  exist  which  are 
thus,  in  effect,  made  courts  of  last  resort  in  the  most  important 
litigations  which  come  before  the  federal  courts.  Uncertainty 
and  want  of  harmony  in  the  decisions  of  these  courts  must 
necessarily  result  from  this  system,  and  it  is  believed  that  the 
embarrassments  thus  arising  will,  at  no  distant  day,  lead  to  an 
earnest  effort  to  induce  Congress  to  so  amend  the  act  in  ques- 
tion as  to  give  to  the  Supreme  Court  the  right  of  review  in  all 
cases  of  railway  foreclosures  and  of  receiverships  over  rail- 
ways. 
Chicago,  December,  1894. 

J,  L.  H. 


PREFACE  TO  FOURTH  EDITM 


The  third  edition  of  this  work  was  pubh'shed  in  December, 
1894.  It  was  the  intention  of  the  author  to  make  no  further 
revisions  himself  but  to  leave  to  the  present  editor  the  task  of 
bringing  out  any  new  editions  which  might  become  necessary. 

During  the  fifteen  years  which  have  elapsed  since  the  publi- 
cation of  the  third  edition,  the  development  of  the  law  of  re- 
ceivers has  been  very  marked.  This  growth  may  to  a  great 
extent  be  attributed  to  the  large  number  of  receiverships  which 
were  the  direct  outcome  of  the  financial  and  economic  disturb- 
ances of  the  years  immediately  following  the  publication  of  the 
last  edition  and  which  were  just  beginning  to  appear  in  the 
reports  at  the  time  of  its  publication.  This  development  has 
been  especially  marked  in  the  case  of  corporate  and  railway 
receiverships,  and  more  than  one-third  of  the  additional  cases 
cited  in  the  present  edition  and  of  the  new  matter  added  to  the 
text  is  embodied  in  the  two  chapters  which  treat  of  these  im- 
portant subjects.  Considerable  additions  have  also  been  made 
to  other  portions  of  the  work,  especially  to  the  chapters  upon 
Possession,  Functions,  Actions,  Liabilities,  Mortgages  and  Ac- 
counts. 

In  the  preface  to  the  third  edition,  the  author,  in  referring  to 
the  doctrine  of  preferred  debts  in  railway  receiverships,  calls 
attention  to  the  tendency  of  the  later  decisions  of  the  Supreme 
Court  of  the  United  States  to  restrict  rather  than  to  extend 
the  right  to  a  preference.  During  tHe  past  few  years,  this  ten- 
dency has  been  especially  noticeable,  both  in  the  decisions  of  the 
Supreme  Court  and  of  the  Courts  of  Appeals  of  the  various 


viii  PREFACE. 

circuits,  and  it  may  be  safely  asserted  that  the  limit  as  regards 
such  allowances  has  been  reached. 

As  opposed  to  this  tendency  to  restrict  the  right  to  a  prefer- 
ence in  receiverships  of  railways  and  other  quasi-public  corpo- 
rations, there  are  to  be  found  a  number  of  well-considered  de- 
cisions of  courts  of  high  standing,  in  which  the  right  to  a 
preference  has  been  extended  to  cases  of  purely  private  cor- 
porations. Whatever  may  be  said  of  the  justice  of  such  allow- 
ances in  the  one  case  if  they  are  properly  made  in  the  other, 
it  is  confidently  believed,  that  without  the  aid  of  legislative 
enactment,  the  doctrine  of  these  authorities  will  not  be  gener- 
ally extended  to  the  case  of  purely  private  corporations. 

Nearly  fourteen  hundred  new  cases  have  been  added  to  the 
present  edition.  These  represent  all  the  decisions  bearing 
upon  the  subject,  which  have  appeared  in  the  American,  English 
and  Irish  reports  from  the  date  of  the  publication  of  the  third 
edition  down  to  the  beginning  of  the  present  year.  Two  hun- 
dred and  thirty  pages  have  been  added  to  the  text,  exclusive  of 
the  table  of  cases  and  of  the  index.  Special  attention  has 
been  given  to  the  index  in  the  endeavor  to  make  it  as  complete 
and  practical  as  possible  without  unnecessary  prolixity  and 
cross-reference.  As  in  the  former  editions,  the  section  num- 
bering remains  unchanged,  the  new  sections  being  indicated  by 

lettering. 

SHIRLEY  T.  HIGH. 

Chicago,  January,  1910. 


CONTENTS. 


CHAPTER  I. 

Section 

Of  the  General  Features  of  the  Jurisdiction 1 

CHAPTER   n. 

Of  the  Courts  Exercising  the  Jurisdiction 40 

I._What   Courts   May  Appoint  Receivers 40 

II. — Relative  Powers  of  State  and  Federal  Courts 50 

CHAPTER    III. 

Of  the  Selection  and  Eligibility  of  the  Receiver 63 

CHAPTER  IV. 

Of  the  Practice  °2 

I.— General  Rules  of  Practice 82 

II. — Time  of  Appointment 103 

III.— Notice  of  the  Application HI 

CHAPTER  V. 

Of  the  Receiver's  Bond  and  Liability  Thereon 118 

I.— Of  the  Bond    118 

II.— Liability  of  Sureties 127 

CHAPTER  VI. 

Of  the  Receiver's  Possession 134 

I. — Nature  of  Receiver's  Possession 134 

II, — ^Interference    with    Receiver's    Possession    163 

ix 


X  CONTENTS. 

CHAPTER  VII. 

Section 

Of  the  Receiver's  Functions 175 

I. — General  Nature  of  his  Functions 175 

II. — Sales  by  Receivers    191 

CHAPTER  VIII. 

Of  Actions  by  and  against  Receivers 200 

I. — Principles  Governing  Actions  by  Receivers 200 

II. — Pleadings  and  Proofs  in  Actions  by  Receivers 231 

III. — Actions  by  Receivers  in  Foreign  Courts 239 

IV. — Defenses  to  Actions  by  Receivers 245 

V. — Actions   against   Receivers 254 

CHAPTER  IX. 

Of  the  Receiver's  Liabilities 269 

CHAPTER  X. 

Of  Receivers  Over  Corporations 287 

I. — Principles  Governing  the  Jurisdiction 287 

II. — Functions,  Duties  and  Rights  of  Action  of  the  Receiver. .  313 

III. — Receivers  of  Insolvent  Corporations 343 

IV. — Receivers  of  National   Banks 358 

CHAPTER  XI. 

Of  Receivers   Over   Railways 365 

I. — Principles    Governing   the  Jurisdiction 365 

II. — Receivers  in  Aid  of  Mortgagees  and  Bondholders 376 

III. — Functions   and   Duties   of  the   Receiver 390 

IV.— Preferred  Debts  394a 

V. — Actions    against    the    Receiver 395 

VI. — Receivers'   Certificates    398c 


CHAPTER  XII. 

Of  Receivers  in  Aid  of  Judgment  Creditors 399 

I. — Principles  on  Which  the  Relief  is  Granted 399 

II.— Of  the  Receiver's  Title 440 

III. — Of  the  Receiver's  Functions  and  Rights  of  Action 453 


CONTENTS.  Xi 

CHAPTER  XIIL 

Section 

Of  Receivers  Over  Partnerships 472 

I.— Principles  on  Which   the   Relief  is   Granted 472 

II. — Receiver  Upon  Dissolution  of  the  Firm 509 

III. — Exclusion  from  Firm  as  Ground  for  Receiver 522 

IV.— Receiver  Upon  Death  of  Partner 530 

V. — Functions  and  Duties  of  the  Receiver 538 

CHAPTER  XIV. 

Of  Receivers  Over  Real  Property 553 

I.— Principles  Upon  Which  the  Relief  is  Granted 553 

II. — Receivers  as  Between  Tenants  in  Common 60.3 

III. — Receivers  as  Between  Vendors  and  Purchasers 609 

IV. — Functions  of  the  Receiver 618 

CHAPTER  XV. 

Of  Receivers  in  Cases  of  Mortgages 639 

I. — Principles  Governing  the  Relief 639 

II. — Inadequacy  of  Security  and  Insolvency  of  Mortgagor 666 

III.— Receivers  as  Between  Different  Mortgagees 679 

CHAPTER   XVI. 

Of  Receivers  in  Cases  of  Trusts 692 

I. — Principles  Governing  the  Relief 692 

II. — Receivers  Over  Executors  and  Administrators 706 

III. — Receivers  Over  Estates  of  Infants 725 

IV. — Receivers  Over  Estates  of  Lunatics 7ZZ 

CHAPTER   XVII. 

Of  Receivers  in  Connection  with  Injunctions 737 

I. — The  Remedies  Compared 7Z7 

II. — The  Remedies  as  Applied  to  Corporations 749 

III. — Creditors'  Suits   755 

IV. — Partnerships     760 

v.— Real  Property  772 

CHAPTER  XVIII. 

Of  the  Receiver's  Compensation 781 


Xii  CONTENTS. 

CHAPTER  XIX. 

Of  the  Receiver's  Accounts 

CHAPTER   XX. 

Of  the  Removal  and  Discharge  of  Receivers 820 

I.— Removal    for    Cause    ^ 

II.— Final  Discharge  ~2 


Section 
,..     797 


TABLE   OF   CASES  CITED. 


THE  RBFERENCES  ARE  TO  THE  PAGES. 


Abbott  V.  Baltimore  &  Rappahan- 
nock Steam  Packet  Co.,  919,  923. 

Abbott  V.  Straiten,  117,  615. 

Acker,  In  re,  499. 

Ackerman  v.   Ackerman,   235. 

Ackland  v.  Gravener,  788,  789. 

Adair  v.  Wright,  127,  805,  808. 

Adams  v.   Hackett,  678,  710. 

Adams  v.  Haskell.  214. 

Adams  v.  Trust  Co..  74,  75. 

Adams  v.  Woods,  259.  678,  710,  941, 
944,  947,  960. 

Addison  v.  Lewis,  525. 

Adee  v.  Bigler,  591. 

Adkins  v.   Edwards,   127. 

Adler  v.  Milwaukee  Patent  Brick 
Manufacturing  Co.,  343,  361. 

Aetna  Life  Ins.  Co.  v.  Broeker,  793. 

Agra  &  Masterman's  Bank  v.  Barry, 
117,  745,  840. 

Ainsley,  In  re,  259. 

Akers  V.  Veal,  942. 

Akrill  V.  Selden,  883. 

Alabama  Coal  &  Coke  Co.  v. 
Schackelford,  349. 

Alabama  Iron  &  R.  Co.  v.  Annis- 
ton  L.  &  T.  Co..  574. 

Albany  City  Bank  v.  Schermerhom, 
203,  204,  626,  627. 

Albright  V.  Albright.  852. 


Alden  v.   Boston,   Hartford  &  Erie 

R.  Co.,  74,  81,  467. 
."Mexander  v.  Maryland  T.  Co.,  211. 
Alexander  v.  Relfe,  255,  385,  387. 
Alexandria   Gas    Co.   v.    Irish,    130, 

134. 
Alford  V.  Berkele,  136. 
Allen  V.  Baxter,  246,  267. 
Allen    V.    Chadburn,    44. 
Alien  V.   Cooley,  98,  216. 
Allen  V.  D.  &  W.  R.  Co.,  479,  480, 

983. 
Allen  V.  Dillingham,  553. 
Allen  V.  Harris,  61. 
Allen  V.  Hawley,  663,  664,  666. 
Allen  V.  Olympia  L.  &  P.  Co.,  430, 

431. 
Allen  V.  Walsh,  392. 
Allison  V.  Weller,  644. 
Allyn  V.  Boorman,  710. 
Alven  V.  Bond,  224,  227. 
American  Bank  v.  Cooper,  119,  252. 
American  C.  Co.  v.  Jacksonville,  T. 

&  K.  W.  R.  Co.,  200. 
American  Investment  Co.  v.  Farrar, 

827. 
American  Loan  &  Trust  Co.  v.  Cen- 
tral V.  R.  Co..  162,  546. 
American    Loan    &    Trust    Co.    v. 

South  Atlantic  &  O.  R.  Co.,  954, 

959. 


Xlll 


XIV 


TABLE    OF    CASES    CITED. 


[references    ABE    TO    PAGES.] 


American  Loan  &  Trust  Co.  v.  To- 
ledo, C.  &  S.  R.  Co.,  461. 
American  Mortgage  Co.  v.  Turner, 

809. 
American  National  Bank  v.  North- 
western M.  Life  Ins.  Co.,  796,  818. 
American    Pig   Iron    S.    W.    Co.    v. 

German,  378. 
American    Steel    &    Wire     Co.    v. 

Bearse,  297,  309. 
.A.merican  Trust  &  Savings  Bank  v. 

McGettigan,  159,  161. 
Ames  V.  Ames,  759,  760. 
Ames    V.    Trustees    of    Birkenhead 

Docks,  161,  171,  172. 
Ames  V.  Union  Pacific  R.  Co.,  474, 

500,  533. 
Amy  V.  Manning,  601. 
Anderson  v.   Anderson,  224,  225. 
Anderson  v.   Buckley,  374. 
Anderson  v.  Cecil,  129. 
Anderson  v.  Chicago  T.  &  T.  Co., 

228. 
Anderson  v.  Condict,  540. 
Anderson  v.  Fidelity  &  Deposit  Co., 

958. 
Anderson  v.  Guichard,  866,  867. 
Anderson  v.   Matthews,  38,  842. 
Anderson  v.  Powell,  680. 
Anderson  v.  Reed,  980. 
Anderson  v.   Riddle,  25. 
Anderson  v.  Treadwell,  629. 
Andrews  v.  Betts,  28. 
Andrews  v.  Knox  Co.,  199. 
Andrews  v.   Paschen,   178. 
.Andrews  v.    Smith,  491. 
.Andrews  v.    Steele   City   Bank,   53, 

430. 
Angel  V.   Smith,  153,  154,  155,  161, 

162,  610. 
Angell,  In   re,  919,  976. 
Angell   V.    Silsbury,    385,    646. 
Anglo-Italian  Bank  v.  Davies,  33. 
Anonymous,   91,   93,    145,    191,    199, 
315,  333,  718,  736,  775,  862,  874, 
992. 


Appleton  Waterw^orks  Co.  v.   Cen- 
tral T.  Co.,  74. 
Archambeau  v.  New  York  &  N.  E. 

R.   Co.,  550. 
Archambeau  v.  Piatt,  561. 
Ardmore   National   Bank  v.   Briggs 

M.  &  S.  Co.,  156,  159,  343. 
Arkansas   Central   R.   Co.  v.   State, 

551. 
Armstrong  v.    Ettlesohn,   455. 
Armstrong  v.  Sanford,  980. 
Armstrong  v.   Southwell,  776. 
Armstrong  v.  Troutman,  455. 
.Armstrong  v.  Warner,  287,  458. 
Arnold,  Petition  of,  632. 
Arnold   v.   Suffolk  Bank,  306. 
Arnold  v.  Weimer,  159. 
Artisans    Bank    v.    Treadwell,    125, 

158. 
Asheville    Division    No.    15   v.    As- 
ton, 389. 
Ashurst  V.  Lehman,  4,  6,  135. 
Astor  V.  Turner,  794,  819,  829. 
Atchison  v.  Davidson,  385,  407,  436. 
Atchison,    T.    &    S.    F.    R.    Co.    v. 

O shorn,  529. 
.\tkins  V.    Petersburg   R.    Co.,   514, 

516. 
Atkins  V.  Wabash,   St.  L.  &  P.  R. 

Co.,  100,  488. 
Atkinson  v.  Henshaw,  64,  65. 
.A.tkinson  v.  Smith,  146. 
Atlantic  Trust  Co.  v.  Chapman,  963. 
Atlantic  Trust  Co.  v.   Consolidated 

E.  S.  Co.,  433. 
Atlantic    Trust    Co.    v.    Dana,    302, 

315,  389,  529. 
.A.llantic   Trust  Co.  v.   Woodbridge 

C.  &  I.  Co.,  515,  526. 
.A.tlas  Bank  v.  Nahant  Bank,  360. 
Atlas    Savings    &    Loan    Assn.    v. 

Kirklin.  731. 
Attorney-General  v.  Atlantic  M.  L. 

I.  Co.,  364. 
Attorney-General    v.    Bank    of    Co- 
lumbia, 100,  115,  432,  440. 


TABLE    OF    CASES    CITED. 


XV 


[BBFBRBNCBS    ABE    TO    PAGES.] 


Attorney-General  v.  Clavin,  18. 

Attorney-General  v.  Continental 
Life  Insurance  Co.,  222,  329,  436, 
711.  915,  928,  956. 

Attorney-General  v.  Day,  20. 

Attorney-General  v.  Gee,  99. 

Attorney-General  v.  Guardian  Mu- 
tual Life  Insurance  Co.,  240,  400, 
403,  427. 

Attorney-General  v.  Life  &  Fire  In- 
surance Co.,  421. 

Attorney-General  v.  Mayor  of  Gal- 
way,  116. 

Attorney-General  v.  North  America 
Life  Insurance  Co.,  427,  915,  953. 

Attorney-General  v.  St.  Cross  Hos- 
pital, 163,  164,  888. 

Attorney-General  v.   Vigor,  212. 

Attrill  V.  Rockaway  Beach  Improve- 
ment Co.,  975. 

Augusta  Ice  Mfg.  Co.  v.  Gray,  110. 

Austin  V.  Figueira,  590. 

Auten  V.  United  States  National 
Bank,  456. 

Averall  v.  Wade,  145. 

Avery  v.  Blees  Manufacturing  Co., 
434. 

Avery  v.  Boston  S.  D.  &  T.  Co., 
230. 


B. 


Bacon  v.  Irvine,  358. 

Baer  v.  McCullough,  543. 

Bagby  v.  A.,  M.  &  O.  R.  Co.,  277, 

278. 
Baggs  V.  Baggs,  750. 
Bagley  v.  Illinois  T.  &  S.  Bank,  795, 

807. 
Bagley  v.  Scudder,  197. 
Bailey  v.  Belmont,  216. 
Bailey  v.  Lane,  602. 
Bailey  v.  Mosher,  449. 
Bailey  v.  O'Mahony.  48,  216 
Bailey  v.  Ryder,  601. 
Bailie  v.  Bailie,  138, 


Bainbrigge  v.  Baddeley,  716,  718. 

721. 
Bainbrigge  v.  Blair,  855,  989. 
Baird  v.  Turnpike  Co.,  37. 
Baker  v.   Administrator  of  Backus, 
2,  3,  18,  24,  100,  101,  123,  124,  343, 
346,  348. 
Baker  v.  Baker,  129. 
Baker  v.   Bartol,   142. 
Baker  v.  Carraway,  294. 
Baker  v.  Cooper,  248,  252. 
Baker  v.  County  of  King,  444. 
Baldwin  v.  Eazler,  915,  924. 
Baldwin  v.  Hosmer,  67,  371,  372. 
Baldwin  v.  Spear,  156,  159. 
Balfe  V.  Blake,  779. 
Ball  V.  Mabry,  540,  543. 
Ball  V.  Marske,  795,  806. 
Ball  V.  Oliver,  64,  65. 
Baltimore  B.  &  L.  Assn.  v.  Alder- 
son,  63,  151,  378,  379. 
Baltimore    Bargain    House    v.    St. 

Clair,  10,  13,  24,  41,  132,  133. 
Baltimore  &   O.   R.    Co.   v.   Burris, 

557. 
Baltimore  &  O.  R.  Co.  v.   Cannon, 

356. 
Baltimore  &  O.  R.  Co.  v.  Flaherty, 

162. 
Bangs  V.  Duckinfield,  417. 
Bangs  V.  Gray,  412,  417. 
Bangs   V.    Mcintosh,   265,   342,   345, 

416. 
Bank  v.  Duncan,  150. 
Bank  t.  Kennedy,  446. 
Bank  v.  McLeod,  277,  278. 
Bank  v.   Motherwell  Iron,  etc.  Co., 

272. 
Bank  v.  Rindge,  395. 
Bank  of  Bethel  v.  Pahquioque  Bank, 

443,  446. 
Bank  of  Commerce  v.  Central  C.  & 

C.  Co.,  567,  568. 
Bank  of  Florence  v.  United  States 

S.  &  L.  Co.,  14,  128,  132. 
Bank  of  Kentucky  v.  Stone,  17. 


XVI 


TABLE    OF    CASES    CITED. 


[BEFBRENCES    ABE    TO   PAGES.] 


Bank  of  Monroe  v.   Schermerhorn, 

106,  122,  123,  579,  581,  899,  978, 

981. 
Bank  of  Montreal  v.  C,  C.  &  W.  R. 

Co.,  492,  565,  566,  568,  569,  570. 
Bank  of  Montreal  v.  Thayer,  566, 

570. 
Bank  of  Niagara,  In  re,  961. 
Bank  of  North  America  v.  Wheeler, 

243. 
Bank  of  Ogdensburg  v.  Arnold,  792, 

828. 
Bank  of  Washington  v.   Creditors, 

146. 
Bank  of  Woodland  v.  Herow,  157. 
Bank  of  Woodland  v.  Stephens,  827. 
Bank  of  Wooster  v.   Spencer,   617. 
Banks  v.  Potter,  139. 
Barber  v.  International  Co.,  10,  99. 
Barber  v.  Manier,  24. 
Barbour     v.      National      Exchange 

Bank,  240,  427. 
Barclay  v.  Quicksilver  Mining  Co., 

368,  375. 
Barker  v.  Clark,  869. 
Barker  v.  Dayton,  261,  619. 
Barker  v.  Wayne  Circuit  Judge,  103. 
Barkley  v.  Lord  Reay,  848. 
Barley  v.   Gittings,   134,  277,  280. 
Barlow  v.  Gaines,  127,  808. 
Barnes  v.  Jones,  113,  667,  695. 
Barnes  v.  Newcomb,  439. 
Barnett  v.  Montgomery,  736. 
Barrett  v.  Henrietta  National  Bank, 

447. 
Barrett  v.  Mitchell,  815. 
Barron  v.  Mullin,  233. 
Barry  v.  Briggs,  40. 
Barry  v.  Kennedy,  47. 
Barry  v.  McGhee,  537. 
Bartlett  v.  Cicero  L.,  H.  &  P.  Co., 

8,  304,  337. 
Bartlett  v.  Wilbur,  272. 
Barton   v.    Barbour,   294,   297,   516, 

541. 


Bartow   Lumber   Co.  v.    Enwright, 

353. 
Bassick  v.  Schoolfield,  812. 
Basting  v.  Aukeny,  53. 
Bateman  v.  Superior  Court,  739. 
Bates  V.  Brothers,  644,  645. 
Battaile  v.  Fisher,  331,  961,  968. 
Battersby,  In  re,  303. 
Battersby  v.  Homan,  737. 
Battershall  v.  Davis,  441. 
Battery  Park  Bank  v.   Western   C. 

Bank,  93,  159,  314.  923,  937. 
Battle  V.  Davis,  3,  32,  89,  246,  248, 

249. 
Bauer  v.  Haggerty,  350. 
Baughman  v.  Reed,  749. 
Baughman  v.  Superior  Court,  993. 
Baxter  v.  Hewes,  917,  959. 
Bay  State  Gas  Co.  v.  Rogers,  373. 
Bayaud  v.  Fellows,  591,  799,  897. 
Bayliss  v.  L.,  M.  &  B.  R.  Co.,  513. 
Bayne  v.   Brewer    Pottery   Co.,   63, 

97,  402. 
Beach  v.  White,  588. 
Beamish   v.   Austen,    597,   633,   737, 

738. 
Beard  v.  Arbuckle,  127. 
Beaser  v.  City  of  Ashland,  17. 
Beaumont  v.  Beaumont,  12,  18. 
Beck  V.  Burdett,  588. 
Becker  v.  Hoke,  355,  358. 
Becker  v.  Torrance,  623. 
Beckford  v.  Kemble,  887. 
Beckwith  v.  Carroll,  935. 
Beecher  v.  Bininger,  19,  74,  81,  82, 

124. 
Beecher  v.  M.  &  P.  R.  M.  Co.,  41, 

790. 
Beers  v.  The  Chelsea  Bank,  990. 
Belknap  Savings  Bank  v.  Lamar  L. 

&  C.  Co.,  378,  571. 
Bell  V.  American  Protective  League, 

153,  322,  326. 
Bell  V.  L,  C.  &  L.  R.  Co.,  550. 
Bell  V.  M'Loghlin,  111. 
Bell  V.  Shibley,  240,  286,  398. 


TABLE    OF    CASES    CITED. 


XVll 


[BEFEBENCES    ABE    TO    PAGES.] 


Bell  V.  Wood  &  Co.,  349. 

Bell's  Estate,  In  re,  333. 

Belmont  v.   Erie   R.   Co.,   117,  342, 

343,  892. 
Belmont  Nail  Co.  v.  Columbia  I.  & 

S.  Co.,  429. 
Benedict  v.  St.  J.  &  W.  R.  Co.,  480. 
Benepe-Owenhouse  Co.  v.  Scheideg- 

ger,  114,  133. 
Benneson  v.   Bill,  98,  425. 
Bennett  v.  Chapin,  924,  929,  960. 
Bennett  v.  Keen,  400. 
Bennett   v.    Northern    Pac.    R.   Co., 

546. 
Bennett  v.   Smith,  684. 
Benson,  Ex  parte,  498. 
Bergen  v.  Little,  630. 
Berkeley  v.  Kings  College,  376. 
Bernard  v.   Union   Trust   Co.,  378, 

569,  570. 
Berney  v.   Sewell,  788,  833. 
Bernheimer  v.  Converse,  281,  397. 
Berry  v.  Brett,  286,  288,  390,  413. 
Berry  v.  Jones,  932. 
Berry  v.  Rood,  916,  919,  954. 
Berry  v.  Wood,  408. 
Bertie  v.  Lord  Abingdon,  969. 
Best    V.    Schermier,    819,    822,    844, 

845. 
Bevan  v.  White,  931. 
Beverley    v.    Brooke,    6,    8,    9,    155, 

840,  844,  985,  987. 
Beytagh  v.  Concannon,  948. 
Bibber-White  Co.  v.  White  River  & 

E.  R.  Co.,  163,  164,  567,  571. 
Bidlack  v.  Mason,  277. 
Bidwell  V.  Paul,  806,  807. 
Big    Creek    Stone    Co.    v.    Seward, 

386. 
Bigbee  v.  Summerour,  759. 
Bigelow  V.  Andress,  591,  897. 
Bigelow  z'.  Draper,  251. 
Bignell,  In  re,  925. 
Bill  V.  New  Albany,  etc.,  R.  Co.,  6, 

74,  84,  486. 
Billard  V.  Erhart,  195. 


Billings  V.  Robinson,  409,  411. 

Bininger,  In  re,  85. 

Birdsall  v.  Colie,  685,  686. 

Birmingham  &  L.  J.  R.  Co.,  In  re 
466. 

Bisson  V.  Curry,  129,  130. 

Bitting  V.  Ten  Eyck,  109. 

Bivins  v.  Marvin,  16. 

Black  V.  Gentery,  146. 

Blackall  v.  Morrison,  780. 

Blackwell  v.  Life  Association,  367. 

Blair  v.  City  of  Chicago,  425. 

Blair  v.  St.  L.,  H.  &  K.  R.  Co.,  259, 
512,  516,  527,  528,  531. 

Blake  Crusher  Co.  v.  Hew  Haven, 
181. 

Blake  v.  State  Savings  Bank,  299. 

Blakeney  v.   Dufaur,    11,   659,   705, 

881. 
Blatchford  v.  Ross,  343. 
Block  V.  Estes,  240. 
Blondheim  v.   Moore,  25,   129,   591 

897. 
Blood  V.  Blood,  28. 
Bloodgood  V.   Clark,   122,   123,  579, 

580,  581,  602,  900. 
Blum  V.  Van  Vechten,  181. 
Blumenthal    v.    Brainerd,    537,    541, 

559. 
Blunt  V.   Clitherow,  212. 
BIythe  V.  Gibbons,  50,  665. 
Bodkin  v.  Merit,  53. 
Boehm  v.  Wood,  762,  769. 
Bogardus  v.  ]\Ioses,  806,  810,  811. 
Boggs  V.  Brown,  555,  563. 
Boid  V.  Dean,  630. 
Boland  v.  Whitman,  269,  415. 
Bolles  V.  Dufif,  52,  105,  802. 
Bonner  v.  Hearne,  70. 
Bonner  v.   Mayfield,  558. 
Booth  V.  Clark,  2,  3,  271,  273,  651. 
Borden  z:  Enterprise  T.  Co.,  68. 
Bories    v.    Union    B.    &    L.    Assn., 

159. 
Borton  v.  Brines-Chase  Co.,  68. 


XVlll 


TABLE    OF    CASES    CITED. 


[eefekences  aee  to  pages.] 


Bosley  v.   Susquehanna  Canal,  880, 

882. 
Boston  Mercantile  Co.  v.  Ould-Car- 

ter  Co.,  114. 
Boston    Safe-Deposit    &    T.    Co.    v. 

Chamberlain,  919,  954. 
Bostwick  V.  Elton,  643,  900. 
Bostwick  V.    Menck,   630,  635,  639, 

640. 
Bosvvorth  v.  St.  Louis  Terminal  R. 

Assn.,  209,  311,  313,  314,  938,  979, 

987. 
Bound   V.    South    Carolina   R.    Co., 

514,  528. 
Bowden  v.  Johnson,  448. 
Bovven  v.  Brecon  R.  Co.,  484, 
Bowen  v.  Parkhurst,  588,  590. 
Bowersbank  v.  Colasseau,  92. 
Bowery  Savings  Bank  v.  Richards, 

200. 
Bowling  V.  Scales,  863. 
Bowling    Green    Savings    Bank    v. 

Todd,  159,  161. 
Bowman  v.  Bell,  110,   125,  126. 
Bowman  v.  Hazen,  57,  332. 
Boyce  v.  Burchard,  667,  668,  903. 
Boyce  v.  Continental  Wire  Co.,  794, 

818. 
Boyd  V.  Cook,  38. 
Boyle    V.    Bettws-Llantwit    Colliery 

Co.,  813. 
Boyle  V.  Townes,  260. 
Brabazon  v.   Teynham,  214. 
Braddock  Brewing  Co.  v.  Pfaulder 

V.  F.  Co.,  307. 
Bradford  v.   Cooledge,  965. 
Brady  v.   Furlow,   186. 
Braman  v.   Farmers'  L.   &  T.   Co., 

216,  916,  926. 
Bramley  v.  Tyree,  37. 
Brande  v.  Bond,  228. 
Brandon  v.  Brandon,  775. 
Brandt  v.  Allen,  173. 
Brant,  hi  re,  24. 

Erassey  v.   N.  Y.  &  N.  E.  R.  Co., 
469. 


Brasted  v.  Sutton,  823. 

Brenan  v.  Preston,  694. 

Brennan  v.  Kenny,  111 . 

Brick  Company  v.  Robinson,  123. 

Bridgeport  Development  Co.  v. 
Tritsch,  358. 

Brien  v.  Harriman,  70S,  931. 

Brien  v.   Paul,   162. 

Briggs  V.   Merrill,  187. 

Briggs  V.  Neal,  13. 

Brigham  v.  Luddington,  271,  274, 
651. 

Brigstocke  v.  Mansel,  735. 

Brinckerhoflf  v.  Bostwick,  444. 

Brinkman  v.  Ritzinger,  126,  806, 
807. 

Brisenden  v.  Chamberlain,  243. 

Bristow  V.  Home  B.  Co.,  131,  219, 
818. 

Bristowe  v.  Needham,  966. 

British  Linen  Co.  v.  South  Ameri- 
can &  M.  Co.,  804. 

British  Power  T.  &  L.  Co.,  In  re, 
50. 

Britton  v.  M'Donnell,  744. 

Broad  v.  Wickham,  191,  199. 

Brockert  v.  Central  Iowa  R.  Co., 
552. 

Brockert  v.  Iowa  Central  Ry.  Co., 
563. 

Brockhurst  v.  Cox,  400. 

Brocklebank  v.  East  London  Rail- 
way, 496,  784. 

Brodie  v.  Barry,  849. 

Brooker  v.  Brooker,  858. 

Brookfield  v.  Hecker,  895. 

Brooks  V.  Greathed,  161,  162,  610. 

Brooks  V.  Town  of  Hartford,   166. 

Brouwer  v.  Appleby,  400. 

Brouwer  v.  Hill,  389,  390,  400. 

B  rowel  1  v.  Reed,  874. 

Brower  v.  Brower,  948. 

Brown.  Ex  parte,  524,  531,  537,  539, 
559,  981. 

Brown,  In  re,  335. 

Brown  v.  Allebach,  87. 


TABLE    OF    CASES    CITED. 


XIX 


[EEFEBENCES    ABE    TO    PAGES.] 


Brown  v.  Brink,  393. 

Brown  v.  Brown,  304,  540. 

Brown  v.  Chase,  21,  818,  819. 

Brown  v.  French,  895. 

Brown  v.  Gilmore,  641,  642. 

Brown  v.  Hazlehurst,  945. 

Brown  v.   New  York  &  Erie  Rail 

road,  490,  496. 
Brown  v.  Nolan,  745. 
Brown  v.  Northnip,  3,  11,  881,  882 
Brown  v.  O'Connor,  776. 
Brown  v.  Ranch,  297,  298. 
Brown  v.  Ring,  39,  800. 
Brown  v.  Schieier,  447. 
Brown  v.   Vandermeulen,  41. 
Brown  v.  Wabash  R.  Co.,  562. 
Brown  v.  Warner,  560. 
Brown,  Receiver  v.  Gay,  563. 
Browne's  Estate,  In  re,  948. 
Browning  v.  Bettis,  580,  602. 
Bruce  v.  M.  &  K.  R.  R.,  74. 
Brundage  v.   Home  S.  &  L.  Assn  , 

111,  219,  607,  805,  933. 
Brunnemer  v.   Cook  &  B.  Co.,  402. 
Bruns    v.     Stewart     Manufacturing 

Co.,  978. 
Brush  V.  Jay,  708. 
Bryan  v.  Cormick,  835,  836,  844. 
Bryan  v.  Moring,  719,  7Zi. 
Bryant  v.  Bull,  33. 
Bryant  v.   Fitzsimmons,   691. 
Brydon  v.  Stewart,  539. 
Brynjolfson  v.  Osthus,  53,  346. 
Buchanan  v.  Berkshire  Life  Insur- 
ance Co.,  35,  807,  818,  829. 
Buchanan  v.  Comstock,  Z3,  672,  675. 
Buchanan  v.  Smith,  82. 
Buck  V.  Piedmont  &  Arlington  Life 

Insurance  Co.,  83,  101,  367. 
Buck  V.  Stuben,  12,  816. 
Buch  V.  Stuben,  12. 
Buckeye  Engine  Co.  v.  Donau  Brew- 
ing Co.,  584. 
Buckhannon  &  N.  R.  Co.  v.  Davis 

546. 
Buckley  v.  Baldwin,  129. 


Buckley  v.   George,  219. 

Buckwalter  v.  Whipple,  954. 

Bufkin  V.  Boyce,  671. 

Builders'  &  Painters'  Supply  Co.  v. 
Lucas,  14. 

Bunbury  v.  Bunbury,  887. 

Bunbury  v.  Winter,  798. 

Burgess  &  Co.  v.  Martin,  114. 

Burguieres  Planting  Co.,  In  re,  937. 

Burk   V.    Muskegon    M.    &    F.    Co 
294,  296. 

Burke  v.  Burke,  118,  931. 

Burke  v.  Dillingham,  553. 

Burke  v.  Ellis,  294. 

Burleigh  v.  Chehalis  County,  165. 

Burlingame  v.  Parce,  820. 

Burnham  v.  Bowen,  509,  511,  519. 

Burr  V.   Smith,  284,  397. 
Burroughs  v.  Bunnell,  915. 
Burrowes  v.  Molloy,  801. 
Burwell    v.    Farmers'   &    M.    Bank, 

97. 
Bush  V.  Mattox,  16,  17. 
Buster  v.  Mann,  962. 
Buswell  V.  Supreme  Sitting,  371. 
Butler  V.   Sprague,  329,  711. 
Butler's  Estate,  In  re,  154. 
Butterworth  v.  O'Brien,  401,  404 


C. 


C.  S.  &  C.  R.  Co.  V.  Sloan,  36. 
Cabaniss  v.  Reco  M.  Co.,  129. 
Cadle  V.   Baker,  450. 
Cadle  V.  Tracy,  456. 
Cadogan  v.  Lyric  Theatre,  586. 
Cagger  v.  Howard,  627. 
Cagill  V.  Wooldridge,  189,  284. 
Caillard  v.   Caillard,  129. 
Cairns  v.    Chabert,   743,   913. 
Cake  V.  Mohun,  50,  915,  916,  954. 
Cake    V.    Woodbury,    50,    915     916 

954. 
Calkins  v.  Atkinson,  407,  894, 
Callaghan  v.   Callaghan,    145. 
Callaghan  v.  Reardon,  213. 


XX 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Callanan  v.  Shaw,  33,  787,  829. 

Callaway  v.  Powhattan  Improve- 
ment Co.,  353. 

Calvert  v.  Adams,  753. 

Cameron  v.  Groveland  Imp.  Co.,  34. 

Cammack  v.  Johnson,  216. 

Camp  V.   Barney,   548. 

Campau  v.  Detroit  Driving  Club, 
167,  168,  916. 

Campbell  v.  Adams,  417. 

Campbell  v.  Foster,  632. 

Campbell  v.   Genet,   632. 

Campbell  v.  Lloyd's,  Barnett's  & 
Bosanquet's  Bank,  804. 

Campbell  v.  Parker,  233. 

Campbell  v.   Spratt,  978. 

Candler  v.  Candler,  600. 

Cane  v.   Bloomfield,  777. 

Cantwell  v.  Columbia  Lead  Co.,  356. 

Cape  May  &  S.  L.  R.  Co.  v.  John- 
son, 195. 

Capital  City  Water  Co.  v.  Weather- 
ly,  141. 

Cardot  v.  Barney,  537,  539,  548. 

Carey  v.  Giles,  52,  428. 

Carlisle  v.  Berkley,   138,  917. 

Carolina  National  Bank,  Ex  parte, 
498. 

Carpenter  v.  Northern  Pac.  R.  Co., 
88,  547. 

Carr  v.   Houser,  224. 

Carroll  v.  Pacific  National  Bank, 
53. 

Carrow  v.  Ferrior,  715,  878. 

Carstarphen  Warehouse  Co.  v. 
Fried,  17. 

Carswell  v.  F.  L.  &  T.  Co.,  4,  322, 
533. 

Carter  v.  Dime  Savings  Bank,  72. 

Carter  v.  Hightower,  594. 

Carter  v.  Hoke,  769. 

Cartwright's    Case,    334. 

Cary  Bros.  v.  Dalhoff  C.  Co.,  662. 

Case  V.  Fish,  230. 

Casey  v.  Galli,  448. 


Casey  v.  La  Societe  de  Credit  Mo- 

bilier,  444. 
Casey  v.  Northern  Pac.  R.  Co.,  321, 

324,  501. 
Cassetty  v.  Capps,  755. 
Cassidy  v.  Meacham,  584,  588,  589, 

590. 
Cassilear  v.  Simons,  174,  201. 
Catlin  V.   Wilcox   Silver-Plate   Co., 

276. 
Central  Appalachian  Co.  v.  Buchan- 
an, 8,  12,  289. 
Central  Railroad  &  Banking  Co.  V. 

Farmers'  L.  &  T.  Co.,  533. 
Central   National   Bank  v.   Hazard, 

572. 
Central   Trust  Co.  v.   Chattanooga, 

R.  &  C.  R.  Co.,  181,  545,  818. 
Central  Trust  Co.  v.  Cincinnati,  J. 

&  M.  R.  Co.,  507,  927. 
Central    Trust    Co.    v.    Clark,    509, 

511,  514. 
Central    Trust    Co.    v.    Continental 

Trust  Co.,  322,  325,  533,  534. 
Central  Trust  Co.  v.  D.  &  R.  G.  R. 

Co.,  541,  542. 
Central  Trust  Co.  v.  East  T.  L.  Co., 

321,  324. 
Central  Trust  Co.  v.  East  T.,  V.  & 

G.  R.  Co.,  474,  509,  512,  515,  526, 

539,  544,  545. 
Central  Trust  Co.  v.  Marietta  &  N. 

G.  R.  Co.,  561. 
Central    Trust    Co.    v.    New    York 

City  &  N.  R.  Co.,  508. 
Central  Trust  Co.  v.   Ohio  Central 

R.  Co.,  495. 
Central  Trust  Co.  v.  Sheffield  &  B. 

C.  I.  &  R.  Co.,  572. 
Central  Trust  Co.  v.  St.  Louis,  A. 

&  T.  R.  Co.,  515,  543,  546. 
Central  Trust  Co.  v.   Texas  &  St. 

Louis  Railway,  513. 
Central  Trust  Co.  v.  Thurman,  513. 
Central  Trust  Co.  v.  Valley  R.  Co., 

527. 


TABLE    OF    CASES    CITED. 


XXI 


[BEPBHENCES    ABB    TO    PAGES.] 


Central  Trust  Co.  v.  Wabash,  St.  L. 
&  P.  R.  Co.,  165,  488,  491,  537, 
539,  541,  919,  926. 

Central  Trust  Co.  v.  Worcester  Cy- 
cle Co.,  12. 

Central  Union  T.  Co.  v.  State,  195. 

Chadbourn  v.  Henderson,  791. 

Chadron  Banking  Co.  v.  Mahoney, 
12. 

V.  Chadwick,  838. 

Chafee  v.  Quidnick  Co.,  192,  194. 

Chalmers  v.  Littlefield,  167,  294, 
298. 

Chamberlain  v.  N.  Y.,  L.  E.  &  W. 
R.  Co.,  550. 

Chamberlain  v.  O'Brien,  591,  636. 

Chandler  v.  Brown,  410. 

Chandler  v.  Cushing- Young  S.  Co., 
972. 

Chapman  v.  Beach,  682. 

Chappell  V.  Akin,  868. 

Chappell  V.  Boyd,  764. 

Charlotte,  C.  &  A.  R.  Co.  v.  C.  & 
L.  N.  G.  R.  Co.,  534. 

Charrington  &  Co.  v.  Camp,  726. 

Chase  v.   Petroleum  Bank,  287. 

Chase's   Case,   717,   731,   732. 

Chattanooga  Terminal  Ry.  Co.  v. 
Felton,  310,  488. 

Chautauque  County  Bank  v.  Risley, 
612. 

Chautauque  County  Bank  v.  White, 
612. 

Cheek  V.  Tilley,  31,  886. 

Chemical  National  Bank  v.  Hart- 
ford Deposit  Co.,  326,  327,  444. 

Cheney  v.   Fiske,   265. 

Cheney  v.  INIaumee  Cycle  Co.,  112, 
161. 

Cherry  v.  W.  W.  I.  E.  Co.,  163,  175, 
624. 

Chesapeake,  O.  &  S.  R.  R.  Co.'s  Re- 
ceivers V.  Smith,  543. 

Chetwood,  In  re,  445. 

Chetwood  V.  California  National 
Bank,  445. 


Chetwood  v.  Coffin,  823. 

Chicago  &  Allegheny  Oil  &  Mining 

Co.   V.    United    States    Petroleum 

Co.,  6,  10,  12,  718,  725,  911. 
Chicago  Deposit  Vault  Co.  v.   Mc- 

Nulta,  216. 
Chicago  F.  P.  Co.  v.  Park  National 

Bank,  446. 
Chicago,  M.  &  St.  P.  R.  R.  Co.  v. 

Packet  Co.,  189. 
Chicago  &   Southeastern  R.    Co.  v. 

Cason,  463. 
Chicago  &  Southeastern  Ry  Co.  v. 

Kenney,  18,  34. 
Chicago  &  Southeastern  Ry.  Co.  v. 

McBeth,  113. 
Chicago  &  Southeastern  Ry.  Co.  v. 

St.  Clair,  126. 
Chicago    Steel     Works    v.     Illinois 

Steel  Co.,  36. 
Chicago  Title  &  Trust  Co.  v.  Brady, 

241. 
Chicago  Title  &  Trust  Co.  v.  Smith, 

159,   624. 
Childs  V.  Cleaves,  398. 
Chinnery  v.  Evans,  801. 
Chipman  v.  Sabbaton,  628. 
Choctaw  C  &  M.  Co.  v.  Williams- 
Echols  D.  G.  Co.,  67. 
Christian    Jensen    Co.,    In    re,    141, 

156,    163. 
Citizens'     Commercial     &     Savings 

Bank    v.    Bay    Circuit    Judge,    5, 

181,  303. 
Citizens'   Savings   Bank  v.    Person, 

299. 
City  of  Baltimore  v.  Chase,  778. 
City   Bank  of   Buffalo,   In   re,   438. 
City  of  Chicago  v.  Beck,  36. 
City  of  Fort  Dodge  v.  M.  &  S.  L. 

Ry.  Co.,  491. 
City  of  Los  Angeles  v.  Los  Angeles 

C.  W.  Co.,  937. 
City  National  Bank  v.  Charles  Bak- 
er Co.,  166. 
City  Pottery  Co.  v.  Yates,  429. 


xxu 


TABLE    OF    CASES    CITED. 


[EEFERBNCES    ABE    TO    PAGES.] 


City  Water   Co.  v.   State,   83,  430, 

431. 
Clark  V.  Bininger,  334. 
Clark  V.  Bradley  Co.,  13,  598. 
Clark  V.  Brockway,  292,  646,  647. 
Clark  V.  Brown,  15,  934. 
Clark  V.   Central  R.  &  B.  Co.,  504, 

506,  509,  511,  513. 
Clark  V.  Chandler,  66,  190. 
Clark  V.  Drew,  734. 
Clark  V.  Fisher,  213. 
Clark  V.  Louisville  Water  Co.,  345. 
Clark  V.  National  Linseed  Oil  Co., 

344,  347,  355. 
Clark  V.  Raymond,  595. 
Clark  V.  Ridgely,  122,  123,  718,  735, 

910. 
Clark  V.  Supreme  Council,  68. 
Clark  and  Bininger,  In  re,  74,  81. 
Clarke  v.  Central  R.  &  B.  Co.,  507, 

977. 
Clarke  v.  Thomas,  408. 
Clegg  V.  Fishwick,  698. 
Cleveland  v.  McCravy,  166. 
Cleveland,  C.  &  S.  R.  Co.  v.  Knick- 
erbocker  T.    Co.,    512,    515,    517, 
526. 
Clinkscales    v.    Pendleton    M.    Co., 

141,   156,   157. 
Clyde   V.    Richmond   &   D.    R.    Co., 

473,  534. 
Coal    &    Mining    Co.    v.    Edwards, 

350. 
Coates  V.  Cunningham,  36. 
Coates  V.  Wilkes,  581. 
Coburn  v.  Ames,  993. 
Cochran  v.  Pittsburg,   S.  &  N.  R. 

Co.,  74. 
Cochrane,  Ex  parte,  161. 
Cochrane,  In  re,  162. 
Cockburn  v.  Raphael,  865. 
Cockrill  V.  Abeles,  449. 
Cockrill  V.  United  States  National 

Bank,  456. 
Coddington  v.  Bispham,  793. 
Coddington  v.  Canaday,  238,  255. 


Coddington  v.  Tappan,  671. 
Codrington   v.   Johnstone,    798. 
Codrington  v.  Parker,  833,  834,  835. 
Coe  V.  New  Jersey  Midland  R.  Co., 

520. 
Cofer  V.  Echerson,  719,  721,  723. 
Cogswell  V.  Second  National  Bank, 

451. 
Cohen,  In  re,  172,  173. 
Cohen  v.  Gold  Creek  M.  Co.,  159, 

623,  992. 
Cohen  v.  Meyers,  35,  897,  591,  593, 

594. 
Cohen  v.  Morris,  591. 
Cohnen  v.   Sweenie,  5. 
Colburn  v.  Cooper,  950. 
Colburn  v.  Yantis,  162. 
Cole  V.  Oil-Well  Supply  Co.,  168. 
Cole  V.  O'Neill,  730. 
Cole  V.   Philadelphia  &  E.   R.   Co., 

87. 
Cole  V.  Price,  132,  692. 
Cole  V.  Satsop  R.  Co.,  408. 
Coleman,  In  re,  222,  342,  385. 
Coleman  v.  Fisher,  61,  127. 
Coleman  v.   Salisbury,  174. 
Coler  V.   Board  of   Commissioners, 

17. 
Colgate  V.  Michigan  Lake  Shore  R. 

Co.,  994. 
Collier  v.  Sapp,  741,  742. 
Collins  V.  Barker,  670. 
Collins  V.  Case,  211. 
Collins  V.  Gross,  787. 
Collins  V.  Richart,  765. 
Colonial  Trust  Co.  v.  Pacific  P.  & 

N.  Co.,  543. 
Colt  V.  Brown,  286,  287,  288. 
Coltrane  v.  Templeton,  43,  93. 
Columbia  National   Sand  Dredging 
Co.  V.  Washed  B.  S.  D.  Co.,  17, 
357,  359. 
Columbia  Wire  Co.  v.  Boyce,  44. 
Columbian  Athletic   Club   v.   State, 
382. 


TABLE    OF    CASES    CITED. 


xxni 


[BEFERENCES 

Columbian  Book  Co.  v.  De  Golycr 

181. 
Columbian    Insurance    Co.,    In    re, 

970. 
Columbian   Insurance   Co.  v.    Stev- 
ens, 423,  965. 
Colvin,  In  re.  958,  959,  975,  985,  987, 

988. 
Combs  V.  Smith,  560. 
Comer  v.  Felton,  184,  294. 
Commercial      National      Bank      v. 

Burch,  53. 
Commercial  &  Savings  Bank  v.  Cor- 

bett,  110,  818. 
Commissioners  v.   Harrington,   772. 
Commonwealth  v.  Eagle  Fire  Insur- 
ance Co.,  953. 
Commonwealth  v.  Felton,  501. 
Commonwealth   v.   Franklin    Insur- 
ance Co.,  Z22,  533. 
Commonwealth  v.  Gould,  148. 
Commonwealth  v.  Hide  &  Leather 

Insurance  Co.,  181. 
Commonwealth  v.  Order  of  Vesta, 

343. 
Commonwealth  v.  Penn  G.  B.  &  L. 

Assn.,  955. 
Commonwealth  v.  Runk,  304,  424. 
Commonwealth  Fire  Insurance  Co., 

In  re,  915,  951,  956. 
Compton  V.   Schwabacher,  246. 
Comstock  V.  Fredcrickson,  277,  278. 
Comstock  V.  McDonald,  696. 
Comyn  v.   Smith,  213. 
Cone  V.  Combs,  808. 
Coney,  In  re,  33,  853. 
Congdon  v.  Lee,  584. 
Conger  v.   Sands,  645. 
Conkling  v.  Butler,  74,  85,  319,  472. 
Conley  v.  Deere,  160. 
Connah  v.  Sedgwick,  598. 
Connelly  v.  Dickson,  126,  806,  807, 
Connor  v.   Allen.  696. 
Conquest  v.   Bank,   16. 


ABE    TO    PAGES.] 

Conro  V.   Gray,  350. 

Consolidated     Barb     Wire     Co.     v. 

Stevenson,    135. 
Consolidated   T.    L.   Co.   v.   Kansas 

City  V.  Co.,  350. 
Const  V.  Harris,  656,  687,  691. 
Continental  Clay  &  M.  Co.  v.  Bry- 

son,  129,  130. 
Continental    Trust    Co.    v.    Toledo, 

St.  L.  &  K.  C.  R.  Co.,  500. 
Convers  v.   Crosbie,  315. 
Converse  v.  Ayer,  53,  397. 
Converse  v.  Hamilton,  395. 
Converse  v.  Mears,  281,  397. 
Conwell  V.  Lawrence,  303. 
Cook    V.    Citizens    National    Bank, 

172,  197. 
Cook  V.  Cole,  158,  291. 
Cook  V.  Martin,  224,  225. 
Cook  V.  Sharman,  962. 
Cooke  V.  Gwyn,  10,  11,  881. 
Cooke  V.  Town  of  Orange,  181,  253. 
Cookcs  V.  Cookes,  93,  94. 
Coolbaugh  v.  Herman,  979. 
Cooney  v.  Cooney,  625. 
Coope  V.  Bowles,  238,  267,  644. 
Cooper   V.    Berney    National    Bank, 

799. 
Cooper  V.  Preston,  515,  517. 
Cooper  V.  Reilly,  32. 
Copper  Hill  Mining  Co.  v.  Spencer, 

978,  979. 
Coquard    v.    National    Linseed    Oil 

Co.,  342. 
Corbet  v.  Mahon,  117,  615. 
Corbin  v.  Thompson,  720. 
Corcoran  v.  Doll,  765,  912. 
Cordele  Ice  Co.  v.  Sims,  16. 
Corey  v.  Long,  3,   16,  17,  884,  946, 

956. 
Corn  Exchange  Bank  v.  Blye,  444. 
Corning  v.  Siesel,  13. 
Corrigan  v.  Trenton  Delaware  Falls 

Co.,  438,  119. 
Cortelyeu    v.    Hathaway,    819,    822, 
823,  844. 


XXIV 


TABLE    OF    CASES    CITED. 


[EEFEBENCES    ABE   TO   PAGES.] 


Cotter  V.  Cotter,  38. 

Coughron  v.  Swift,  16,  883. 

Couper  V.  Shirley,  790,  964. 

Courand  v.  Hanmer,  967. 

Covell  V.  Fowler,  272,  394. 

Covington  Drawbridge  Co.  v.  Shep- 
herd, 362. 

Cowan  V.   Failey,  372. 

Cowdrey  v.  G.,  H.  &  H.  R.  Co.,  494, 
505. 

Cowdrey  v.  The  Railroad  Company, 
497,  919,  923,  925,  949,  959,  983. 

Cowen  V.   Merriman,  558. 

Cox  V.  Dickie,  408. 

Cox  V.    Peters,   685. 

Cox  V.  Volkert,  240,  286. 

Coy  V.  Title  G.  &  T.  Co.,  3,  100. 

Cramer  v.  Her,  159,  161. 

Crandall  v.  Lincoln,  403. 

Crane  v.  Ford,  223. 

Crane  V.  McCoy,  12,  85,  888. 

Cranstown  v.   Johnston,  887. 

Crawford  v.  Ross,  6,  975,  978,  979, 
980. 

Crawford  v.  Spurling,  34. 

Creed  v.  Moore,  751. 

Cremen  v.  Hawkes,  16,  17,  750,  884. 

Creuze  v.  Bishop  of  London,  91,  116. 

Crewe  v.   Edleston,  482. 

Crews    V.    United    States    Car    Co., 
167. 

Crine  v.  Davis,  624. 

Crittenden  v.  Coleman,  591. 

Crockett  v.  Crockett,  736. 

Cronibie  v.  Order  of  Solon,  33. 

Cronan  v.  District  Court,  427. 

Cronin  v.  McCarthy,  781,  912. 

Cross  V.   Evans,  557. 

Cross  V.  Will   County   Natl.   Bank, 
818,  842. 

Croton  Insurance  Co.,  In  re,  421. 

Crow  V.   Red   River  County   Bank, 

799. 
Crow  V.  Wood,  112,  753. 
Crowder  v.  Moone,  110,  128. 


Crumlish's  Adm'r  v.  Shenandoah  V. 

R.    Co.,    139,   915,   919,   933,   955, 

956. 
Crutchfield  v.  Hunter,  302. 
Culver  V.  Allen  Medical  Assn.,  917, 

919. 
Culver  V.  Guyer,  114,  132. 
Cummings  v.  Edwards,  806 
Cummings  v.   Steele,   129. 
Cunningham  v.  U.  S.  National  Bank, 

96. 
Curling    v.     Marquis     Townshend, 

578. 
Curling  V.  Townshend,  120. 
Curran  v.    Craig,  305. 
Curtis  V.  Leavitt,  3,  216,  387,  388. 
Curtis  V.  Lewis,  402. 
Curtis  V.   Mcllhenny,  238. 
Gushing  v.  Perot,  396. 
Cutter  V.  Pollock,  963,  969. 
Cutting   V.    Florida   R.    &   N.    Co., 

494. 

D. 

Dale  V.  Kent,  24,  35. 

Dalliba  v.  Winschell,  769,  930,  956, 
958. 

Dalmer  v.  Dashwood,  835,  837,  844. 

D'Alton  V.  Trimleston,  738. 

Daniel  v.  Citizens'  Fire  Insurance 
Co.,  260. 

Dann  Manufacturing  Co.  v.  Park- 
hurst,  57,  222. 

Darrow  v.  Lee,  851. 

Darst  V.  The  People,  199. 

Darusmont  v.   Patton,  762. 

Davelaar  v.  Blue  M.  I.  Co.,  129,  132, 
586. 

Davenport  v.  City  Bank  of  Buffalo, 
441. 

Davenport  v.  Kelly,  623,  674. 

Davenport  v.  Receivers,  524. 

David  V.  Levy,  141. 

Davies  v.  Cracraft,  333. 

Davies   v.   Lathrop,   559. 


TABLE    OF    CASES    CITED. 


XXV 


[references  are  to  pages.] 


Davis  V.  Atkinson,  919. 

Davis  V.  Barrett,  62,   107,  138,  800, 

801,  887. 
Davis  V.   Browne,   123. 
Davis  V.  Butters  Lumber  Co.,  164. 
Davis  V.  Dale,  810,  811. 
Davis  V.  Duke  of  Marlborough,  3, 

46,  607,  609,  731,  747,  748,  838,  856, 

988. 
Davis  V.  Duncan,  311,  561. 
Davis  V.  Edwards,  36,  348,  592. 
Davis  V.  Flagstaff  S.  M.  Co.,  342. 
Davis  V.  Foster,  50. 
Davis  V.  Gray,  471.  894. 
Davis  V.  Grove,  689,  907. 
Davis  V.  Ladoga  Creamery  Co.,  238, 

390. 
Davis  V.  Reaves,  719. 
Davis  V.  Shearer,  S3,  54,  413. 
Davis  V.  Stover,  291. 
Davis  V.  Talbot,  238,  390. 
Davis  V.  Taylor,  739. 
Davis  V.  The  Railroad  Co.,  81. 
Davis  V.  United  States,  E.  P.  &  L. 

Co.,  344. 
Davy  V.   Gronow,  871. 
Davy   V.    Scarth,    916. 
Dawson  v.  Raynes,  148. 
Dawson  v.  Yates,  763. 
Day,  In  re,  \62,  204. 
Day  V.  Croft,  917. 
Day  V.   Postal  Telegraph  Co.,   153, 

272. 
Dayton  v.  Connah,  266. 
Dayton    Hydraulic    Co.    v.    Felsen- 

thall,  322,  325. 
Dease  v.  Reilly,  942. 
De  Bemer  v.  Drew,  368. 
Decker  v.  Gardner,  306,  554. 
Deford  v.  Macwatty,  231. 
De  Forrest  v.  Coffey,  299,  300. 
Defries  v.  Creed,  139,  141,  157. 
De  Groot  v.  Jay,  294,  295. 
Dehon  v.   Foster,   887. 
Delaney  v.  Tipton,  870. 
Delany  v.  Mansfield,  208. 


Delaware,   Lackawanna  &  Western 

R.  Co.  V.  Erie  R.  Co.,  466. 
De  Leonis  v.  Walsh,  58. 
Delozier  v.  Bird,  192. 
Demain  v.   Cassidy,  331. 
Deming  v.  New  York  Marble  Co., 

183. 
Denison,  In  re,  234. 
Denniston  v.  Chicago,  Alton  &  St. 

Louis  R.  Co.,  515. 
Denton  v.   Baker,  444. 
Denver  &  R.  G.  R.  Co.  v.  Gunning, 

561. 
Des  Moines  Gas  Co.  v.  West,  820. 
Detroit  &  Toledo   S.  L.   R.  Co.  v. 

Campbell,  469. 
Devendorf   v.    Beardsley,    286,    398, 

415,  416. 
Devendorf  v.   Dickinson,  2,  3,  243, 

966. 
De  Visser  v.   Blackstone,   153,   191, 

781. 
Devlin  V.  Hope,  116.  854. 
Devoe  v.   Ithaca  &  Owego  R.  Co., 

134,  433. 
De  Walt  V.  Kinard,  719. 
De    Winton   v.    Mayor    of   Brecon, 

161,  171,  319,  481. 
De  Wolf  V.  Royal  Trust  Co.,  322, 

323. 
Diamond  Match  Co.  v.  Taylor,  SO. 
Dick  V.  Laird,  700. 
Dick  V.  Struthers,  251. 
Dickens  v.  Dickens,  696. 
Dickerson  v.  Van  Tine,  603,  604. 
Dickey  v.  Reed,  199. 
Dickinson  v.  Saunders,  380. 
Billing  V.  Foster,  142,  615. 
Dillingham  v.  Hawk,  542,  544. 
Dillingham  v.  Moran,  916. 
Dillingham  v.  Russell,  543. 
Dixon  V.  Dixon,  193. 
Dixon  V.  Rutherford,  229. 
Dobbin  v.  Adams,  73Z. 
Dobson  V.  Simonton,  351. 


XXVI 


TABLE   OF    CASES    CITED. 


[REFERENCES    ARE    TO    PAGES.] 


Dodge  V.  Pyrolusite  Manganese  Co., 

591. 
Doe  V.  Northwest  C.  &  T.  Co.,  350. 
Doe  V.  Northwestern  C.  &  T.  Co., 

378. 
Dollard  v.  Taylor,  41,  580,  602. 
Dollins  V.  Lindsay,  595. 
Donahue  v.  Quackenbush,  225. 
Donald    v.    Manufacturers'    Export 

Co.,  348. 
Doolittle,  In  re,  499. 
Dorsey  v.   Sibert,  314. 
Dougherty  v.  Jones,  978. 
Dougherty  v.    McDougald,   858. 
Douglass  V.  Cline,  519,  787. 
Dow  V.  M.  &  L.  R.  Co.,  480. 
Dowling  V.  Hudson,  135. 
Downing  v.  Dunlap,  Coal  I.,  &  R. 

Co.,  353. 
Downs  V.  Allen,  320. 
Downs  V.   Farmers'  Loan  &  Trust 

Co.,  843. 
Downs  V.  Hammond,  414. 
Drake  v.   Goodrich,  770. 
Drake  v.  Thyng,  960. 
Drakeford  v.  Adams,  198. 
Drennen  v.  Mercantile  T.  &  D.  Co., 

380. 
Drever  v.  Maudesley,  327. 
Drew  V.  Town  of  Geneva,  17. 
D  re  wry  v.  Barnes,  17,  47,  884. 
Drey  v.   Watson,  919. 
Dreyspring  v.  Loeb,  141. 
Driver  v.  Lanier,  239. 
Drought  V.  Percival,  750. 
Drury  v.  Roberts,  34,  688,  980. 
Dubois  V.  Bowles,  792. 
Dubois   V.    Cassidy,  635. 
Duckworth  v.   Trafford,   121. 
Dudley  v.  Dakota  H.  S.  Co.,  348. 
Dugger  V.  Collins,   169. 
Dumville  v.  Ashbrooke,  485,  895. 
Duncan  v.  Campau,  40,  759,  760. 
Dunham  v.  Byrnes,  638. 
Dunlap  V.  Hedges,  818. 
Dunn,  Ex  parte,  9,  470. 


Dunn  V.  McNaught,  677,  905. 
Durant  v.  Crowell,  818. 
Durward  v.  Jewett,  371,  430. 
Duryee  v.  United  States  C.  S.  Co., 

160. 
Dutton  V.  Thomas,  602. 
DuVal  V.  Marshall,  862. 
Dykman  v.  Keeney,  450. 
Dysart  v.   Brown,  229. 


Eagle  Iron  Works,  In  re,  91,  92, 
101,  116,  440. 

Eames  v.  Doris,  393,  894. 

Earle  v.  Humphrey,  294,  296. 

East  Line  &  R.  R.  R.  Co.  v.  Texas, 
461. 

East  Tennessee,  V.  &  G.  R.  Co.  v. 
Atlanta  &  F.  R.  Co.,  75. 

East  &  West  T.  Lumber  Co.  v. 
Williams,  38. 

Eastern  &  Midlands  Railway  Com- 
pany, In  re,  518. 

Eastern  Trust  &  B.  Co.  v.  Ameri- 
can Ice  Co.,  791,  794. 

Eastman  v.  Cain,  60. 

Easton  v.  Houston  &  T.  C.  R.  Co., 
535,  926. 

Eaton  &  Hamilton  R.  Co.  v.  Var- 
num,  36. 

Eau  Claire  Canning  Co.  v.  Western 
Brokerage  Co.,  36. 

Eckhardt  Mfg.  Co.,  In  re,  93,  101. 

Ecklund  v.  Willis,  794. 

Eddy  V.  Lafayette,  546. 

Edee  v.  Strunk,  240. 

Edison  v.  Edison  U.  P.  Co.,  353, 
355,  433. 

Edrington  v.  Pridham,  206. 

Edwards  v.  Edwards,  139,  141,  157. 

Edwards  v.  National  W.  G.  J.  Assn., 
271,  274. 

Edwards  v.  Norton,  167,  169. 

Edwards  v.  Standard  Rolling  Stock 
Syndicate,  804. 


TABLE    OF    CASES    CITED. 


XXVll 


[references    ABE    TO    PAGES.] 


Eel  River  R,  Co.  v.  State,  374. 
Egan    V.    North    American    L.    Co., 

296. 
Eichman  v.  Hersker,  53,  54. 
Eisenmann  v.  Thill,  74,  11 . 
Elderkin  v.  Peterson,  53,  408. 
Elk  Fork  Oil  &  Gas  Co.  v.  Foster, 

24,  110,  954,  962. 
Elkhart  Car  Works  v.  Ellis,  309. 
Ellard  v.   Cooper,  993. 
Ellett  V.  Newman,  849. 
Ellicott  V.  United  States  Insurance 

Co.,  436,  437. 
Ellicott  V.   Warford,   3,  4,   11,  881, 

987. 
Ellis  V.  Boston,  Hartford  &  Erie  R. 

Co.,  8,  496,  880. 
Ellis  V.  Little,  216,  321,  445,  447. 
Ellis   V.   Vernon   I..   L.   &   W.    Co., 

167,  168,  377. 
Ellis  V.  Warsaw,  986. 
Elmira       Mechanics'       Society      v. 

Stanchfield,  795. 
Elwood  V.  First  National  Bank,  451, 

454. 
Embree  v.  Shideler,  413,  414. 
Emeric  v.   Alvarado,  37. 
Emerson  v.  Gaither,  449. 
Emerson  and  Wall's  Appeal,  719. 
Emmons  v.  Garnett,  35. 
Empire  City  Bank,  In  re,  100,  376. 
Empire   Distilling   Co.   v.    M'Nulta, 

301,  322. 
Empire  Hotel  Co.  v.  Main,  886. 
Ensley  Development  Co.  v.  Powell, 

129. 
Ephraim  v.  Pacific  Bank,  935. 
Equitable  Life  Assurance  Society  v. 

Brown,  14. 
Equitable  Trust  Co.  v.  Wilson,  53, 

55. 
Erickson  v.  Nesmith,  395. 
Erie  R.  Co.  v.  Heath,  376. 
Erskine  v.  Mcllrath,  557,  558. 
Erwin  v.   Davenport,  537. 
Esch  V.  White,  824. 


Eslava  v.   Crampton,  825. 
Estate  of  St.  George,  In  re,  982. 
Esterlund  v.  Dye,  781. 
Etowah  Mining  Co.  v.  Wills  Valley 

M.  &  M.  Co.,  848. 
Euphrat  v.  Morrison,  799. 
Eureka    Mining,    S.    &    P.    Co.    v. 

Lewiston  N.  Co.,  63,  825. 
Evans,  Ex  parte,  139,  141,  156. 
Evans  v.  Coventry,  112,  366. 
Evans  v.  Nellis,  274,  392,  395. 
Evans  v.  Trimountain  IMutual  Fire 

Insurance  Co.,  420. 
Evansville   &   St.   Louis   R.    Co.   v. 

Wilson,  528. 
Evelyn  v.  Lewis,  161,  163,  164,  294, 

304,  888,  889. 
Everett  v.  The  State,  247. 
Express  Co.  v.  Railroad  Co.,  560. 
Eyre  v.  Eyre,  171. 
Eyre  v.    M'Donncll,  224,  227. 
Eyton  V.   Denbigh,   Ruthin  &   Cor- 

wen  R.  Co.,  470,  471. 


Fagan  v.  Boyle  I.  M.  Co.,  302. 

Failey  v.  Fee,  67,  371. 

Failey  v.  Talbee,  388. 

Fairbairn  v.  Fisher,  33,  34,  862,  863, 
869. 

Fairburn  v.  Pearson,  676. 

Falk  V.  Janes,  277,  279. 

Falkenbach  v.  Patterson,  238. 

Falmouth  National  Bank  v.  Cape 
Cod  S.  C.  Co.,  591. 

Farley  v.  St.  P.,  M.  &  M.  R.  Co., 
472. 

Farmers  Bank  v.  Beaston,  157,  159, 
183. 

Farmers'  Loan  &  Trust  Co.  v.  Bank- 
ers &  M.  T.  Co.,  378. 

Farmers'  Loan  &  Trust  Co.  v.  Bur- 
lington &  S.  W.  R.  Co.,  535. 

Farmers'  Loan  &  Trust  Co.  v.  Cape 
Fear  &  Y.  V.  R.  Co.,  97,  526. 


XXVlll 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Farmers'  Loan  &  Trust  Co.  v.  Cen- 
tral R.  &  B.  Co.,  491. 

Farmers'  Loan  &  Trust  Co.  v.  Cen- 
tral Railroad,  561,  562,  920,  927, 
971. 

Farmers'  Loan  &  Trust  Co.  v.  Cen- 
tralia  &  C.  R.  Co.,  566,  569,  57L 

Farmers'  Loan  &  Trust  Co.  v.  Chi- 
cago &  A.  R.  Co.,  522. 

Farmers'  Loan  &  Trust  Co.  v.  De- 
troit, B.  C.  &  A.  R.  Co.,  529. 

Farmers'  Loan  &  Trust  Co.  v. 
Eaton,  495. 

Farmers'  Loan  &  Trust  Co.  v.  Funk, 
393. 

Farmers'  Loan  &  Trust  Co.  v. 
Grape  Creek  Coal  Co.,  378. 

Farmers'  Loan  &  Trust  Co.  v. 
Green,  507. 

Farmers'  Loan  &  Trust  Co.  v. 
Meridian  Waterworks,  469. 

Farmers'  Loan  &  Trust  Co.  v. 
Minneapolis  Engine  &  Machine 
Works,  636. 

Farmers'  Loan  &  Trust  Co.  v. 
Nestelle,  528. 

Farmers'  Loan  &  Trust  Co.  v.  New- 
man, 535. 

Farmers'  Loan  &  Trust  Co.  v. 
Northern  Pacific  R.  Co.,  102,  527, 
528,  529,  534,  495,  975. 

Farmers'  Loan  &  Trust  Co.  v. 
Oregon   Pac.  R.  Co.,  489. 

Farmers'  Loan  &  Trust  Co.  v. 
Petitioner,  571. 

Farmers  &  Mechanics  Bank  v. 
Jenks,  287,  407,  412. 

Farmers  &  Merchants  Bank  v.  Ger- 
man National  Bank,  115,  132. 

Farmers  &  Merchants  Insurance 
Co.  V.  Needles,  272,  275. 

Farmers'  National  Bank  v.  Backus, 
219,  818. 

Farmers  Trust  Co.  v.  Prudden,  824. 

Farnsworth  v.  Wood,  392. 

Farran  v.  Morris,  980. 


Farris  v.  Receivers,  308. 

Farsow  v.  Gorham,  36. 

Farwell  v.  Great  Western  Tel.  Co., 

259,  315,  357,  385. 
Fassett  v.  Tallmadge,  119. 
Faulkener  v.  Daniel,  72,2>,  833,  834. 
Favorite  v.  Deardoff,  798. 
Fawcett    v.    Supreme    Silting,    66, 

371. 
Fay  V.  Erie  &  Kala'mazoo  Railroad 

Bank,  428,  441,  989. 
Featherstone  v.   Mitchell,  743. 
Fellows  V.  Heermans,  10,  32,  41. 
Felton  V.  Ackerman,  310,  312. 
Felton  V.  Felton,  942,  949. 
Fenton  v.  Lumberman's  Bank,  116. 
Ferguson  v.  Dent,  962. 
Fernald  v.  Spokane  &  B.  C.  T.  Co., 

70. 
Ferrior,  In  re,  878. 
Ferry  v.  Bank  of  Central  New  York, 

441,  975,  991. 
Fessenden  v.  Woods,  629,  631. 
Fidelity  Insurance,  T.  &  S.-D.   Co. 

V.  Roanoke  Iron  Co.,  378. 
Fidelity  T.  &  S.  V.  Co.  v.  Mobile 

S.  R.  Co.,  499. 
Fidelity  Title  &  T.  Co.  v.  Schenley, 

232. 
Field  V.   Jones,   180,   182,  616,  985, 

986. 
Field  V.  Ripley,  128. 
Fields  V.  United  States,  333. 
Fifield  V.  Northern  Railroad,  539. 
Fifth  National  Bank  v.  P.  &  C.  S. 

R.  Co.,  456,  975. 
Fifth  National  Bank  v.  Pierce,  792. 
Fifty-four    First    Mortgage    Bonds, 

In  re,  100,  489. 
Filkins  v.   Nunnemacher,  272. 
Finance  Co.  v.  Charleston,  C.  &  C. 

R.  Co.,  96,  100,  509,  514,  517,  527, 

542. 
Finch  V.  Houghton,  825. 
Fincke  v.  Funke,  703. 
Fingal  V.  Blake,  IZZ,  734. 


TABLE    OF    CASES    CITED. 


XXIX 


[BEFEKENCES    AKE    TO    PAGES.] 


Fink  V.  Montgomery,  26,  691. 

Finney  v.  Guy,  274,  395. 

Finnin  v.  Malloy,  625. 

First    National     Bank    v.    Barnum 

Wire  &  Iron  Works,  39,  976,  977. 
First    National    Bank    v.    Bunting, 

314. 
First  National   Bank  v.   Cook,   159, 

624,  642,  663,  934. 
First  National  Bank  v.  Dovetail  B. 

&  G.  Co.,  386. 
First  National  Bank  v.  Ewing,  504, 

505,  508,  509,  518,  526,  566,  567. 
First  National  Bank  v.  Gage,  588, 

617. 
First  National  Bank  v.  Illinois  Steel 

Co.,  795,  806,  807,  818. 
First   National    Bank   v.    Mack,   53, 

56. 
First    National     Bank    v.     Oregon 

Paper  Co.,  917,  924,  955. 
First     National     Bank     v.     United 

States  E.  T.  Co.,  53. 
Fischer  v.  Superior  Court,  129,  131. 
Fish  V.  Olin,  448. 
Fish  V.  Potts,  439,  779. 
Fisher  v.  Graham,  731. 
Fisher  v.  Trust  Co.,  95,  129,  378. 
Fitch  V.  Wetherbee,  223. 
Fitzburgh  v.  Everingham,  579,  580, 

900. 
Fitzgerald    v.    Fitzgerald    &    M.    C. 

Co.,  60,  66. 
Fitzner  v.   Noullet,  231. 
Flagler  v.  Blunt,   15,   18. 
Fleming  v.  Carson,  684. 
Fleming  v.  Fleming  Hotel  Co.,  322. 
Fleming  v.   Patterson,   195,   197. 
Flentham  v.   Steward,  297,  309. 
Fletcher  v.   Dodd,  952. 
Flint  V.  Webb,  581,  582. 
Flippin  V.  Kimball,  300. 
Flood  V.   Lord  Aldborough,  970. 
Florence    Gas,    E.    L.   &   P.    Co.   v. 

Hanby,  53,  215,  343. 
Florida   Coast  Co.  v.  Young,  42. 


Fluker  v.  Emporia  City  R.  Co.,  353. 

Flynn  v.  Third  National  Bank,  358. 

Fogarty  v.   Bourke,  21,  582,   583. 

Fogarty  v.  Burke,  617. 

Fogg  V.   Supreme  Lodge,  421. 

Ford  V.  Gilbert,  933,  955. 

Ford  V.  Rackham,  778,  968. 

Ford  V.  Taylor,  13,  129. 

Fordyce  v.   Dixon,  296. 

Fordyce  v.  Du  Bose,  563. 

Fordyce  v.  Kansas  City  &  N.  C.  R. 

Co.,  517. 
Foreman  v.  Central  Trust  Co.,  540, 

543. 
Forrester  v.   B.  &  M.   C.   C.  &  S. 

M.  Co.,  356,  937. 
Forsaith    Machine    Co.    v.    Lumber 

Co.,  223. 
Fort    Payne    Coal    &    Iron    Co.    v. 

Webster,  248,  249. 
Fort  Payne  F.   Co.  v.  Fort   Payne 

C.  &  I.  Co.,  348. 
Fort  Wayne  Electric  Corporation  v. 

Franklin  E.  L.  Co.,  433. 
Fort   Wayne,   M.   &   C.   R.   Co.   v. 

Mellett,  162. 
Fosdick  V.  Car  Company,  521. 
Fosdick  V.  Schall,  509,  510,  511,  519, 

520. 
Foster  v.  Barnes,  233. 
Foster  v.  Foster,  778,  953. 
Foster  v.    Rincker,   624. 
Foster  v.  Row,  393. 
Foster  v.  Townshend,  261,   781. 
Fountain  v.  Mills,  986. 
Fowler,  In  re,  852. 
Fowler  v.  Beckman,  198. 
Fowler   v.    Jarvis-Conklin    M.    Co., 

99,  977. 
Fowler  v.   Lamson,   395. 
Fowler  v.  Osgood,  271,  274. 
Fox   River   Paper   Co.   v.   Western 

Envelope  Co.,  297. 
Foxwell  V.  Van  Grutten,  718,  739. 
Francklyn  v.  Sprague,  330. 


XXX 


TABLE   OF    CASES    CITED. 


[REFERENCES    ARE    TO    PAGES.] 


Frank  v.  Denver  &  R.  G.   R.  Co., 

499. 
Frank  v.   Morrison,   253,  270,  408. 
Frank  v.  New  York,  L.  E.  &  W.  R. 

Co.,  549. 
Frankle  v.  Jackson,  560. 
Franklin  National  Bank  v.  White- 
head, 385. 
Fraser  v.  City  Council,  869. 
Fraternal  Guardian's  Estate,  343. 
Frazier  v.  Barnum,  616. 
Fredenheim  v.  Rohr,  61,  129. 
Freeholders  v.   State  Bank,  100. 
Freeman    v.    Winchester,    244,    248, 

249,  501. 
Freer  v.  Davis,  719. 
Frelinghuysen  v.  Baldwin,  455. 
French  Bank  Case,  Z1 ,  342. 
French  v.  Gifford,  129,  130,  919,  932, 

933. 
French  v.  Union  Pac.  R.  Co.,  71. 
Frick  V.  Fritz,  934. 
Fricker  v.  Peters  &  C.  Co.,  130,  132. 
Fripp  V.  The  Bridgewater  Co.,  839. 
Fripp   V.   The    Chard    R.    Co.,   481, 

483. 
Frisbee  v.  Trimanus,  741,  742. 
Frisbie  v.  Bateman,  819,   822,  823, 

844. 
Front  Street  Cable  Ry.  Co.  v.  Drake, 

529. 
Frowert  v.  Blank,  67. 
Fuggle  V.   Bland,  33. 
Fuller  V.  Jewett,  549. 
Fuller  V.  Taylor,  580,  602. 
Fullerton  v.  Fordyce,  537,  544. 
Furlong  v.  Edwards,  6,  607,  805,  992. 


Gableman  v.  Peoria,  D.  &  E.  R.  Co., 

88,   550. 
Gadsden  v.  Whaley,  872. 
Gage  V.  Smith,  617. 
Gainey  v.   Gilson,  238. 
Gaither  v.  Stockbridge,  322,  533. 


Gallagher  v.  Gingrich,  922,  956,  962. 

Galluchat,  Ex  parte,  864. 

Galster  v.   Syracuse  Savings  Bank, 

319. 
Galway    v.    United    States    Steam 

Sugar  Refining  Co.,  363. 
Gardiner  v.  Tyler,  915,  924. 
Gardner  v.  Blane,  138. 
Gardner  v.   Caldwell,  3,  163,  167. 
Gardner  v.  Howell,  34. 
Gardner  v.  London,  C.  &  D.  R.  Co., 

464. 
Gardner  v.  Smith,  649. 
Garland  v.  Garland,  91,  98. 
Garner    v.    Southern    B.    M.    &    L. 

Assn.,  74. 
Garniss  v.  Superior  Court,  741. 
Garr  v.  Hill,  778. 
Garretson  v.  Weaver,  683,  906. 
Garrett   v.    City    of    Memphis,    579, 

587. 
Garrett  v.  London  &  L.  F.  Ins.  Co., 

61. 
Garver  v.  Kent,  248,  249. 
Gas  Light  &  Banking  Co.  v.  Haynes, 

389,  408. 
Gates  V.  McGee,  70,  348. 
Gayle   v.   Johnson,   4. 
Gaylord  v.  Fort  Wayne,   M.  &  C 

R.  Co.,  74,  75,  486. 
Gaynor  v.  Blewett,  IIZ. 
Gehr  v.  Mont  Alto  Iron  Co.,  166. 
Geisse  v.  Beall,  172,  173,  202. 
Gelpeke    v.    Milwaukee   &    Horicon 

R.  Co.,  88,  177. 
General    Electric    Co.    v.    Whitney, 

323. 
George  Mather's  Sons*  Co.,  In  re, 

167. 
Gere  v.  Dibble,  159,   160,  609,  623. 
German  National  Bank  v.  Best,  950, 

965. 
German  National  Bank  v.  Farmers 

&  M.  Bank,  393. 
Gibbins  v.  Howell,  784. 
Gibbons  v.  Mainwaring,  135. 


TABLE    OF    CASES    CITED. 


XXXI 


[KEFEBENCES    ABE    TO    PAGES.] 


Gibbs  V.  David,  767. 

Gibert  v.  W.  C,  V.  M.  &  G.  S.  R. 

Co..  479,  505,  523. 
Gibson  V.  Martin,  131. 
Gibson  v.  Peters,  447. 
Gibson   V.   Sexson,  57. 
Gila  Bend  R.  &  I.  Co.  v.  Gila  Water 

Co.,  228,  229. 
Gilbert  v.  Hewetson,  209. 
Giles  V.  Stanton,  518. 
Gill  V.  Balis,  255. 
Gillet  V.  Fairchild,  255,  266. 
Gillet  V.  Moody,  385,  400,  401. 
Gillet  V.  Phillips,  291,  402,  419. 
Gillett  V.  Higgins,  656,  691. 
Gilman  v.  Ketcham,  277,  279. 
Gilmore  v.  Herrick,  548. 
Gilreath  v.  Union  Bank  &  Trust  Co., 

129,   132. 
Girard    Insurance    &    Trust    Co.    v. 

Cooper,  468,  533. 
Gladdon  v.  Stoneman,  864. 
Glenn  v.  Gill,  188. 
Glenville    Woolen    Co.    v.    Ripley, 

375. 
Glossup  V.  Harrison,  149. 
Glover  v.  Thayer,  545. 
Goddard  v.  Clarke,  840,  843. 
Goddard  v.  Stiles,  639,  640. 
Godfrey  v.  Ohio  &  M.  R.  Co.  550. 
Goff  V.  Gofif,  619. 
Gold  Hunter  M.  &  S.  Co.  v.  Holle- 

man,  110. 
Goldman  v.  Manistee  Circuit  Judge, 

130. 
Goldschmidt  v.  Oberrheinische  Met- 

allwerke,   621. 
Gooch  V.  Haworth,  176. 
Goodale  v.  Fifteenth  District  Court, 

760. 
Goodhue  v.  Daniels,  796. 
Goodman  v.   Whitcomb,  682. 
Goodnough  v.  Gatch,  299,  300. 
Goodyear  v.  Betts,  18,  598. 
Gordon  v.  Anthony,  647. 


Goshen  Woolen   Mills  v.   City  Na- 
tional  Bank,  36. 
Goss  V.  Carter,  281. 
Goss  V.  Southall,  264. 
Gottlieb  V.  Miller,  624. 
Gould  V.  Tryon,  21,  582,  583. 
Goulding  V.  Bain,  660. 
Gouthwaite  v.  Rippon,  608,  799. 
Gowan  v.  Jeffries,  691. 
Grabbe  v.  Moffit,  945. 
Grady  v.    Richmond   &  D.  R.   Co, 

308. 
Graebner  v.  Post,  410. 
Graff  V.  Bonnett,  632,  649. 
Graffenried  v.  Brunswick  &  Albany 

R.  Co.,  294. 
Graham  v.  Carr,  917. 
Graham  v.  Mutual  Aid  Society,  159. 
Graham   Button   Co.   v.   Spielmann, 

400,  402. 
Grand  De  Tour  Plow  Co.  v.  Rude 

Bros.  Mfg.  Co.,  42. 
Grand  Trunk  Ry.  Co.  v.  Central  Vt. 

R.  Co.,  517,  521,  531. 
Grandin  v.  La  Bar,   129. 
Grant  v.  Bryant,  923. 
Grant   v.   City   of   Davenport,    186, 

889. 
Grant  v.  Los  Angeles  &  P.  R.  Co , 

937. 
Grant  v.  Phoenix  Life  Ins.  Co.,  794, 

808,  818. 
Grant  v.  Superior  Court,  937. 
Grant  v.  Webb,  41. 
Grantham  v.  Lucas,  608. 
Gravenstine's  Appeal,  111,  346,  893. 
Gray  v.    Chaplin,   21,   22,   352,  353, 

884. 
Gray  v.  Gaither,  862. 
Gray  v.  Grand  Trunk  W.  Ry.  Co., 

557. 
Gray  v.   Lewis,   246. 
Gray  v.  Oughton,  35. 
Graydon  v.  Church.  272,  283,  284. 
Great  Western  Mining  &  M.  Co.  v. 
Harris,  271,  273. 


XXXll 


TABLE    OF    CASES    CITED. 


[EEFEEENCES    AEE    TO    PAGES.] 


Great  Western  R.  Co.  v.  Birming- 
ham &  Oxford  Junction  R.  Co., 
881. 

Great  Western  T.  Co.  v.  Gray,  408, 
410. 

Great  Western  Telegraph  Co.  v. 
Lowenthal,   624. 

Greeley  v.  Missouri  Pac.  Ry.  Co., 
37. 

Greeley  v.  Provident  Savings  Bank, 
166,  922. 

Green  v.  Bookhart,  650. 

Green  v.  Bostwick,  635. 

Green  v.  Green,  172,  176. 

Green  v.  Hicks,  603. 

Green  v.  Walkill  National  Bank, 
444. 

Green  v.  Winter,  245. 

Greenawalt  v.  Wilson,  53. 

Greene  v.  Star  C.  &.  P.  Car  Co., 
24. 

Greene  v.  Williams,  8. 

Gregg  V.  Mercantile  Trust  Co.,  517, 
526,  528. 

Gregg  V.  Metropolitan  Trust  Co., 
530. 

Gregory  v.  Gregory,  26,  702,  718, 
721,  724. 

Grenfell  v.  Dean  and  Canons  of 
Windsor,  993. 

Gresley  v.  Adderley,  839. 

Greville  v.  Fleming,  13. 

Gridley  v.  Conner,  656,  706. 

Griesel  v.   Schmal,  269. 

Griffen  v.  Long  Island  R.  Co.,  268. 

Griffin  v.  Griffin  Iron  Co.,  349. 

Griffin  v.   Henderson,   16. 

Griffith  V.  Blackwater  B.  &  L.  Co., 
322. 

Griffith  V.  Griffith,  144,  173,  176,  335, 
752. 

Groeltz  v.  Cole,  228. 

Grogan  v.  Egbert,  67,  189. 

Grosscup  V.  German  S.  &  L.  So- 
ciety, 167,  168. 

Grote  V.  Bing,  118. 


Guarantee    Trust   &    S.    D.    Co.   v. 

P.,  R.  &  N.  E.  R.  Co.,  499,  500. 
Guaranty  Trust  Co.  v.  Galveston  C. 

R.  Co.,  74,  515. 
Guardian  Savings  Institution,  In  re, 

150. 
Guardian     Savings     Institution     v. 

Bowling  Green  Savings  Bank,  211. 
Guernsey  v.  Powers,  763. 
Guild  V.  Meyer,  676. 
Guihnartin  v.   Middle   G.   &  A.    R. 

Co.,  591. 
Gunby  v.   Armstrong,   53. 
Gunby  v.  Thompson,  34,  764. 
Gunn  V.  Blair,  853. 
Gunning  v.  Sorg,  192. 
Gurden  v.  Babcock,  970. 
Gutsch  V.  Mcllhargey,  331. 
Guy  V.  Ide,  827. 

Gwynne  v.  Memphis  A.-A.  Co.,  664. 
Gypsum  P.  &  S.  Co.  v.  Adsit,  94. 


H. 


Haas  V.   Chicago  Building  Society, 

126,  806,  807. 
Habenicht  v.  Lissak,  617. 
Hackensack  Water  Co.  v.  De  Kay, 

232. 
Hackett  v.  Snow,  787. 
Hackley  v.  Draper,  221,  229. 
Hade  v.  McVay,  287. 
Hagedon  v.  Bank  of  Wisconsin,  436. 
Hagenbeck  v.   Hagenbeck,  852. 
Hager  v.  Stevens,  48,  352,  353,  751. 
Haggarty  v.  Pittman,  591,  593,  897. 
Haigh  V.  Carroll,  810,  811,  972. 
Haigh  V.  Grattan,  931. 
Haight  V.   Burr,  695. 
Haines  v.  Carpenter,  858,  860. 
Hale  V.  Allison,  271,  272,  274,  276, 

392,  395. 
Hale  V.  Coffin,  392,  395 
Hale  V.  Cushman,  398. 
Hale  V.  Frost,  516. 
Hale  V.  Hale,  700. 


TABLE    OF    CASES    CITED. 


XXXlll 


[KEFEHENCES    ABE    TO    PAGES.] 


Hale  V.  Hardon,  272,  274,  395. 

Hale  V.  Harris,  284. 

Hale  V.  Nashua  &  Lowell  Railroad, 

505. 
Hale  V.  Tyler,  272,  392,  395. 
Hale-Berry   Co.   v.   Diamond    State 

Iron  Co.,  n2. 
Hall  V.  Hall,  23,  681. 
Hall  V.  Jenkinson,  761. 
Hall  V.  Nieukirk,  357,  430. 
Hall  V.  Smith,  939. 
Hall   V.   Wayne   Circuit   Judge,   26, 

39. 
Hallam  v.  Tillinghast,  455. 
Halsted  v.  Forest  Hill  Co.,  208. 
Hamacker  v.  Commercial  Bank,  945. 
Hamberlain  v.  Marble,  748. 
Hamburgh     Manufacturing    Co.    v. 

Edsall,  12,  13,  746,  880. 
Hamill  v.  Hamill,  709. 
Hamilton,  In  re,  290. 
Hamilton  v.  Accessory  Transit  Co., 

369. 
Hamilton  v.  Brewster,  144. 
Hamlin  v.  Wright,  636,  637. 
Hammer  v.  Kaufman,  99. 
Hammerly  v.    Mercantile   T.   &   D, 

Co.,  530. 
Hammock  v.  Loan  &  Trust  Co.,  109. 
Hammond  v.  Cline,  392. 
Hamor  v.  Taylor-Rice  E.  Co.,  385. 
Hampton  v.  Buchanan,  356. 
Hampton  v.  Norfolk  &  W.  R.  Co 

529. 
Hampton    Roads    R.    &    E.    Co.    v. 
Newport  News,  etc.,  Co.,  87,  163. 
Hancock,  In  re,  24. 
Hand  v.  Railroad  Co.,  493,  955. 
Hand  v.  Savannah  &  Charleston  R. 

Co.,  505,  506. 
Hanna  v.  Hanna,  13,  25. 
Hanna  v.  State  Trust  Co.,  166,  378. 
Hanon  v.  Weil,  38. 
Hanover  Fire  Insurance  Co.  v.  Ger- 

mania  Fire  Insurance  Co.,  95. 
Hanson  v.  Davison,  274. 


Hanson  v.  Stephens,  938. 

Hardin   v.    Hardin,   828. 

Hardin  v.  Sweeney,  246,  249. 

Harding  v.   Garber,  806. 

Harding  v.  Glover,  675,  685. 

Harding  v.   Nettleton,  540. 

Hard  wick  v.   Hook,  253,  263. 

Hardy  v.   McClellan,  24. 

Hargrave  v.  Hargrave,  758,  913. 

Harland  v.  Bankers  &  Merchants 
Telegraph  Co.,  248. 

Harman  v.    Foster,   952. 

Harman  v.  McMuUin,  3. 

Harmon  v.  Wagener,  861. 

Harrell  v.  Kent,  248,  249. 

Harrigan  v.  Gilchrist,  5,  217,  224, 
299,  325,  Zn,  386,  918,  919,  92l[ 
955,  957. 

Harrington  v.  Foley,  965. 

Harris  v.  Beauchamp  Brothers,  33, 
620. 

Harris  v.  Root,  985. 

Harris  v.   Sangston,  980. 

Harris  v.   Sleep,  930. 

Harris  v.  United  States  S.  F.  &  L 

Co.,  806,  807,  818,  825. 
Harrison  v.  Boydell,  970. 
Harrison  v.  Dignan,  214. 
Harrison  v.  Fitzgerald,  HZ. 
Harrison  v.  Warren  Co.,  8. 
Harrup  v.   Winslet,  858. 
Hart  V.  Marshall,  883. 
Hart  V.  Tims,  586. 
Hart  V.  Tulk,   12,Z. 
Harvey  v.  Allen,  458. 
Harvey  v.  Lord,  449. 
Harvey  v.  Varney,  63,  (HI, 
Harwell  v.   Potts,  24. 
Hatch  V.  Daniels,  34,  980. 
Hatcher  v.   Massey,  848. 
Hatfield  v.  Cummings,  53,  238. 
Haugan  v.  Netland,  135,  837. 
Hause  v.  Newel,  272. 
Havemeyer  v.   Superior  Court,  374. 
Havens    &    Geddes    Co.    v.    Harris 
697. 


XXXIV 


TABLE    OF    CASES    CITED. 


[REFERENCES    ARE    TO    PAGES.] 

Haverly   v.   Elliott,   57. 
Hawkins  v.  Gathercole,  617. 
Hawkins  v.  Luscombe,  125. 
Hayden  v.   Shearman,  72>7. 
Hayden  v.  Thompson,  446. 
Hayes  v.   Brotzman,  253,  270. 
Hayes  v.  Dickinson,  802. 
Hayes  v.  Heyer,  689. 
Hayes   v.  Jasper  Land   Co.,  6,   14, 

355. 
Hayes  v.  Kenyon,  391. 
Hayner  v.  Fowler,  636. 
Haywood  v.  Cope,  880.. 
Hazard  v.  Durant,  271. 
Hazelrigg  v.  Bronaugh,  194. 
Hazeltine  v.  Granger,  790. 
Head  v.   Miller,  242. 
Heard  v.  Murray,  129. 
Hearn   v.   Tennant,    197. 
Heath  v.  Missouri,  K.  &  T.  R.  Co., 

550. 
Heathcot  v.  Ravenscroft,  674,  904. 
Heatherton  v.  Hastings,  664. 
Heavilon  v.  Farmers  Bank,  113. 
Heermans  v.  Clarkson,  218. 
Heffron  v.  Gage,  8,  153,  307. 
Heffron  v.  Rice,  50,  916,  919,  944. 
Heflebower  v.  Buck,  665,  688. 
Hegewisch  v.  Silver,  139. 
Heinze  v.   Butte  &  B.    C.   M.   Co., 

13,  44,  759,  760. 
Heinze  v.  Kleinschmidt,  755. 
Hellebush  v.  Blake,  63. 
Helme  v.  Littlejohn,  248,  249,  252, 

270,  700. 
Helmore  v.  Smith,  194. 
Hembree  v.  Dawson,  934. 
Hendee  v.  Connecticut  &  P.  R.  R- 

Co.,  456. 
Henderson    v.    Reynolds,    129,    131, 

133. 
Henderson  v.  Walker,  539. 
Hendrie   &   Bolthoff   Co.   v.    Parry, 

216,  947,  950.  , 

Hendrix  v.  American  F.  L.  M.  Co.,  |  Hilliker  v.  Hale,  271,  394. 
136  809.  Hinckley,  In  re,  927 


Henn  v.  Walsh,  33,  658,  688,  902, 

906. 
Henning  v.  Raymond,  248,  252. 
Henning  v.  Sampsell,  550,  551. 
Henry  v.  Henry,  673,  929,  943,  946, 

954,  956,  958. 
Henry  v.   Kaufman,  319,   332. 
Henshaw  v.  Wells,  110,  845. 
Herbert  v.  Greene,  819,  821. 
Herman  v.  Dunbar,  967,  993. 
Herndon  v.  Hurter,  938. 
Heroy  v.  Gibson,  581,  582. 
Herrick  v.  Miller,  224,  796. 
Herrick's  Minors,  In  re,  148,  149. 
Herring  v.  New  York,  L.  E.  &  W. 

R.  Co.,  462. 
Hervey  v.  Fitzpatrick,  858,  865. 
Hewitt  V.  Traders'  Bank,  444. 
Hibbert  V.  Jenkins,  104,  855. 
Hickey  v.  Parrott  S.  &  C.  Co.,  217, 

919,  920,  921. 
Hickox  V.  Holladay,  985. 
Hicks  V.  Hicks,  876. 
Hicks  V.  I.  &  G.   N.  R.   Co.,  550, 

563. 
Higgins,  In  re,  499. 
Higgins  V.  Bailey,  702. 
Higgins  V.   Gillesheiner,  636. 
Higgins   Oil  &   Fuel   Co.  v.   Snow, 

756,  759,  760. 
Highland  Avenue  &  B.  Ry.  Co.  v. 

C.  E.  Co.,  43. 
Highland    Ave.    &    B.    R.    Co.    v. 

Thornton,  50. 
Highley  v.  Deane,  964. 
Hiles  V.   Case,  525. 
Hiles  V.  Dunn,  704. 
Hiles  V.  Moore,  126,  833,  835. 
Hill  V.  Arnold,  859. 
Hill  V.  Gould,  353. 
Hill  V.   Robertson,  818,   824. 
Hill  V.  Taylor,  766. 
Hill  V.  Western  &  A.  R.  Co.,  636. 


TABLE  OF  CASES  CITED. 


XXXV 


[BEFEnSNCES    ABE   TO    PAGES.] 


Hinckley  v.  G.,  C.  &  S.  R.  Co.,  971. 

Hinckley  v.   Pfister,  343. 

Hinckley  v.  Railroad  Co.,  916,  927, 

951. 
Hirsch,  Elson  &  Co.  v.  Israel,  598. 
Hitchen  v.  Birks,  65. 
Hitz  V.  Jenks,  45,  842. 
Hlawacek  v.  Bohman,  749. 
Hoare  v.   Stephens,  804. 
Hobart  v.  Ballard,  660,  661. 
Hobart  v.   Bennett,   225. 
Hobhoiise  v.  Hollcombe,  774. 
Hobson  V.  Sherwood,  772. 
Hodges  V.  McDuff,  746. 
Hoffman  v.  Bank,  314,  989. 
Hoffman  v.  Schoyer,  674. 
Hoge  V.  Hollister,  807. 
Holbert  v.  Chilvers,  792. 
Holbrook  v.  Ford,  272,  309,  310,  638, 

639. 
Holbrook  v.  Receivers  of  American 

Fire  Insurance  Co.,  419. 
Holcombe    v.    Executors    of    Hol- 

combe,  925. 
Holcombe  v.  Johnson,  336. 
Holden's     Administrators     v.     Mc- 

Makin,  36,  697,  698,  907. 
Holdrege  v.  Gwynne,  591,  897. 
Holland  v.  Cork  &  Kinsale  R.  Co., 

482,  616. 
Holland  Trust  Co.  v.  International 

B.  &  T.  Co.,  11. 
Hollenbeck  v.  Donnell,  819,  821. 
Hollier  v.  Hedges,  IIZ. 
Hollifield  V.   Wrightsville  &  T.   R. 

Co.,  545. 
Hollins  V.  Iron  Co.,  591. 
Hollis,  Ex  parte,  200. 
Hollis  V.  Bryant,  748. 
Hollister  v.   Barkley,   34,   9S0. 
Holmes  v.  Bell,  812. 
Holmes  v.   Holmes,  750. 
Holmes  v.  Millage,  33,  620. 
Holshouser   v.    Cooper   Co.,    166. 
Home  Fire  Ins.  Co.  v.  Dutcher,  45. 


Home  P.  S.  F.  Association,  In  re, 
212. 

Home  Savings  &  Trust  Co.  v.  Polk 
District  Court,  35. 

Homer  v.  Barr  P.  E.  Co.,  249,  272. 

Hone,  In  re,  217. 

Honegger  v.  Wettstein,  306. 

Hood  V.  First  National  Bank,  21. 

Hook  V.   Bosworth,  793. 

Hooper  v.   Central  Trust  Co.,  378. 

Hooper  v.  Winston,  3,  208,  943,  952. 

Hoover  v.  M.  &  G.  L.  R.  Co.,  565, 
566. 

Hope  Mutual  Life  Ins.  Co.  v.  Tay- 
lor, 272,  275,  652. 

Hopkins  v.  Connel,  524. 

Hopkins  v.  Taylor,  399. 

Hopkins  v.  Worcester  &  Birming- 
ham Canal  Proprietors,  481. 

Hoppe  V.  Fountain,  758. 

Horlock  V.  Smith,  156. 

Horn  V.  Bohn,  963. 

Horn  V.  Pere  Marquette  R.  Co.,  156, 
164. 

Horner  v.  Bell,  744. 

Horner  v.  Dey,  819. 

Hornsby  v.  Eddy,  537,  539. 

Horton  v.  White,  754. 

Hottenstein  v.  Conrad,  10,  38,  113, 
662,  881. 

Houlditch  V.  Lord  Donegal,  64,  887. 

Houston  V.   Redwine,  257. 

Houston  &  Texas  C.  Ry.  Co.  v. 
Crawford,  556. 

Hovey  v.  McDonald,  219,  972. 

How  V.  Jones,  954,  955,  971. 

Howard  V.  Chesapeake  &  O.  R.  Co., 
272. 

Howard  v.  Lowell  Machine  Co., 
979. 

Howard  v.  Palmer,  118,  628. 

Howard  v.   Papera,  862. 

Howard  v.  Whitman,  432. 

Howard  Co.  v.  Strother,  166. 

Howarth  v.  Angle,  397. 

Howarth  v.  Lombard,  281,  397. 


XXXVl 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Howe  V.  Jones,  129,  964. 
Howe  V.  Deuel,  342,  343,  892. 
Howe    V.    Willard,    197. 
Howell   V.    Dawson,   33. 
Howell  V.  Hough,  4. 
Howell  V.  Ripley,  21,  840. 
Howes  V.   Davis,  924,  945,  954. 
Hoyt  V.  Thompson,  66,  277,  422. 
Hoyt  V.  Thompson's   Executor,  66 
Hubbard  v.  Guild,  645. 
Hubbard  v.  Hamilton  Bank,  436. 
Hubbard  v.  Hubbard,  591,  897. 
Hubbell  V.  Avenue  Investment  Co., 

795. 
Hubbell  V.  Dana,  264,  309. 
Hudson  V.  Plets,  628. 
Huellmantel  v.  Huellmantel,  619. 
Huerstel  v.   Lorillard,  743. 
Huet  V.  Lumber  Co.,  355. 
Huff  V.  Bidwell,  129. 
Hugh  V.  McRae,  430. 
Hughes  V.  Hatchett,  764. 
Huguenin  v.  Baseley,  11.  729,  881. 
Hulings  V.  Jones,  51,  956. 
Hull  V.  Caughy,  38. 
Hull  V.  Thomas,  191,  197,  198. 
Hulse  V.  Wright,  591,  593. 
Hulst,  In  re,  81. 
Humphreys  v.  Allen,  567,  571. 
Humphreys  v.  Hopkins,  189. 
Hungerford  v.  Cushing,  111. 
Hunt    V.    American    Grocery    Co., 

348. 
Hunt  V.   Columbian  Insurance  Co., 

67,  275,  277. 
Hunt  V.  Illinois  Central  R.  Co.,  313. 
Hunt   V.   Whewell,   395. 
Hunt  V.  Wolfe,  3,  5,  262,  776. 
Hursh  V.  Hursh,  109,  787. 
Hutchins  v.   Langley,   286. 
Hutchinson  v.  American  P.-C.  Co., 

14. 
Hutchinson  v.  Crutcher,  444. 
Hutchinson  v.  Green,  74. 
Hutchinson  v.   Hampton,  932. 


Hutton  V.  Lockridge,  127. 
Hyatt  V.  McMahon,  399. 
Hyde  v.  Lynde,  286,  389,  400. 
Hyde  Park  Gas  Co.  v.  Kerber,  14, 

353. 
Hyman  v.  Kelly,  818,  826. 
Hyslop  V.  Hoppock,  134. 


I. 


I.  &  G.  N.  R.  Co.  V.  Ormond,  550, 

563. 
Idaho  Gold  Reduction  Co.  v.  Crog- 

ham,  263. 
Iddings  V.  Bruen,  176,  226,  579,  626. 
Iglehart  v.  Bierce,  249,  253,  258,  283. 
Illinois  Steel  Co.  v.  Putnam,  158. 
Illinois    Trust   &    Savings    Bank   v. 

Doud,  509,  525. 
Illinois   Trust   &   Savings    Bank   v. 

Pacific  Ry.  Co.,  53,  565,  972. 
Illinois   Trust   &    Savings   Bank  v. 

Smith,  328. 
Imperial    Mercantile    Credit    Asso- 
ciation V.    Newry   &   Armagh   R. 

Co.,  117,  482. 
Industrial  Mutual  D.  Co.'s  Receiver 

V.  Taylor,  386. 
IngersoU  v.   Cooper,  248,  251. 
Insurance    Commissioner  v.    C.    M. 

Ins.  Co.,  211,  414,  421. 
Insurance   Commissioner  v.   United 

F.  Ins.  Co.,  431. 
International    &   G.    N.    Ry.    Co.   v. 

Bender,  539. 
International   Trust    Co.   v.   Decker 

Bros.,  18,  378. 
International    Trust    Co.    v.    Town- 
send  B.  &  C.  Co.,  512,  530. 
International   Trust    Co.   v.   United 

Coal   Co.,   50,  363,  378,  379,   591, 

915,  916,  954. 
Investment  Co.  v.  Ohio  &  N.  W.  R. 

Co.,  565. 
Ireland  v.  Eade,  213,  967. 
Ireland  v.  Nichols,  740,  985,  986 


TABLE    OF    CASES    CITED. 


XXXVll 


[BEFBRBNCBS    ABE    TO    PAGES.] 


Iron  Hall  v.  Baker,  358,  429. 
Irons    V.     Manufacturers    National 

Bank,  451. 
Irwin  V.  Everson,  660. 
Irwin   V.   Granite    S.    P.    Assn.,   66, 

373. 
Irwin  V.  Lewis,  17. 
Irwin  V.  McKechnie,  545. 

J. 
J.   I.   Case    Plow   Works   v.    Finks, 

305,  545. 
Jackson  v.  De  Forest,  663,  664,  665, 

683,  701. 
Jackson  v.  First  State  Bank,  225. 
Jackson  v.  Hooper,  818,  821. 
Jackson  v.  Jackson,  876. 
Jackson  v.   Lahee,  674. 
Jackson  v.  Roberts,  412,  418. 
Jackson  v.   Sheldon,   595,   596,  679, 

898. 
Jackson  v.  Van  Slyke,  417. 
Jacksonville  Ferry  Co.  v.  Stockton, 

129,  132. 
Jacobs  V.  Gibson,  815. 
Jacobs  V.  Jacobs  M.  Co.,  353. 
Jacobs  V.  Miller,  111. 
Jacobs  V.  Turpin,  389. 
Jacobson   v.    Allen,    391. 
Jacobson  v.  Landolt,  162. 
Jacox  V.  Clark,  885. 
Jaffray  v.  Raab,  935. 
Janeway  v.  Green,  851. 
Jasper  Land  Co.  v.  Wallis,  357,  358. 
Jay,  Ex  parte,  646. 
Jay  V.  De  Groot,  263. 
Jay's  Case,  306,  889. 
Jefferson  v.  Edrington,  772. 
JefTerys  v.  Dickson,  803. 
JeflFerys  v.  Smith,  759. 
Jenkins  v.  Briant,  969. 
Jenkins  v.  Jenkins,  864. 
Jenks  V.  Horton,  743. 
Jenner-Fust  v.  Needham,  804. 
Jerome  v.  McCarter,  377. 
Jewett  V.  Miller,  224,  226. 


John  V.  John,  721. 

Johnes  v.   Claughton,  163,  185,  888, 

889. 
Johns  V.   Johns,   106,   122,   123,  862. 
Johnson,  Ex  parte,  537. 
Johnson  v.   Central  Trust  Co.,  990. 
Johnson  v.  Farnum,  591. 
Johnson  v.  Garrett,  935. 
Johnson  v.  Gimter,  211. 
Johnson  v.  Lehigh  V.  T.  Co.,  322. 
Johnson  v.   Martin,   139,  263. 
Johnson  v.    Powers,  240,  316. 
Johnson  v.  Southern  B.  &  L.  Assn., 

277,  430,  431. 
Johnson  v.  Tucker,  579. 
Johnson  v.  Woodruff,  606. 
Johnston  v.   Hanner,  37. 
Johnston  v.  Henderson,  744. 
Johnston  v.   Robuck,   324. 

V.  Jolland,  104,  855,  875,  952. 


Jolly  V.   Arbuthnot,  803. 

Jonas  H.  French,  170. 

Jones  V.  Arena  Publishing  Co.,  381. 

Jones  V.  Bank  of  Leadville,  24,  429. 

Jones  V.  Blun,  53,  143. 

Jones  V.  Boyd,  762. 

Jones  V.  Dougherty,  122,  124,  600. 

Jones  V.  Frost,  735. 

Jones  V.  Goodrich,  64. 

Jones  V.  Graves,  129. 

Jones  V.  Jones,  716. 

Jones  V.  Keen,  919,  923. 

Jones  V.  Moore,  167. 

Jones   V.    North    P.    F.   &   O.    Co., 

39. 
Jones  V.  Pugh,  604,  606,  731. 
Jones  V.  Purcell,  93,  189. 
Jones  V.  Schall,  24. 
Jones  V.  Schlapback,  547. 
Jones  V.  Weir,  686. 
Joost  V.  Bennett,  946. 
Joralmon  v.  IMcPhee,  936,  937. 
Jordan  v.  Beal,  736,  764. 
Jordan  v.  Jordan,  96,  110. 
Jordan  v.  Miller,  655.  -^ 

Jordan  v.  Wells,  296. 


XXXVIU 


TABLE    07    CASES    CITED. 


[REFERENCES    ARE    TO    PAGES.] 


Joselove  v.  Bohrman,  684. 

Joseph  Dry  Goods  Co.  v.  Hecht, 
129,  592. 

Joslin  V.  Williams,  57. 

Joslyn  V.  Athens  C.  &  C.  Co.,  936. 

Journeay  v.  Brown,  44,  599. 

Juckett  V.   Fargo,  228. 

Judd  V.  Bankers  &  Merchants  Tele- 
graph Co.,  74,  80. 

Justice  V.  Kirlin,  248,  249. 

K. 

Kaighn  v.  Fuller,  980. 
Kain  v.  Smith,  549. 
Kaiser  v.  Kellar,  3,  4,  320. 
Kanawha  Coal  Co.  v.  Ballard  &  W. 

C.  Co.,  18. 
Kansas    Pacific   Ry.    Co.   v.   Bayles, 

324,  495. 
Kansas    Pacific    R.    Co.    v.    Wood, 

552. 
Kansas  Rolling  Mill  Co.  v.  A.,  T. 

&  S.  F.  R.  Co.,  38. 
Karn  v.  Rorer,  568. 
Katsch  V.  Schenck,  691,  693. 
Katz  V.  Brewington,  691. 
Kavanagh  v.  Bank  of  America,  312. 
Keach,  In  re,  647. 
Kean  v.  Colt,  18,  22,  124. 
Keeley  v.  Union  Pac.  Ry.  Co.,  307. 
Keen  v.  Breckenridge,  294,  296,  297. 
Keenan  v.  Shannon,  747. 
Keene  v.  Gaehle,  336. 
Keep   V.    Michigan   Lake   Shore   R. 

Co.,  74,  476,  485,  814,  818,  830. 
Kehler  v.  Jack  Mfg.  Co.,  591. 
Kehr  v.  Hall,  260. 
Keihl  V.  City  of  South  Bend,  87. 
Kellar  v.  Williams,  3,  708. 
Kelley  v.  Boettcher,  14,  26. 
Kellogg  V.  King,  17. 
Kelly,  In  re,  525. 
Kelly  V.  Butler,  1Z1 . 
Kelly  V.   Fargo,  348. 


Kelly  V.  Rutledge,  745,  980. 
Kelly  V.  Steele,  719. 
Kelly  V.  Trustees,  461,  476. 
Kelso  V.  American  I.  &  I.  Co.,  38. 
Kempson  v.  Kempson,  198. 
Kennedy  v.  Gibson,  446,  448,  452. 
Kennedy  v.  I.,  C.  &  L.  R.  Co.,  294, 

299,  541,  542. 
Kennedy  v.   St.    Paul  &   Pacific  R. 

Co.,  485,  490,  492,  565,  567. 
Kennedy  v.  Thorp,  641, 
Kenney  v.  Ranney,  332. 
Kent  V.  Lake   Superior  Canal  Co., 

zn. 

Keogh  V.  McManus,  841. 
Kerchner  v.  Fairley,  818. 
Kerr  v.  Brandon,  99,  150. 
Kerr  v.  Potter,  660,  902,  903. 
Kerr  v.  White,  61. 
Kidder  v.  Beavers,  296. 
Kilgore  v.  Hair,  98. 
Kilpatrick  v.  Horton,  915,  938 
Kimball  v.  Gaflford,  187. 
Kimball  v.  Ives,  389. 
Kimberly  v.  Blackford,  264. 
Kimberly  v.  Goodrich,  264. 
Kimberly  v.  Stewart,  264. 
Kimmerle    v.    Dowagiac    Mfg.    Co., 

920,  929,  955. 
King  V.  Armstrong,  448. 
King  V.  Cochran,  249,  261,  281,  396, 

397. 
King  V.  Cutts,  3,  208,  248,  251. 
King  V.  O.  &  M.  R.  Co.,  192,  499. 
King  V.  Pomeroy,  453. 
King  V.   Wooten,   165. 
Kinney    v.    Crocker,    86,    294,    297, 

541. 
Kipp  V.  Hanna,  744. 
Kirby  v.  Ingersoll,  691,  692. 
Kirker  v.  O wings,  146,  942. 
Kirkpatrick  v.  McElroy,  214,  700. 
Kittanning  Insurance   Co.,   Petition 

of,  429. 
Kittredge  v.  Osgood,  159,  430. 
Klee  V.  Steele  Co.,  591. 


TABLE   OF    CASES    CITED. 


XXX IX 


[KEFEIiENCES    ABE    TO    PAGES.] 


Klein  v.  Gavenesch  Co.,  322. 

Klein  v.  Independent  B.  Assn.,  349. 

Klein  v.  Jcwctt,  524,  537, 

Knabe  v.  Johnson,  314. 

Kneeland  v.  American  L.  &  T.  Co., 
507,  522,  575. 

Kneeland  v.  Bass  Foundry  &  Ma- 
chine Works,  507. 

Kneeland  v.  Luce,  567,  573. 

Knickerbocker  v.  Benes,  337. 

Knickerbocker  v.  McKindley  C.  & 
M.  Co.,  50,  51. 

Knickerbocker  Bank,  In  re,  103,  376. 

Knickerbocker  Life  Insurance  Co.  v. 
Hill,  815. 

Knight  V.  Duplessis,  64,  734,  862. 

Knight  V.  Knight,  859. 

Knight  V.  Nash,  41,  582. 

Knight  V.  Plimouth,  330. 

Knighton  v.  Young,  732,  911. 

Knode  v.  Baldridge,  674. 

Knott  V.  Receivers  of  Morris  Canal 
&  Banking  Co.,  210. 

Konrad,  In  re,  592. 

Koontz  V.  Northern  Bank,  232,  782. 

Kountze  v.  Omaha  Hotel  Co.,  794, 
818. 

Kretschmar  v.  Stone,  244. 

Kriesle  v.  Campbell,  180,  181. 

Krohn  v.  Weinberger,  8,  120,  124. 

Kron  V.  Dennis,  739. 

Kronberg  v.  Elder,  285. 

Kyme  v.  Digman,  214. 


Lackawanna    Iron    &    Coal    Co.    v. 

Farmers'  L.  &  T.  Co.,  526. 
Lackmann  v.   Supreme  Coimcil,  68. 
La  Cliaise  v.  Lord,  595,  596,  898. 
Ladd  V.  Harvey,  110,  111,  854. 
Lafayette  Bank  v.  Buckingham,  385, 

981. 
Laing  v.  Williams,  28. 
Lake   National   Bank  v.  Wolfebor- 

ough  S.  Bank,  43,  74. 


Lake  Shore  &  M.  S.  R.  Co.  v.  Fel- 
ton,  164. 

Lake  Shore  &  ]\I.  S.  R.  Co.  v.  Tay- 
lor, 198. 

Lamar  Insurance  Co.  v.  Gulick,  410. 

Lamaster  v.  Elliott,  755. 

Lamb  v.  Rowan,  220. 

Lammon  v.  Giles,  935. 

Lanauze    v.    Belfast,    Holy  wood    & 
Bangor  R.  Co.,  745,  840. 

Lancashire  v.  Lancashire,  718,  723. 

Lancaster  v.  Asheville  St.  Ry.  Co., 
14. 

Land  Title  &  Trust  Co.  v.  Asphalt 
Co.,  311. 

Landers  v.  Felton,  88. 

Lane  v.  Macon  &  A.  Ry.  Co.,  520. 

Lane  v.  Sterne,  191,  192. 

Lane  v.  Townsend,  962. 

Lane  v.  Washington  Hotel  Co.,  50, 
934. 

Lang  V.  Macon  C.  Co.,  621. 

Langdon  v.  Vermont  &  Canada  R. 
Co.,  491,  571. 

Langford  v.  Langford,  62,  192,  202, 
800,  887. 

Langley  v.  Hawk,  864. 

Lanier  v.   Gayoso   Savings   Institu- 
tion, 288. 

Lansing  v.  Manton,  613. 

Laramie    National    Bank    v.    Stein- 
hoff,  195. 

Largan  v.  Bowen,  989. 

Larsen  v.  Winder,  129,  130. 

Latham  v.  Chafee,  6,  123,  848,  849. 

Lathrop  v.  Knapp,  262. 

Latimer  v.  A.  &  B.  R.  Co.,  464. 

Latta  V.  Catawba  Electric  Co.,  400. 

Laughlin  v.   United    States   Rolling 
Stock  Co.,  378. 

Lavender  v.  Lavender,  985. 

Law  V.  Ford,  689. 

Law  V.  Glenn,  803. 

Lawrence  v.  Greenwich  Fire  Insur- 
ance Co.,  351. 

Lawrence  v.  McCready,  390,  413. 


xl 


TABLE   OF    CASES    CITED. 


[eefeeences  aee  to  pages.] 


Lawrence     Iron-Works     v.    Rock- 
bridge Co.,  26. 
Lawson   v.   Ricketts,  993. 
Lazear  v.   Ohio   Valley    S.    F.   Co., 

215. 
Leach  v.  Tisdal,  106. 
Leary  v.   Columbia  R.  &  P.   S.   N. 

Co..  591. 
Leathers  v.  Shipbuilders  Bank,  437. 
Leavitt  v.  Yates,  11,  18,  25,  351,  881, 

882. 
Leddel's  Executor  v.  Starr,  110,  872. 
Ledoux  V.  La  Bee,  166,  192. 
Lee  V.  Cone,  187. 
Lee  V.  Powell  Bros.  &  Sanders  Co., 

994. 
Le  Grand  v.  O'Neill,  117. 
Lehigh  C.  &  N.  Co.  v.  Central  R. 

Co.,  300,  493,  494. 
Le  Hote  v.  Boyet,  380. 
Leney  v.  Callingham,  726. 
L'Engle  v.  Florida  Central  R.   Co., 

472,  982. 
Lenoir  v.  Linville  I.  Co.,  421,  989. 
Lenox  v.  Notrebe,  7,  19. 
Levenson  v.  Elson,  849. 
Levi  V.  Karrick,  47,  174. 
Levin  v.  Florsheim,  35. 
Levy  V.  Cavanagh,  185. 
Levy  V.  Ely,  595,  596,  898. 
Lewis,  In  re,  197. 
Lewis  V.  American  N.  S.  Co.,  74,  75, 

277. 
Lewis  V.  Campau,  39. 
Lewis  V.  Clark,  277. 
Lewis  V.  Lindeen  Steel  Co.,  380. 
Lewis  V.  Singleton,  197. 
Libby  v.  Rosekranz,  228,  385,  423. 
Lichtenstein  v.  Dial,  919,  922,  923. 
Liggett  V.  Glenn,  75. 
Ligon  V.  Bishop  et  al.,  605. 

V.  Lindsey,  62,  63,  887. 

Link  Belt  Machinery  Co.  v.  Hughes, 

322,  324,  964. 
Links  V.  Connecticut  River  B.  Co., 

294,  408. 


Linville  v.  Hadden,  67,  345. 
Litchfield  Bank  v.  Church,  242. 
Litchfield  Bank  v.  Peck,  241,  242. 
Little  Warrior  Coal  Co.  v.  Hooper, 

129,  348. 
Littlefield  v.  Maine  Central  R.  Co., 

294. 
Litzenberger  v.  Jarvis-Conklin  Trust 

Co.,  517. 
Livingston  v.   Bank  of  New  York, 

432,  440. 
Livingston  v.  Olyphant,  257. 
Livingston  v.   Pettigrew,  321. 
Lloyd,  In  re,  98,  99. 
Lloyd  V.   Chesapeake,  O.   &  S.  W. 

R.  Co.,  846. 
Lloyd  V.  Lord  Trimleston,  720. 
Lloyd  V.  Passingham,  604,  718,  719, 

910. 
Lloyd  V.  Trimleston,  734. 
Lock  V.  Turnpike  Co.,  550. 
Lofsky  V.  Maujer,  794,  797. 
Lombard  v.  Wade,  971. 
Loney  v.  Penniman,  704. 
Long  Branch  &  Sea  Shore  R.  Co., 

In  re,  470,  987. 
Longstaff  v.  Hurd,  181,  710. 
Lonsdale  v.  Church,  952. 
Loomis  V.  McKenzie,  657. 
Lorch  V.  Aultman,  159,  222. 
Lord  Fingal  v.  Blake,  720. 
Lotte  Bros.  v.   American  Silk  Co., 

91. 
Lottimer  v.  Lord,  46,  216,  217,  679. 
Louisville,  New  Albany  &  Chicago 

R.  Co.  V.  Cauble,  552. 
Louisville  &  N.  R.  Co.  v.  Central 

Trust  Co.,  521. 
Loven  v.  The  People,  195. 
Low  V.  Holmes,  28. 
Lowe  V.  Lowe,  878,  950. 
Lowe  V.  Riley,  45. 
Lowe  V.  Stephens,  645. 
Lowell  V.  Doe,  791,  826. 
Lowenstein  v.  Finney,  53. 
Lowry  V.  Smith,  233. 


TABLE    OF    CASES    CITED. 


xU 


[befekbnces  abb  to  pages.] 


Luderbach     Plumbing    Co.    v.    Its 

Creditors,  208. 
Ludgater  v.  Channell,  146. 
Lumsden  v.  Fraser,  770. 
Lupton  V.  Stephenson,  96. 
Lycoming    Fire    Insurance    Co.    v. 

Wright,  277,  413. 
Lyle  V.  Commercial  National  Bank, 

13. 
Lyman  v.  Central  Vermont  R.  Co., 

297,  537,  541. 
Lyne  v.  Lockwood,  738. 


M. 


Mabon  v.  Ongley  Electric  Co.,  374 

Mabry  v.   Harrison,  941. 

Macartney  v.  Walsh,  780. 

MacDonald  v.  O'Toole,  31. 

Madden,  In  re,  731. 

Madgwick  v.  Wimble,  656,  697,  698. 

Magan  v.  Fallon,  335. 

Magee  v.  Cowperthwaite,  915,  924. 

Maguire  v.  Allen,   135. 

Maher  v.  Bull.  708,  907. 

Mahon  v.  Crothers,  823. 

Main  v.  Giuthert,  831. 

Maish  V.   Bird,  136,  800. 

Makeel  v.  Hotchkiss,  50,  936. 

Makins  v.  Percy  Ibotson  &  Sons, 
804. 

Malcolm  v.  O'Callaghan,  929. 

Malcolm  v.  Montgomery,  110,  136, 
600. 

Malcomson  v.  Wappoo  Mills,  952. 

Malone  v.  Buice,  852. 

Malott  V.  State,  296. 

Manchester  &  L.  D.  B.  Co.  v.  Par- 
kinson, 33,  620. 

Manchester  Locomotive  Works  v. 
Truesdale,  525. 

Manchester  &  Mil  ford  R.  Co.,  In  re, 
466. 

Mandeville  v.  Avery,  636,  638. 

Mangle  v.  Lord  Fingall,  781,  912. 


Manhattan  Trust  Co.  v.  Sioux  City 

&  N.  R.  Co.,  517. 
Manker   v.    Loan    Association,   297, 

309. 
Manley  v.  Rassiga,  266,  636. 
Manlove  v.  Burger,  248,  253,  414. 
Manlove  v.  Naw,  414. 
Mann  v.  Fairchild,  441. 
Mann  v.  Caddie,  662,  676. 
Mann  v.   German-American  I.  Co., 

10,  24. 
Mann  v.  Pentz,  409,  626,  646. 
Mann  v.  Stennet,  149. 
Manners  v.  Furze,  138. 
Manning  v.  Evans,  629,  632. 
Manning  v.  Monaghan,  331. 
Manning  v.  Mullins,  856. 
Manufacturers   Paper  Co.  v.   Lind- 

blom,  8,  308. 
Mapes  V.  Scott,  739. 
Mardian   v.   Wayne    Circuit   Judge, 

39. 
Marion    Trust    Co.    v.    Blish,    286, 

411. 
Market    National    Bank    v.    Pacific 

National  Bank,  258. 
Marr  v.  Littlewood,  64. 
Marsh  v.  Hussey,  966. 
Marshall  v.   Lockett,   163. 
Marshall  v.  Sherman,  395. 
Marshall    &    Ilsley    Bank    v.    Cady, 

824. 
Marten   v.    Van    Schaick,    663,    664, 

665,  689. 
Martin  v.   Atchison,  297. 
Martin  v.  Black,  186. 
Martin  v.  Martin,  915,  919. 
Martin  v.  N.  Y.,  S.  &  W.  R.  Co., 

493. 
Marvine  v.  Drexel's  Executors,  869. 
Mason  v.  Hubner,  231. 
Mason  v.  Mason,  783,  912. 
Mason  v.  Supreme  Court,  343. 
Mason  v.  Westoby,  33,  804. 
Mather    Humane    Stock   T.    Co.   v. 

Anderson,  521. 


xlii 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Mathews  v.  Neilson,  614,  868. 
Maudslay,  Sons  &  Field,  In  re,  62, 

203. 
Maund  v.   Allies,   708. 
Maunsell  v.  Egen,  145,  149. 
Mauran  v.  Crown  C.  L.  Co.,  938. 
Maxwell  v.  Akin,  409. 
Maxwell  v.  Peters  Shoe  Co.,  132. 
Maxwell  v.  Wilmington  D.  M.  Co., 

922. 
May  V.   Greenhill,  591. 
May  V.   Printup,   74. 
Maynard  v.  Bond,  141,  156,  157. 
Maynard  v.  Railey,  132,  678. 
Mayo  V.  McPhaul,  721. 
Mays  V.  Rose,  5,  10,  12,  18,  19,  135, 

153,  154,  604,  766,  880,  881. 
Mays  V.   Wherry,  752. 
Maythorne  v.  Palmer,  885. 
McAllister  v.  Harman,  246. 
McAlpin  V.  Jones,  277,  279. 
McAneny  v.  Superior  Court,  619. 
McAnrow  v.  Martin,  934,  935,  938, 

964. 
McArthur  v.  Montclair  R.  Co.,  927. 
McBride  v.  Clarke,  942. 
McCan  v.  O'Ferrall,  335. 
McCarter  v.  Clavin,  18. 
McCarthy  v.  Peake,  ID,  72,  676,  883, 

905. 
McCaskill  v.  Warren,  116. 
McCaslin  v.  State,  763. 
McClure  v.  McGee,  17. 
McCombs  V.  Merryhew,  174. 
McCord  V.  Weil,  41. 
McCornack  v.  Salem  Ry.  Co.,  527. 
McCosker  v.  Brady,  849,  986. 
McCraith  v.  Quin,  620. 
McCulloch  V.   Norwood,  308. 
McCullough  V.   Merchants  Loan  & 

Trust  Co.,  100. 
McCurdy  v.  Bowes,  569. 
McDermott  v.  Crook,  558. 
McDonald  v.  Carney,  264. 
McDonald  v.  Railroad,  167. 


McDonald  v.  Ross-Lewin,  393,  413, 

416. 
McDonald  v.  State,  455. 
McDonnell  v.  White,  HZ. 
McElvey  v.  Lewis,  684. 
McElwain  v.  Willis,  588. 
McElwaine  v.  Hosey,  7. 
McEvers  v.  Lawrence,  311. 
McEwen  v.  Brewster,  632. 
McGarrah  v.  Bank,  3,  13,  110. 
McGhee  v.  Willis,  561. 
McGilliard  v.   Donaldsonville   F.  & 

M.  Works,  91,  93,  102. 
McGoldrick  v.  Slevin,  591,  593. 
McGowan  v.  Myers,  181,  182,  631. 
McGraw  v.  Union  Trust  Co.,  322. 
McGregor  v.  Third  National  Bank, 

313. 
Mcllhenny  v.  Binz,  461,  519,  532. 
Mcllrath  v.  Snure,  241. 
Mcintosh  V.  Perkins,  659. 
McKay  v.  Van  Kleeck,  54,  70,  183. 
McKennon  v.  Pentecost,  210. 
McKenzie  v.  Coslett,  935. 
McKinney  v.  Ohio  &  INlississippi  R. 

Co.,  552. 
McKinnon   v.    Pike   County   Guano 

Co.,  800. 
McKinnon  v.  Wolfenden,  314. 
McLane  v.   Placerville  &   S.  V.  R. 

Co.,  480,  504,  507. 
McLaughlin  v.  Kimball,  391. 
McLaughlin  v.  Taylor,  222. 
McLean  v.  Lafayette  Bank,  135,  74S. 
McLean  v.  Presley's  Administrator, 

791. 
McLeod    V.    City    of   New    Albany, 

165,  208. 
McMahon  v.  McClernan,  708. 
McMahon    v.    North    Kent    L    Co., 

804. 
McNab  V.  Noonan,  707. 
McNair  v.  Pope,  719,  778. 
McNeil  V.  Garratt,  197. 
McNulta  V.  Ensch,  557. 
McNulta  V.  Lochridge,  89,  547. 


TABLE    OF    CASES    CITED. 


xliii 


[KEFERBNCES    ABE    TO    PAGKS.] 


McNulta  V.  Lockridge,  557,  558. 
M'Crecry  v.  Beiiueti,  32. 
Mead  v.  Burk,  18,  26,  763. 
Mead  v.  Orrery,  138,  142. 
Meaden  v.  Sealey,  133,  788. 
Meadow     Valley     Mining     Co.     v. 

Dodds,  36. 
Meara's  Administrator  v.  Holbrook, 

304,  537,  539. 
Mechanics  Bank  of  Philadelphia  v. 

Bank  of  New  Brunswick,  948. 
Mechanics    National    Bank   v.   Lan- 

daur,  301. 
Medynski  v.  Theiss,  209. 
Meeker  v.  Sprague,  301. 
Meier   v.    Kansas    Pacific    R.    Co., 

3,  467. 
Meinhard  v.   Strickland,  591. 
Melendy  v.   Barbour,  294,  299,  312, 

541. 
M'Elmoyle  v.  Cohen,  273. 
Memphis    &    Charleston    R.    Co.    v. 

Glover,  562. 
Mercantile  I.  &  G.  T.  Co.  v.  River 

Plate  T.  L.  &  A.  Co.,  62. 
Mercantile  Insurance  Co.  v.  Jaynes, 

258. 
Mercantile   Trust    Co.   v.    Farmers' 

L.  &  T.  Co.,  322,  325,  533,  534. 
Mercantile  Trust  Co.  v.  Kanawha  & 

O.  R.  Co.,  473,  572. 
Mercantile   Trust    Co.    v.    Lemoille 

Valley  R.  Co.,  84. 
Mercantile   Trust    Co.   v.    Missouri, 

K.  &  T.  R.  Co.,  477,  495. 
Mercantile   Trust    Co.   v.    Southern 

States  L.  &  T.  Co.,  182. 
Mercantile  Trust  &  Deposit  Co.  v. 

Southern  I.  C.  Line,  520. 
Merchants'  Bank  v.  Crysler,  959. 
Merchants  Insurance  Co.,  In  re,  5, 

81,  83,  154. 
Merchants  &  Manufacturers  Nation- 
al Bank  v.  Kent  Circuit  Judge,  24, 

98,  800. 


Merchants  National  Bank  v.  North- 
western M.  &  C.  Co.,  408. 
Merchants     &     Planters     National 

Bank  v.  Trustees,  74. 
Meredith   Village    Savings   Bank  v. 

Simpson,  294,  298. 
Meridian  N.  &  P.  Co.  v.  Diem  &  W, 

P.  Co.,  129,  665. 
Meriwether  v.  Garrett,  579,  587. 
Merrell  v.  Pemberton,  49,  886. 
Merriam  v.   St.  Louis,   C.  G.  &  F. 

S.  Ry.  Co.,  37,  461,  478. 
Merriam  v.  Victory  Mining  Co.,  378, 

381,  971. 
Merrill  v.  Elam,  110,  127. 
Merrill  v.  First  National  Bank,  446. 
Merritt,  In  re,  239,  890. 
Mesnager  v.  De  Leonis,  760. 
Metcalf  V.  Moses,  683. 
Aletcalfe  v.  Commonwealth  L.  &  L. 

Co.'s  Receiver,  167. 
Metcalfe  v.  Pulvertoft,  121,  122,  765. 
Metropolitan  National  Bank  v.  Com- 
mercial State  Bank,  53,  54. 
Metropolitan  Trust  Co.  v.  Columbus, 

S.  &  H.  R.  Co.,  499. 
Metropolitan    Trust    Co.    v.    Tona- 

wanda  Valley  &  C  R.  Co.,  565. 
Metz  V.   B.,   C.  &  P.  R.   Co.,  548, 

550. 
Metzner  v.  Bauer,  272,  277,  278. 
Meyer   v.    Johnston,   461,   491,   565, 

568. 
Meyer  v.  Seebald,  747. 
Meyer  v.  Thomas,  819. 
Miami  Exporting  Co.  v.  Gano,  254. 
Middleton    v.    Dodswell,    122,    605, 

858,  861. 
Middleton  v.  New  Jersey  West  Line 

R.  Co.,  490. 
Mikkelson  v.  Truesdale,  540. 
Milbank  v.  Revett,  755,  757. 
Miles  V.  New  South  B.  &  L.  Assn., 

173. 
Milhous  V.  Dunham,  782. 
Miller  v.  Cavanaugh,  135. 


xliv 


TABLE    OF    CASES    CITED. 


[BEFEKENCES    AEE    TO    PAGES.] 

Miller  V.  Jones,  106,  172,  173,  697, 

698,  699,  706,  907. 
Miller  v.  Kitchen,  354. 
Miller  v.  Loeb,  294,  316,  994. 
Miller  v.  Mackenzie,  630. 
Miller  v.  Shriner,  131. 
Miller  Brothers  v.  Perkins,  60,  63. 
Mills  V.  Fry,  776. 

Miltenberger  v.  Logansport  R.  Co., 
492,  504,  505,  506,  514,  515,  520, 
840. 
Milwaukee  &  Minnesota  R.  Co.  v. 
Soutter,  461,   462,   489,   809,   969, 
979,  991. 
Milwaukee   &    St.    Paul    R.    Co.    v. 
Milwaukee  &   Minnesota   R.   Co., 
84. 
Minkler   v.    United    States    S.    Co., 

584. 
Minneapolis    Baseball    Co.    v.    City 

Bank,  392. 
Minneapolis    Western    Ry.    Co.    v. 
Minneapolis  &  St.  L.  R.  Co.,  246. 
Minnesota  T.    M.   Co.  v.   Langdon, 

404,  408. 
Missouri    Pacific    R.    Co.    v.    Love, 

70,  172. 
Missouri    Pacific    R.    Co.   v.   Texas 

&  P.  R.  Co.,  494,  537,  543. 
Mitchell,  Ex  parte,  568. 
Mitchell  V.  Barnes,  730. 
Mitchell  V.  Roland,  127. 
M'Loughlin  v.  Longan,  772. 
Moak  V.  Coats,  629. 
Moat  V.   Holbein,   195. 
Mobile   &    Ohio   R.    Co.   v.   Davis, 

563. 
Moies  V.  O'Neill,  668. 
Moise  V.  Chapman,  286,  398. 
Molony  v.  Cruise,  46,  856. 
Monarch  Co.  v.  Bank.  601. 
Moncrieff  v.  Hare,  795. 
Monitor  Furnace  Co.  v.  Peters,  434. 
Montana,  Boston  &  M.  C.  C.  &  S. 
M.    Co.    V.    Montana    O.    P.    Co., 
390. 


Montgomery,  In  re,  967. 
Montgomery  v.  Enslen,  197,  304. 
Montgomery    v.    Merrill,    364,    752, 

753,  798. 
Montgomery  v.  Petersburg  S.  &  I. 

Co.,  919,  954. 
Mooney  v.  British  Commercial  Life 

Insurance  Co.,  215. 
Moore  v.  Bank,  13. 
Moore  v.  Lincoln  P.  &  S.  C.  Co., 

934. 
Moore  v.   O'Loghlin,  259. 
Moore  v.  Potter,  193. 
Moran  v.  Dillingham,  916. 
Moran  v.  Johnston,  127. 
Moran  v.  Schaeffer,  492. 
Moran    v.    Wayne    Circuit    Judge, 

102. 
Mordaunt  v.  Hooper,  718,  721. 
Morey  v.  Grant,  659. 
Morford  v.  Hamner,  762. 
Morgan  v.  County  Court,  199. 
Morgan  v.  Gibian,  70. 
Morgan  v.  Hardee,  916. 
Morgan  v.  New  York  &  Albany  R. 

Co.,  434,  892. 
Morgan  v.  Potter,  139,  263. 
Morgan    v.    South    M.    L.    V.    Co., 

401. 
Morgan's  Louisiana  &  T.   R.  &   S. 
S.  Co.  V.   Farmers'  L.  &  T.  Co., 
526. 
Moriarty  v.  Kent,  248,  249. 
Moritz  V.  Miller,  128. 
Morley  v.   Saginaw   Circuit   Judge. 

497. 
Morris  v.  Branshaud,  819. 
Morris  v.  Elyton  Land  Co.,  353. 
Morris  v.  Taylor,  584. 
Morrison   v.    Buckner,    13,    16,   786, 

787. 
Morrison  v.   Forman,  492. 
Morrison  v.   Shuster,  591. 
Moseby  v.  Burrow,  285,  430. 
Mott  V.  Dunn,  595,  898. 
Mountfort,  Ex  parte,  110. 


TABLE    OF    CASES    CITED. 


xlv 


[REFERENCES    ABE    TO    PAGES.] 


Moyers  v.  Coiner,  130,  963. 
Mueller  v.   Stinesville  &  B.  S.  Co., 

223. 
Mulcahcy  v.   Strauss,  153,  159,  161, 

294,  297. 
Mullane  v.  Ahern,  620. 
Mullen  V.  Jennings,  16,  883. 
Mullcr  V.  Pondir,  924. 
Municipal    Commissioners    of    Car- 

rickfergus  v.  Lockhart,  21,  26,  718, 

723,  910. 
Munns   v.    Isle    of   Wight    R.    Co., 

464. 
Murdock's   Case,   880,  882. 
Murphy  v.  Fidelity  M.  F.  Ins.  Co., 

53,  115,  132. 
Murphy  v.   Harker,   198. 
Murphy  v.   Penniman,  238,  450. 
Murray  v.  Chambers,  455. 
Murray  v.  Superior  Court,  342,  348. 
Murray  v.  Vanderbilt,  368,  369. 
Murrey  v.  Chambers,  455. 
Murrough  v.  French,  619. 
Murtey  v.  Allen,  249,  261,  281,  395, 

396. 
Musgrove  v.  Gray,  178. 
Musgrove  v.  Nash,  950. 
Mutual  Life  Insurance  Co.  v.  Spicer, 

830. 
Myer  v.   Carr   Co.,  520. 
Myers  v.  Estell,  7,  819. 
Myton  V.  Davenport,  846. 


N. 


N.  J.  &  N.  Y.  R.  Co.,  In  re,  493. 

Naglee  v.  Minturn,  678,  710. 

Nason  v.  Blennerhassett,  777. 

Nathan  v.  Whitlock,  254. 

Nathans  v.   Steinmeyer,   792. 

National  Bank  v.  Colby,  457,  458. 

National  Bank  of  the  Metropolis  v. 
Sprague,  230. 

National  Fire  Ins.  Co.  v.  Broad- 
bent,  824. 


National  Mechanics  Banking  Asso- 
ciation V.  Mariposa  Co.,  582,  583, 
992. 

National  State  Bank  v.  Vigo  Coun- 
ty National  Bank,  386. 

National  Trust  Co.  v.  Miller,  279. 

National  Trust  Co.  v.  Murphy,  257. 

Naylor  v.  Sidener,  35. 

Nealis  v.  American  T.  &  I.  Co., 
401. 

Neall  V.  Hill,  342,  343,  892. 

Neate  v.  Pink,  784. 

Neeves  v.  Boos,  53. 

Neitzel  v.   Lyons,  348. 

Nelson  v.  Connor,  71. 

Nelson  v.  Kalkhofif,  322,  325. 

Nelson  v.  Nugent,  265. 

Nesbitt  V.  Turrentine,  726. 

Neun  V.  Blackstone  B.  &  L.  Assn., 
53,  214. 

Nevitt  V.  Woodburn,  3,  4,  297. 

New  V.  Wright,  656,  666,  676,  905. 

New  Amsterdam  Fire  Insurance 
Co.,  In  re,  424. 

Newbold  v.  P.  &  S.  R.  Co.,  570. 

Newell  V.  Fisher,  261. 

Newell  V.  Schnull,  134. 

New  England  R.  Co.  v.  Carnegie 
Steel  Co.,  513,  516. 

New  Haven  H.  N.  Co.  v.  Linden 
Springs  Co.,  395. 

Newman  v.  Hammond,  62,  143. 

Newman  v.  Mills,  215. 

Newman  v.  Newman,  801,  805. 

New  Orleans  Gas  Light  Co.  v.  Ben- 
nett, 389,  408. 

Newport  v.  Bury,  104,  855,  876, 
917. 

Newport  &  Cincinnati  Bridge  Co.  v. 
Douglass,  519. 

Newport  Cotton  Mill  Co.  v.  Mims, 
286,  398,  409,  411. 

New  South  B.  &  L.  Assn.  v.  Wil- 
lingham,  114. 

Newton  v.  Eagle  P.  Mfg.  Co.,  378. 

Newton  v.  Ricketts,  854. 


xlvi 


TABLE   OF    CASES    CITED. 


[references  are  to  pages.] 


New  York  N.  E.  Bank  v.  Metropol- 
itan S.  Bank,  394. 

New  York,  P.  &  O.  R.  Co.  v.  New 
York,  L.  E.  &  W.  R.  Co.,  533. 

New  York  Security  &  T.  Co.  v.  Illi- 
nois T.  R.  Co.,  302. 

New  York  &  W.  U.  T.  Co.  v.  Jew- 
ett,  316,  994. 

Nichol  V.  Murphy,  55. 

Nichols  V.  Perry  Patent  Arm  Co., 
435,  892. 

Nichols  V.   Smith,  537. 

Nicoll  V.  Boyd,  652. 

Niemann  v.  Niemann,  664. 

Nimick  &  Co.  v.  Iron  Works  Co., 
395. 

Nimocks  v.  Shingle  Co.,  34. 

Nisbet  V.  Great  Northern  C.  Co., 
378. 

Nisbet  V.  Tindall,  333. 

Nix  V.  Ellis,  287. 

Noad  V.  Backhouse,  46,  856. 

Noe  V.  Gibson,  191,  192. 

Noonan  v.  McNab,  710. 

Norris  v.  Lake,  13,  15. 

North  American  Gutta  Percha  Co., 
In  re,  159,  160. 

North  America  Land  &  T.  Co.  v. 
Watkins,  129,  353. 

North  Carolina  R.  Co.  v.  Drew,  523. 

North  Carolina  R.  Co.  v.  Wilson, 
852. 

Northern  Alabama  Ry.  Co.  v.  Hop- 
kiris,  916,  942. 

Northern  Pacific  R.  Co.  v.  Heflin, 
541. 

Northern  Pacific  R.  Co.  v.  Lament, 
512,  515,  517. 

Northwestern  Iron  Co.  v.  L.  &  R. 
I.  Co.,  70,  71. 

Northwestern  Mutual  Life  Ins.  Co. 
V.  Burr,  154. 

Northwestern  Mutual  Life  Ins.  Co. 
V.  Kidder,  386. 

Northwestern  Mutual  Life  Insur- 
ance Co.  V.  Park  Hotel  Co.,  816. 


Norwood,  Ex  parte,  281. 

Nowell  V.  International  Trust   Co., 

930. 
Noyes  v.  Rich,  479,  502. 
Nugent  V.  Nugent,  224,  226,  777. 
Nusbaum  v.  Stein,  129,  130,  591,  593, 

897. 
Nutting  V.  Colt,  660,  902. 


O. 


Oakes  v.  Myers,  165. 

Oakford  v.  Robinson,  794,  795,  806. 

Oakley  v.  Paterson  Bank,  23,  114, 
344,  345,  347,  435,  886,  892. 

O'Brien  v.  Chicago,  Rock  Island  & 
Pacific  R.  Co.,  359. 

O'Callaghan  v.  O'Callaghan,  774. 

Ocean  Steamship  Co.  v.  Wilder,  270. 

O'Connor  v.  Malone,  213. 

O'Donnell  v.  First  National  Bank, 
132. 

Oehme  v.  Rucklehaus,  739. 

Ogden  V.  Gregg,  703. 

Ogden  City  v.  Irrigation  Co.,  932, 
937,  963. 

Ohio  &  Mississippi  R.  Co.  v.  Ander- 
son, 550. 

Ohio  &  Mississippi  R.  Co.  v.  Davis, 
537,  550. 

Ohio  &  Mississippi  R.  Co.  v.  Fitch, 
86,  551,  552,  554. 

Ohio  &  Mississippi  R.  Co.  v.  Nick- 
less,  555. 

Ohio  &  Mississippi  R.  Co.  v.  Russell, 
553. 

Ohio  Turnpike  Co.  v.  Howard,  212 

O'Keeflfe  v.  Armstrong.  145. 

Olcott  V.  Heermans,  218. 

Oldham  v.   Bank,  818. 

Olds  V.  Tucker,  300. 

Oleson  V.  Bank,  601. 

Oliver  v.  Clark,  284. 

Oliver  v.  Decatur,  789. 

Oliver  v.  Victor,  591. 


TABLE    OF    CASES    CITED. 


xlvii 


[eefbkences  ake  to  pages.] 


Olmstead  v.  Distilling  &  C.  F.  Co., 

102. 
Olney  v.  Tanner,  272,  630,  639. 
Olson  V.  Bank,  956,  961. 
Olyphant  v.  St.  Louis  O.  &  S.  Co.. 

377. 
Omaha  &  S.  W.  R.  Co.  v.  Chicago, 

etc.,  Ry.  Co.,  44. 
O'Mahoney  v.  Belmont,  20,  48,  70, 

112,  189,  958,  982. 
Ormsby,  In  re,  931. 
Orphan    Asylum    v.    McCartee,    17, 

18,  848,  853. 
Orton  V.   Madden,  591. 
Osborn  v.  Heyer,  3,  579,  580,  581, 

899. 
Osborne   v.   Big   Stone   G.   C.   Co., 

568. 
Osborne  v.  Harvey,  110,  125. 
Osgood  V.  Laytin,  389,  390,  404,  405, 

894. 
Osgood  V.  Maguire,  292. 
Osgood  V.  Ogden,  291,  404,  419. 
Otis  V.  Gross,  328. 

Overholt  v.  Old  D.  Mfg.  Co.,  970. 
Overton  v.  M.  &  L.  R.  Co.,  461. 
Owen  V.  Homan,  12,  14,  26,  27,  718, 

722,  880,  910. 
Owen  V.  Smith,  365,  752. 


Pacific  Lumber  Co.  v.  Prescott,  215. 
Pacific  R.  Co.  V.  Wade,  542. 
Pacific  Railroad  v.  Ketchum,  61. 
Pagett  V.  Brooks,  52,  975,  986. 
Paige  V.  Smith,  294,  332,  537,  541, 

559. 
Paige  V.  Vankirk,  665. 
Paine  v.  Holliday,  638. 
Painter  v.   Painter,   304. 
Palen  v.  Bushnell,  262,  644,  649. 
Palen  v.  Johnson,  262. 
Palmer  v.  Bank,  392. 
Palmer  v.  Murray,  256. 


Palmer  v.  Pettingill,  166. 
i'almcr  v.  State,  70. 
Palmer  v.  Vaughan,  31,  886. 
Palmer  v.  Wright,  869. 
Palys  V.  Jewett,  301,  542. 
Pangburn  v.  American  V.,  S.  &  L. 

Co.,  224,  930. 
Panton  v.  Zebley,  201. 
Paradise  v.  Farmers  &  Merchants 

Bank,  279. 
Park  V.  New  York,  L.  E.  &  W.  R. 

Co.,  533. 
Parker  v.  Browning,  179,  201. 
Parker  v.  Dunn,  213. 
Parker  v.  Lamb  &  Sons,  272,  276. 
Parker  v.  Moore,  584,  586. 
Parker  v.   Parker,  759. 
Parker  v.  Stoughton  Mill  Co.,  413. 
Parkhurst  v.  Kinsman,  48. 
Parkhurst  v.  Muir,  671,  672. 
Parkin  v.  Seddons,  64,  65,  718. 
Parkinson  v.  Trousdale,  34,  980. 
Parks  V.  Sprinkle,  644,  645. 
Parks  V.  United  States  B.  Corpora- 
tion, 356. 
Parmly  v.  Tenth  Ward  Bank,  16,  17, 

363,  884. 
Parr  v.  Bell,  294,  304,  305,  889. 
Parr   v.    Spartanberg,    etc.    R.    Co., 

550. 
Parsons  v.   Charter  Oak  Life  Ins. 

Co.,  64,  372,  473. 
Parsons  v.   Monroe  Manufacturing 

Co.,  433. 
Partington  v.  Booth,   195. 
Patrick  v.  Eells,  308. 
Patterson  v.  Lynde,  67. 
Patterson   v.    Northern   Trust    Co., 

93,  104. 
Patterson  v.   Patterson,  230. 
Patterson  v.  Ward,  225,  972. 
Payne  v.  Atterbury,  740. 
Payne  v.  Baxter,  127,  294. 
Payne  v.  Hook,  652. 
Payne  v.  Paddock,  885. 
Payson  v.  Jacobs,  297,  298. 


xlviii 


TABLE    OF    CASES    CITED. 


[EEFEEENCES    ABE    TO    PAGES.] 


Peabody  v.  New  England  W.  Co., 
403. 

Peacock  v.  Peacock,  676. 

Pearce  v.  Elwell,  IS. 

Pearce  v.  Gamble,  703. 

Pearce  v.  Jennings,  595. 

Pearson  v.  Kendrick,  38. 

Pease  v.  Fletcher,  33. 

Peatman  v.  Centerville  L.,  H.  &  P. 
Co.,  354. 

Peek  V.  Trinsmaran  Iron  Co.,  804. 

Peirce  v.  Van  Dusen,  8,  430,  540. 

Pelzer  v.  Hughes,  591,  598. 

Pender  v.  Mallett,  636. 

Pendleton  v.  Lutz,  548. 

Pendleton  v.  Russell,  308,  437. 

Penn  v.  Whiteheads,  24,  614,  885. 

Pennsylvania  Co.  v.  American  Con- 
struction Co.,  476. 

Pennsylvania  Co.  v.  Jacksonville,  T. 
&  K.  W.  R.  Co.,  962. 

Pennsylvania  Steel  Co.  v.  New  York 
C.  Ry.  Co.,  527,  529. 

Pentz  V.  Hawley,  407,  412,  893. 

Penzel  Grocer  Co.  v.  Williams,  224. 

People  V.  Albany  &  Susquehanna  R. 
Co.,  124,  128,  352. 

People  V.  Bank  of  San  Luis  Obispo, 
343. 

People  V.  Barnett,  468. 

People  V.  Barrett,  199. 

People  V.  Brooks,  334. 

People  V.   Central   City   Bank,   183, 
205. 

People  V.  Columbia  Car  Spring  Co., 
949. 

People  V.  Commercial  Alliance  L.  & 
I.  Co.,  439. 

People  V.  District  Court,  118,  342. 

People  V.  Draper,  29,  886. 

People  V.  Hulburt,  629. 

People  V.  Jones,  334. 

People  V.  Knickerbocker  Life  Insur- 
ance Co.,  308,  437,  956. 
People    V.    Mayor    of    New    York, 
739. 


People  V.  Mead,  581. 

People  V.   Merchants  &  Mechanics 

Bank,  329. 
People  V.  Norton,  135,  751. 
People  V.  Rogers,  200. 
People  V.    Security   Life    Insurance 

Co.,  216,  427. 
People   V.    Security   Life    Insurance 

and  Annuity  Co.,  956. 
People  V.  St.  Nicholas  Bank,  322. 
People  V.   Sturtevant,  195. 
People  V.  Universal  Life  Insurance 

Co.,  322. 
People  V.  Van  Buren,  195. 
People  V.  Washington  Ice  Co.,  374, 

893. 
People  V.  Weigley,  192,  199,  342. 
People  V.  Zimmer,  334. 
Peoples  National  Bank  v.  Virginia 

Textile  Co.,  51. 
People's  State  Bank  v.  Francis,  286, 

447. 
Peoria  &  P.  U.  R.  Co.  v.  Chicago, 

P.  &  S.  W.  R.  Co.,  506. 
Peoria     Steam    Marble    Works    v. 

Hickey,  321. 
Pepper  v.  Fidelity  &  C.  Co.,  455. 
Perrin  v.  Lepper,  858,  871. 
Perry  v.  Oriental  Hotels  Co.,  93,  95, 

813. 
Perry-Mason    Shoe    Co.    v.    Sykes, 

954. 
Person  v.  Learj^  277. 
Persse,  In  re,  294,  304,  305,  889. 
Petaluma  Savings  Bank  v.  Superior 

Court,  619. 
Petersburg  Sav.  &  Ins.  Co.  v.  Del- 

latorre,  575. 
Peterson  v.  Baker,  543,  545. 
Pfeltz  V.  Pfeltz,  717,  910. 
Phelan  v.  Ganebin,  181. 
Phelps  V.  Foster,  591,  897. 
Phenix    Insurance    Co.    v.    Schultz, 

277. 
Philadelphia  M.  &  T.  Co.  v.  Goos, 
791,  816. 


TABLE    OF    CASES    CITED. 


xlix 


[eebtbrbnces  are  to  pages.] 


Philadelphia  M.  &  T.  Co.  v.  Oyler, 

794. 
Philadelphia   &   Reading   R.    Co.   v. 

Commonwealth,  469. 
Philadelphia  &  R.  R.  Co.  v.  Little, 

232. 
Phillips  V.  Atkinson,  696. 
Phillips  V.  Eiland,  764. 
Phillips  V.   Smoot,   158. 
Phipps  V.  Bishop  of  Bath,  836. 
Phoenix    Iron    Co.    v.    New    York 

Wrought  Iron  Railroad  Chair  Co., 

422. 
Phoenix  Mutual  Life  Insurance  Co. 

V.  Grant,  125. 
Phoenix  Warehousing  Co.  v.  Badg- 
er, 409. 
Pickersgill  v.  Myers,  389. 
Pickett  V.  Fidelity  &  C.  Co.,  653. 
Picton   V.    Cullen,    31. 
Pignolet  V.  Bushe,  759,  760. 
Pinchback  v.  Mining  Co.,  430,  431. 
Pincke,  Ex  parte,  98,  878. 
Pine   Lake    Iron    Co.   v.   LaFayette 

Car  Works,  398,  399. 
Pini   V.  Roncoroni,  675. 
Pitcher  v.  Helliar,  874. 
Pitkin  V.  Cowen,  548. 
Pitt  V.  Snowden,  250,  775. 
Pittman  v.  Hopkins,  954. 
Pittsburg  Carbon  Co.  v.   McMillin, 

387. 
Pittsfield   National   Bank  v.   Bayne, 

935. 
Piatt  V.  Adriance,  455. 
Piatt  V.  Archer,  81,  82,  83. 
Piatt  V.  Beach,  455. 
Piatt  V.  Beebe,  450. 
Piatt  V.  Crawford,  269,  446,  450. 
Piatt  V.  New  York  &  S.  B.  Ry.  Co., 

55. 
Piatt  V.   Philadelphia  &  R.  R.   Co., 

473,  520,  522. 
Poage  V.  Bell,  16.  883. 
Podmore  v.  Gunning,  733. 
Poertner  v.  Russell,  197. 


Poland  V.  Railroad  Co.,  526,  531. 
Polk  V.  Garver  C.  &  M.  Co.,  936. 
Polk  V.  Johnson,  94,  937,  939. 
Pollard  V.   Southern  Fertilizer  Co., 

114,  129,  132. 
Pollock  V.  B.  &  L.  Assn.,  272. 
Ponca    Mill    Co.    v.    Mikesell,    356, 

358. 
Pond  V.  Cooke,  189. 
Pond  V.    F.  &  L.  R.  Co.,  343. 
Ponsonby  v.  Ponsonby,  992. 
Pontius,  In  re,  363. 
Pope  V.  Ames,  156. 
Pope  V.  Pope,  776. 
Popp  V.  Mining  Co.,  24,  Zl . 
Popper  V.  Scheider,  660,  661,  903. 
Poppitz  V.  Rognes,  584. 
Portarlington  v.   Soulby,  887. 
Porter  v.   Kingman,  300. 
Porter  v.  Lopes,  33. 
Porter  v.  Sabin,  406. 
Porter  v.  Williams,  629,  636. 
Porter  v.  Williams  &  Clark,  250. 
Post  V.  Dorr,  52,  794,  840. 
Potter  V.  Bunnell,  315,  537. 
Potter  V.  IMerchants  Bank,  270. 
Potter    V.    Spa    Spring    Brick    Co., 

162. 
Potts,  In  re,  129. 
Potts  V.  Leighton,  952,  953. 
Potts  V.  Warwick  and  Birmingham 

Canal  Navigation  Co.,  609. 
Pouder  v.  Catterson,  775. 
Ponder  v.  Tate,  821. 
Pound,  In  re,  804. 
Fountain,  In  re,  877. 
Powell  V.  Allarton,  885. 
Powell  V.  Dayton,  S.  &  G.  R.  R.  Co., 

554. 
Powell  V.   Follett,  197. 
Powell  V.   Quinn,  858. 
Powell  V.  Waldron,  647,  650. 
Powers  V.  Hamilton  Paper  Co.,  433. 
Powers  V.  Loughridge,  330. 
Poythress  v.  Po>-thress,  848,  850. 


TABLE    OF    CASES    CITED. 


[REFERENCES    ARE   TO    PAGES.] 


Prather  Engineering  Co.  v.  Detroit, 

F.  &  S.  Ry.,  298. 
Pread  v.  Lewis,  111. 
Prebble  v.  Boghurst,  751. 
Premier  Cycle  Mfg.  Co.,  In  re,  978, 

979. 
Premier    Steel    Co.    v.    McElwaine- 

Richards  Co.,  170. 
Prescott  V.  Pfeififer,  636,  638. 
Pressley  v.  Harrison,  24. 
Pressley  v.  Lamb,  53. 
Preston  v.  American  Surety  Co.,  151. 
Preston    v.    Corporation    of    Great 

Yarmouth,  812. 
Preston  v.  Tunbridge,  840. 
Preston    National     Bank  v.     Smith 

M.  P.  Co.,  915. 
Price  V.  Abbott,  455. 
Price  V.  White,  928. 
Price's  Executrix  v.  Price's  Execu- 
tors, 861. 
Pringle  v.  Woolworth,  399,  430. 
Pritchard  v.  Fleetwood,  746. 
Probasco  v.  Probasco,  123,  738. 
Provident  Life  &  Trust  Co.  v.  Ken- 

iston,  14. 
Prytherch,  In  re,  804. 
Pueblo    T.    &    E.    Co.    v.    Allison, 

493. 
Pullan  V.   Cincinnati  &  Chicago  R. 

Co.,  6,  12,  477,  881. 
Pullis  V.  Pullis,  719. 
Pullman's  Palace-Car  Co.  v.  Amer- 
ican L.  &  T.  Co.,  521. 
Purcell  V.  Woodley,  970. 


Quin  V.  Holland,  779. 
Quincy  v.  Cheeseman,  818,  829. 
Quincy,  M.  &  P.  R.  Co.  v.  Humph- 
reys, 322,  533. 
Quinn  v.  Brittain,  607,  833,  834. 


R. 


Rabb  V.  Albright,  60. 

Rachel  Colvin,  In  re,  205,  877. 

Radebaugh  v.  Tacoma  &  P.  R.  Co., 

53,  523. 
Radford  v.  Folsom,  935,  951,  962. 
Raht  V.  Attrill,  379. 
Railroad  v.  Keary,  539. 
Railway  Co.  v.  Jewett,  130,  462. 
Raincock  v.  Simpson,  775. 
Rainey  v.  Freeport  S.  C.  &  C.  Co., 

10,  24. 
Ralph  V.  Wisner,  478. 
Ralston  v.  Washington  &  C.  R.  Ry. 

Co.,  102. 
Randall  v.  Morrell,  686,  905. 
Randfield  v.  Randfield,  294,  295. 
Ranger    v.    Champion    C.    P.    Co., 

354. 
Rankin  v.  Minor,  633. 
Rankine  v.  Elliott,  407,  439,  894. 
Ranney  v.  Peyser,  840,  841,  846. 
Ratcliff  V.  Adler,  297,  560. 
Rathbone  v.  Gas  Co.,  348. 
Rath  f on  v.  Locher,  265. 
Rawnsley  v.  Trenton  Mutual  Life  & 

Fire  Insurance  Co.,  23,  435,  886, 

892. 
Ray  V.   Carlisle,  825. 
Ray  V.  Macomb,  259. 
Ray  V.  Pierce,  548. 
Ray  V.  Robert  Price  Coal  Co.,  13. 
Ray  V.  Trice,  303. 
Read  v.  Brayton,  162. 
Read  v.  Corcoran,  961. 
Real  Estate  Associates,  In  re,  45. 
Real   Estate  Associates  v.  Superior 

Court,  109. 
Receiver    v.    First    National    Bank, 

244,  245. 
Receiver  of  Adams  &  Co.  v.  Roman, 

710. 
Receivers  v.  Wortendyke,  531. 
Receivership   of  Dugdamonia    S.   & 
L.  Co.,  In  re,  224. 


TABLE    OF    CASES    CITED 


li 


[RBFEBENCBS    AUE    TO    PACKS.] 


Receivership  of  the   N.   I.   C.   Mill 

Co.,  In  re,  153,  209. 
Reddall  v.   Bryan,  880. 
Redding  v.  Anderson,  691. 
Redmond  v.  Hoge,  369. 
Reed  v.  Axtell,  299. 
Rees  V.  Andrews,  26,  129. 
Reeves  v.   Hastings,  937. 
Regenstein  v.  Pearlstein,  156,  591. 
Reid  V.  Middleton,  772. 
Reid  V.  Reid,  34. 
Reinhart  v.  Sutton,  542. 
Rendall  v.  Rendall,  858,  866. 
Renick    v.    Bank    of    West    Union, 

254. 
Renton  v.  Chaplain,  685,  686,  904. 
Republic  v.  Swigert,  387. 
Reynolds    v.    Aetna    Life    Ins.    Co., 

629. 
Reynolds  v.  Quick,  829. 
Reynolds  v.  Stockton,  69. 
Reynolds'    Executor    v.    Pettyjohn, 

239. 
Reynolds   &   Hamby   E.    M.   Co.   v. 

Martin,  21. 
Rheinstein  v.  Bixby,  799. 
Rhode  Island  Locomotive  Works  v. 

Continental  T.  Co.,  526,  530. 
Rhodes  v.  Cousins,  591. 
Rhodes  v.  Lee,  33,  671,  672,  902. 
Rhorer  v.    Middlesboro,   265. 
Rice  V.  Dodd,  115. 
Rice  V.  St.  Paul  &  Pacific  R.  Co., 

16,  479. 
Rich  V.  Levy,  591,  593,  898. 
Rich  V.  Loutrel,  159,  160. 
Richards,  Ex  parte,  198. 
Richards  v.  Allen,  641,  650. 
Richards  v.  Chave,  64. 
Richards  v.  Haliday,  637. 
Richards  v.  Morris  Canal  &  Banking 

Co.,  948. 
Richards   v.    People,    180,    181,    194, 

195,  197. 
Richards  v.  West,  195. 


Richardson  v.   Clinton  Wall  Trunk 
Co.,  343. 

Richardson  v.  Hickman,  204. 

Richardson  v.  Turner,  443. 

Riches  v.  Owen,  613. 

Richey  v.  Gleeson,  118. 

Richmond  v.  Irons,  449. 

Richter  v.  Schroeder,  956. 

Rickert  v.   Suddard,  388. 

Ricks  V.  Broyles,  952. 

Rider  v.  Bagley,  796. 

Rider  v.  Vrooman,  796. 

Ridge  V.  Manker,  294,  297,  309. 

Ridout  V.  Earl  of  Plymouth,  138. 

Ridpath  v.  S.   P.  &  C.  R.  F.  &  T. 
Co.,  354. 

Rigge  V.  Bowater,  797. 

Riggs  V.  Whitney,  162,  651. 

Righton  V.  Pruden,  639,  640. 

Roach  V.  Glos,  806,  810,  841. 

Robenson  v.  Ross,  35. 

Roberson  v.  Roberson,  37. 

Robert  v.  Tift,  854. 

Roberts  v.  Anderson,  34,  980. 

Roberts  v.  Eberhardt,  668,  681. 

Roberts  v.  Parker,  819. 

Roberts  v.  Pipkin,  662. 

Robertson  v.  Detroit  Pattern  Works, 

182. 
Robertson  v.  Staed,  189. 
Robeson  v.  Ford,  175,  201. 
Robinson  v.  Arkansas  L.  &  T.  Co., 

320. 
Robinson  v.  Atlantic  &  Great  West- 
ern R.  Co.,  153,  167.  169. 
Robinson  v.  Dickey,  109. 
Robinson  v.  Hadley,  110. 
Robinson  v.  Huidekoper,  539. 
Robinson  v.  Mills,  544. 
Robinson  v.  Mutual  R.  L.  I.  Co.,  74, 

77. 
Robinson  v.  Taylor,  95. 
Robrecht  v.  Robrecht,  41. 
Roby  V.  Title  G.  &  T.  Co.,  107. 
Rochat  V.  Gee,  50,  945.  972. 
Rockwell  V.  Merwin,  266. 


Hi 


TABLE    OF    CASES    CITED. 


[REFERENCES   ARE    TO    PAGES.] 


Rockwell  V.  Portland  Savings  Bank, 

994. 
Rodger  Ballast  Car  Co.  v.  Omaha, 

K.  C.  &  E.  R.  Co.,  525,  530. 
Rodgers  v.  Adriatic  Fire  Ins.  Co., 

308,  437. 
Rodman  v.  Harvey,  581. 
Rodman  v.  Henry,  642. 
Rogers  v.  Chippewa  Circuit  Judge, 

543. 
Rogers  v.   Corning,  188,  647. 
Rogers  v.  Dougherty,  129,  131. 
Rogers  v.  Haines,  277,  888. 
Rogers  v.  Marshal],  740,  913. 
Rogers  v.  Newton,  813. 
Rogers  v.  Odom,  99,  150. 
Rogers  v.  Riley,  277,  280. 
Rogers  v.  Rogers  Locomotive  Co., 

234. 
Rogers  &  Baldwin  Hardware  Co.  v. 

Cleveland  B.  Co.,  8,  74. 
Rogers  Mfg.  Co.  v.  Rogers,  195. 
Roller  V.  Paul,  209,  953. 
Rollins  V.  Henry,  719,  739. 
Roman  v.  Woolfolk,  358. 
Root  V.  Safford,  618. 
Rose  V.  Baker,  631. 
Rose  V.  Bevan,  608,  899. 
Rosenberg  v.   Moore,  591,  593,  594, 

897. 
Rosenblatt  v.  Johnston,  445. 
Rosenthal  v.  McGraw,  952. 
Ross  V.  Bridge,  981. 
Ross  V.  Williams,  151. 
Rossman  v.  Mitchell,  267. 
Rouse  V.  Harry,  537. 
Rowan  v.  Ide,  44. 
Rowe  V.  Wood,  833,  834. 
Rowland  v.  Auto  Car  Co.,  660. 
Roxbury  v.  Central  Vermont  R.  Co., 

297. 
Royal  Trust  Co.  v.  Washburn,   B. 

&  I.  R.  Co.,  192. 
Ruffner  v.  Mairs,  41,  129. 
Ruggles  V.  Brock,  411. 
Ruggles  V.  Patton,  936,  937. 


Ruggles  V.  Southern  Minnesota 
Railroad,  461,  476,  814,  818,  895. 

Rumney  v.  Detroit  &  Montana  Cat- 
tle Co.,  354. 

Rumney  v.  Donovan,  219. 

Runals  v.   Harding,  618. 

Runk  V.  St.  John,  272,  277. 

Runyon  v.  Farmers  &  Mechanics 
Bank  of  New  Brunswick,  4,  406. 

Ruprecht  v.  Muhlke,  842. 

Russell  V.  Baker,  774. 

Russell  V.  Bruce,  806,  818. 

Russell  V.  Chicago  Trust  &  Savings 
Bank,  639. 

Russell  V.  East  Anglian  R.  Co.,  161, 
171,  192,  195. 

Russell  V.   Millett,   182. 

Russell  V.  Pacific  Ry.  Co.,  395. 

Russell  V.  Texas  &  P.  R.  Co.,  167, 
783. 

Rust  V.  United  Waterworks  Co., 
272. 

Rutherford  v.  Jones,  618. 

Rutter  V.  Tallis,  156,  157,  183. 

Ryan  v.  Hays,  510,  563. 

Ryan  v.   Kingsbery,  200. 

Ryan  v.  Lefroy,  839. 

Ryan  v.  Morrill,  704. 

Ryckman  v.  Parkins,  259,  960. 

Ryder  v.  Bateman,  26,  719,  721. 


S. 


Sackhoff  V.  Vandegrift,  595. 
Sacramento  &  P.  R.  Co.  v.  Superior 

Court,  480. 
Safford  v.  People,  469. 
Sage  V.   Memphis  &  L.  R.  R.  Co., 

463,  473. 
Salisbury  z:  Wilcox,  188. 
Sallee  v.   Soules,  18. 
Salway   v.    Salway,   328. 
San   Antonio   &   A.   P.   Ry.    Co.   v. 

Bowles,  556. 
Sanders  v.  Lord  Lisle,  840,  841,  977. 
Sandford  v.  Ballard,  756,  758,  913. 


TABLE   OF   CASES    CITED. 


liii 


[RBFERBNCKS    AKE    TO    PAGES.] 


Sand  ford  v.  Clarke,  330,  915. 
Sandford  v.  Sinclair,  128,  618. 
Sands  v.  Greeley  &  Co.,  66,  67,  69, 

277,  372,. 
Sands  v.  Hill,  418. 
Sands  v.  Roberts,  625. 
Sands  v.  Sanders,  412,  416,  418. 
Sands  v.  Sweet,  412,  417. 
Sanford  v.  Anderson,  787. 
Sanford  v.  United   States   F.  &  G. 

Co.,  592. 
San    Jose    Safe    Deposit    Bank    v. 

Bank  of  Madera,  739. 
Sankey  v.  O'Maley,  597. 
Sargant  v.  Read,  705. 
Saulsbury  v.  Lady  Ensley  C,  I.  & 

R.  Co.,  958,  971. 
Savage  v.  Medbury,  286,  398,  415. 
Savannah,  F.  &  W.  R.  Co.  v.  J.,  T. 

&  K.  W.  R.  Co.,  504,  506,  533. 
Sawyer,  In  re,  199. 
Saylor  v.  Mockbie,  655,  670,  904. 
Scaife  V.  Scammon,  373. 
Scannell  v.  Felton,  307. 
Scarborough  v.  Borman,  227. 
Schaberg  v.   McDonald,  228,  448. 
Schenck  v.  Ingraham,  971. 
Schenk  v.  Peay,  188. 
Schilcer  v.  Brock,  114. 
Schindelholz  v.  Cullum,  163. 
Schlecht's  Appeal,  113,  718,  734,  910. 
Schmid  v.  N.  Y.,  L.  E.  &  W.  R.  Co., 

563. 
Schmidt  v.  Gayner,  294. 
Schoeffler  v.  Schwarting,  980. 
Schofield  V.  Palmer,  455. 
Schoonover  v.  Hinckley,  410. 
Schreiber   v.    Carey,    126,   806,   807, 

818,  825. 
Schtirr  v.  Omaha  &  St.  L.  Ry.  Co., 

550. 
Schuyler's   S.  T.   B.   Co.,  In  re,  80, 

141,  156. 
Schwartz  v.  Keystone  Oil  Co.,  919, 
920,  921,  951,  973, 


Schwartz  v.  Rosetta  G.  P.  &  I.  Co., 

943. 
Scott  V.  Armstrong,  287,  458,  459. 
Scott  V.  Duncombe,  268. 
Scott  V.  Elmore,  629. 
Scott  V.  Nevius,  649. 
Scott  V.  Rainier  P.  &  R.  Co.,  321. 
Scott  V.  Scott,  731. 
Scott  V.  Searles,  61. 
Scott  V.  Ware,  793.      •■ 
Screven  v.  Clark,  247. 
Seagram  v.  Tuck,  143. 
Sea  Insurance  Co.  v.  Stebbins,  813, 

818,  819. 
Sealy  v.  Munns,  784. 
Seamans  v.  Millers'  M.  I.  Co.,  413. 
Searcy  v.  Stubbs,  256. 
Searle  v.  Choate,  294. 
Second  National  Bank  v.  Lappe  T. 

Co.,  68,  Z7Z. 
Second  Ward  Bank  v.  Upmann,  62, 

584. 
Secor  V.  T.,  P.  &  W.  R.  Co.,  192, 

499. 
Security  Bank  v.  National  Bank  of 

the  Commonwealth,  444,  457. 
Security  Life  Insurance  &  Annuity 

Co.,  In  re,  915. 
Security   S.   &   L.   Assn.  v.    Moore, 

68. 
Security     Title    &     Trust     Co.     v. 

Schlender,  704. 
Security  Trust  Co.  v.  Goble  Trust 

Co.,  381. 
Sedgwick  v.  Menck,  74,  81,  82. 
Sedgwick  v.  Place,  85. 
Seeds  Dry  Plate  Co.  v.  Heyn  Photo- 
Supply  Co.,  41. 
Seibert  v.  Minneapolis  &  St.  L.  Ry, 

Co.,  533. 
Seibert  v.  Seibert,  694. 
Seidenbach  v.  Denklespeil,  150. 
Seighortner  v.  Weissenborn,  885. 
Seignious  v.  Pate,  828. 
Sellers  v.  Stoffell,  806. 


liv 


TABLE    OF    CASES    CITED. 


[REFERENCES    ABE   TO    PAGES.] 


Seney  v.  Wabash  Western  R.  Co., 
322,  533. 

Sengfelder  v.  Hill,  719. 

Sercomb  v.  Catlin,  194. 

Seventh  National  Bank  v.  Shenan- 
doah Iron  Co.,  378. 

Severns  v.  English,  163. 

Seymour  v.  Aultman  Co.,  119. 

Seymour  v.  Wilson,  636. 

Shadewald  v.  White,  3. 

Shainwald  v.  Lewis,  260,  598,  599, 
976. 

Shand  v.  Hanley,  599. 

Shannon  v.  Davis,  858. 

Shannon  v.   Hanks,  41,  94,  95. 

Shannon  v.  Wright,  667,  695. 

Sharp  V.  Carter,  155,  156. 

Shaughnessy  v.  The  Rensselaer  In- 
surance Co.,  286,  389,  398,  412, 
415. 

Shaw  V.  Rhodes,  952,  953. 

Shaw  V.  Shore,  63,  801. 

Shea,  hi  re,  234. 

Shearing  v.  Trumbull,  88. 

Shedd  V.  Seefeld,  297,  299,  301. 

Shee  V.  Harris,  125,  746. 

Sheeks  v.  Klotz,  807. 

Sheets  Lumber  Co.,  In  re,  224,  919. 

Shehan  v.  Mahar,  28. 

Sheldon  v.  Ames,  255. 

Sheldon  v.  Parker,  125. 

Sheldon  v.  Weeks,  117. 

Shelly  V.   Pelham,  775. 

Shephard,  In  re,  620. 

Shepherd  v.  Pepper,  794,  818. 

Sheppard  v.  Oxenford,  62,  677,  887, 
906. 

Sheridan  Brick  Works  v.  Marion 
Trust  Co.,  34,  351,  359. 

Sherman  v.  Clark,  16,  883. 

Sherwood  v.  New  England  K.  Co., 
305. 

Shewell  V.  Jones,  948. 

Shinney  v.  North  American  S.,  L. 
&  B.  Co.,  69,  88. 


Shoemaker  v.  Smith,  668. 
Shotwell  V.  Smith,  792. 
Shreve  v.  Hankinson,  796. 
Shulte  V.  Hoflfman,  125,  141,  690. 
Sieghortner  v.   Weissenborn,  903. 
Sigua  Iron  Co.  v.  Brown,  8,  376. 
Sigwald  V.  City  Bank,  297. 
Silliman  v.  Whitmer,  195. 
Silver  V.   Bishop  of  Norwich,   748, 

836. 
Silverman  v.  Kuhn,  609. 
Silverman  v.  Northwestern  Mutual 

Life  Insurance   Company,  797. 
Simmons  v.  Allison,  153,  154,  915. 
Simmons  v.  Henderson,  33,  34,  870. 
Simmons  v.  Shelton,  942. 
Simmons  v.  Taylor,  246. 
Simmons   v.    Wood,    124,    131,    230, 

232. 
Simmons  Hardware  Co.  v.  Waibel, 

46. 
Simon  v.  Schloss,  671. 
Simpson  v.  Roberts,  798. 
Sims  V.  Adams,  136. 
Siney    v.    New    York    Consolidated 

Stage  Co.,  976,  979. 
Singerly  v.  Fox,  253,  292. 
Sjoberg  v.  Security  S.  &  L.  Assn., 

367. 
Skiddy  v.  A.,  M.  &  O.  R.  Co.,  516, 

519. 
Skinner  v.  Maxwell,  3,  15,  32,  153, 

162,  167,  169,  875. 
Skinner  v.  Terhune,  630. 
Skinners  Company  v.  Irish  Society, 

12,  21,  22,  718,  724,  SS2.  885,  910. 
Skip  V.  Harwood,  184.  191,  197,  198, 

709. 
Slade  V.  Van  Vechten,  227. 
Slemmer's    Appeal,    687. 
Sligh  V.  Shelton  S.  R.  Co.,  294. 
Sloan  V.  Central  Iowa  R.  Co.,  537, 

562. 
Slover  V.  Coal  Creek  C.  Co.,  17,  594, 
Small  V.  Smith,  280. 
Smathers  ?/.  Bank,  394. 


TABLE    OF    CASES    CITED. 


Iv 


[bbfeebnces  aue  to  pages.] 


Smiley  v.  Sioux  B.  S.  Co.,  10,  378. 

Smith,  Ex  parte,  62. 

Smith  V.   Brown,  667. 

Smith  V.  Burton,  224. 

Smith  V.  Butcher,  41,  109,  608. 

Smith  V.  Cawell,  33. 

Smith  V.  Earl  of  Effingham,  310. 

Smith  V.  Ely  &  Walker  Dry  Goods 

Co.,  55,  56,  182. 
Smith  V.  Harris,  652. 
Smith  V.  Hopkins,  53. 
Smith  V.  Jeyes,  667,  682,  683,  903. 
Smith  V.  Johnson,  387. 
Smith  V.  Kelley,  764. 
Smith  V.  Lowe,  671. 
Smith  V.  Lowery,  38. 
Smith  V.  Lusk,  7. 
Smith  V.  Lyster,  876,  987. 
Smith  V.  Manhattan  Insurance  Co., 

438. 
Smith  V.  McNamara,  181. 
Smith  V.  Mosby,  288. 
Smith    V.    New   York    Consolidated 

Stage  Co.,  93,  216,  217,  259. 
Smith   V.    Nursery   &    S.    Co.,    158, 

159. 
Smith  V.  Smith,  866. 
Smith  V.  St.  Louis  &  S.  F.  Ry.  Co., 

294,  546. 
Smith  V.  Superior  Court,  591. 
Smith  V.  Taggart,  371. 
Smith  V.  Thompson,  583,  588. 
Smith  V.  Tiffany,  806. 
Smith   V.    Trenton   Delaware   Falls 

Co.,  308. 
Smith  V.  United  States,  72. 
Smith  V.  United  States  Express  Co., 

317. 
Smith  V.  Vaughan,  990. 
Smith  V.  Wells,  19,  20,  352. 
Smith  V.  White,  739. 
Smith  V.  Woodruff,  644. 
Smith-Dimmick     Lumber     Co.     v. 

Teague,  114,  342. 
Snow  V.  Winslow,  573. 
Sobernheimer  v.  Wheeler,  277,  279. 


Solis  V.  Blank,  67. 

Sollory  V.   Leaver,    16,   738,   884. 

Solomons    v.    American    B.    &    L. 

Assn.,   952. 
Somerset  Coal  Co.  v.  Diamond  State 

S.  Co.,  189. 
Sorchan  v.  Mayo,  797. 
Sorley  v.  Brewer,  596,  898. 
South    Baltimore    B.    &    T.    Co.    v. 

Kirby,  222,  230,  231. 
South  Carolina  &  G.  R.  Co.  v.  C, 

C.  G.  &  C.  Ry.  Co.,  537. 
South   Carolina  R.   Co.   v.   People's 

Saving  Institution,  74. 
Southern  Bank  of  Kentucky  v.  Ohio 

Insurance  Co.,  364. 
Southern   B.  &  L.   Assn.  v.   Carey, 

793.  818,  825. 
Southern  Development  Co.  v.  Same, 

526. 
Southern  Granite  Co.  v.  Wadsworth, 

8,  294,  295. 
Southern  Mutual  B.  &  L.  Assn.  v. 

Andrews,  306. 
Southern  Pacific  R.  Co.  v.  Maddox, 

543. 
Southern   Railway   Co.,  In  re,  466. 
Southern    Ry.    Co.    v.    Adams,    509, 

511,  512,  513. 
Southern     Ry.     Co.     v.     American 

Brake  Co.,  509,  511,  512,  513. 
Southern  Ry.  Co.  v.  Carnegie  Steel 

Co.,  509,  511,  512,  513. 
Southern  Ry.  Co.  v.  Dunlop  Mills, 

518. 
Southern  Ry.   Co.  v.  Tillett,  513. 
Spalding  v.  Commonwealth,  166. 
Special     Bank     Commissioners     v. 

Franklin  Institution,  917,  920,  954. 
Speights  V.  Peters,  6,  16,  657,  693. 
Speiser     v.     Merchants'     Exchange 

Bank,  921,  930,  952,  960. 
Spencer  v.  Brooks,  533. 
Spencer  v.  Cuyler,  581,  588,  589. 
Spencer  v.  World's  Columbian  Ex- 
position. 322,  323,  325. 


Ivi 


TABLE    OF    CASES    CITED. 


[references    ABE    TO   PAGES.] 


Spinning  v.  Ohio  Life  Insurance  & 

Trust   Co,   74,   11,   80,    161,    192, 

193. 
Spokane    v.    Amsterdanisch    T.    K, 

719,  724. 
Spokane  County  v.  Annis,  166. 
Spring  V.  Strauss,  643. 
Springer  v.  Ayer,  11. 
Stairley  v.  Rabe,  858,  861,  873. 
Standish  v.  Musgrove,  811,  943,  944. 
Standley  v.   Handrie  &  B.  M.  Co., 

378. 
Stanger  Leathes  v.  Stanger  Leathes, 

33,  853. 
Stanley    v.    National    Union    Bank, 

53. 
Stannus  v.  French,  228. 
Stanton  v.  A.  &  C.  R.  Co.,  567,  569, 

574. 
Staples  V.  May,  814,  815. 
Stark  V.  Burke,  389,  407,  431,  432. 
Starr  v.  Rathbone,  584,     586. 
State  V.  A.  &  G.  R.  Co.,  469. 
State  V.  Allen,  727. 
State  V.  Anheuser-Busch  B.  Assn., 

61,  382. 
State  V.  Bank  of  New  England,  13. 
State  V.  Bank  of  Rushville,  211,  217. 
State  V.  Bell,  219. 
State  V.  Butler,  961. 
State  V.  Circuit  Court,  195. 
State  V.  City  of  New  Orleans,  129, 

212. 
State  V.  Claypool,  981. 
State  V.  Corning  State  S.  Bank,  328. 
State  V.  Bearing,  129. 
State  V.  Denham,  202. 
State  V.  District  Court,  26,  55,  129, 

132,  201,  355,  356,  592,  739. 
State  V.  E.  &  K.  R.  Co.,  490. 
State  V.  Exchange  Bank,  61. 
State  v.  Fawcett,  232,  346. 
State  V.  Fichtenkamm,   255. 
State   V.    German    Exchange   Bank, 
938. 


State  V.   Germania  Bank,  330,  930, 

942,  959. 
State  V.  Gibson,  146,  336. 
State    V.    Gooch,    328. 
State  V.  Hirzel,  219. 
State  V.  J.,  P.  &  M.  R.  Co.,  117,  129, 

429,  461. 
State  V.   Johnson,  45,  218. 
State    V.    Judge    of    Civil    District 

Court,  53,  167. 
State  V.  M.  &  C.  R.  Co.,  472. 
State  V.  Markuson,  195. 
State  V.  McM.  &  M.  R.  Co.,  490. 
State  V.  Merchant,  468. 
State  V.  Milligan,  199. 
State  V.   Minneapolis  &  St.  L.  Ry. 

Co.,  551. 
State  V.  Miller,  86. 
State  V.   Nebraska   S.   &  E.   Bank, 

916,  917,  942. 
State  V.   Northern   Central   R.   Co., 

63. 
State  V.  Northern  Pac.  R.  Co.,  88. 
State  V.  People's  U.  S.  Bank,  917, 

932. 
State  V.   Phoenix  Loan  Assn.,  367. 
State  V.   Pierce,   195. 
State  V.   Port  Royal  &  A.   R.   Co., 

544,  547. 
State  V.  Reynolds,  70,  153,  154,  188. 

976. 
State  V.  Rivers,  155. 
State  V.  Ross,  2,  24,  55,  56. 
State  V.  Stull,  45. 
State  V.  Sullivan,  241,  242. 
State   V.    Superior   Court,    199,   624, 

979. 
State  V.  Theard,  199. 
State  V.  Union  National  Bank,  24. 
State  V.  Union  Stock  Yards  State 

Bank,   393. 
State  V.  Wabash  R.  Co.,  551. 
State  V.  Woodson,  367. 
State  Bank,  In  re,  916. 
State  Bank  v.  Domestic  S.  M.  Co^ 
4. 


TABLE    OF    CASES    CITED. 


Ivii 


[bbfeeences  aue  to  pages.] 


State  Bank  v.  Gill,  582. 

State  Bank  v.  Receivers  of  Bank  of 

New    Brunswick,   288. 
State  Central  Savings  Bank  v.  Bali- 
Bearing  Chain  Co.,  211,  942,  943, 
958. 
State  Investment  &  Insurance  Co.  v. 

Superior  Court,  343. 
State  of  Maryland  v.  Northern  Cen- 
tral  R.   Co.,  484. 
State   Trust  Co.   v.   National   L.   I. 

&  M.  Co.,  98. 
Stearns    Paint    Mfg.    Co.   v.    Corn- 
stock,  921. 
Steel  V.  Holladay,  932. 
Steele  v.  Aspy,  20. 
Steele  v.  Cobham,  858,  864. 
Steele  v.  Sturgis,  141,  156,  157,  183. 
Steele  v.  Walker,  301. 
Steinke  v.  Loofbourow,  392,  395. 
Stelzer  v.   La  Rose,   703,  781. 
Stenhouse  v.  Davis,  870. 
Stephens  v.  Augusta  T.  &  E.   Co., 

299,  302. 
Stephens  v.  Meriden  B.  Co.,  402. 
Stephens  v.  Perrine,  637. 
Sterling  Electric  Co.  v.  Augusta  T. 

&  E.  Co.,  247. 
Stern  v.  Austern,  598. 
Stern  v.  State  Board,  31. 
Sternberg  v.  Wolff,  349,  351. 
Stevens  v.  Davison,  461,  464. 
Stevens  v.  Hadfield,  811. 
Stevens  v.  Myers,  980. 
Stevens  v.  South  O.  L.  Co.,  350. 
Steward  v.  Green,  613. 
Steward  v.  Stevens,  583,  588,  589. 
Stewart  v.  Beebe,  265,  267. 
Stewart  v.  Chesapeake  &  Ohio  Canal 

Co.,  375. 
Stewart  v.  Lay,  408,  410. 
St.  George,  Estate  of.  In  re,  982. 
Stillman  v.  Dougherty,  408,  411. 
Stillwell  V.   Savannah  Grocery  Co., 

16. 
Stihvell   V.   Wilkins,   729,   730. 


Stith   V.   Jones,   759. 

Stitwell    V.    Williams,   729,    730. 

St.  John  V.  Denison,  264. 

St.  Johns  Table  Co.  v.  Brown,  265. 

St.  Joseph  &  Denver  City  R.  Co.  v. 

Smith,  294,  297,  298,  541. 
St.    Joseph    &    St.    L.    R.    Co.    v. 

Humphreys,  322,  533. 
St.  Louis,  A.  &  S.  R.  Co.  v.  Hamil- 
ton, 153,  161,  162,  192,  294,  296. 
St.  Louis,  A.  &  S.  R.  Co.  v.  O'Hara, 

515,  517. 
St.  Louis,  A.  &  T.  R.  Co.  v.  Whit- 

aker,  168. 
St.    Louis    Car    Co.    v.    Stillwater 

Street  R.  Co.,  347. 
St.  Louis,  C  G.  &  F.  S.  Ry.  Co.  v. 

Holladay,  2,  307,  430. 
St.  Louis,  K.  &  S.  R.  Co.  v.  Wear, 

102,  130,  200. 
St.  Louis  Merchants'  B.  T.  Ry.  Co. 

V.  Continental  Trust  Co.,  526. 
St.   Louis   National   Bank  v.   Field, 

793. 
St.  Louis  &  S.  C.  &  M.  Co.  v.  San- 
doval C.  &  M.  Co.,  56. 
St.  Louis  &  S.  F.  Ry.  Co.  v.  Bricker, 

550. 
St.   Louis    S.    W.    Ry.    Co.   v.   Hol- 

brook,  537,  544. 
St.  Louis  Trust  Co.  v.   Riley,  509, 

515,  528. 
Stockbridge    v.    Beckwith,    67,    272, 

275. 
Stockley  v.  Thomas,  38,  369. 
Stockton  V.  Central  R.  R.  Co.,  892. 
Stockton   V.   Harmon,   129. 
Stockton  V.    Mechanics,   etc.,  Bank, 

322. 
Stoepel  V.  Union  Trust  Co.,  322,  326. 
Stokes  V.  Hoffman  House,  50,  322. 
Stokes  V.  Knickerbocker  Investment 

Co.,  353,  433. 
Stokes  V.   New  Jersey  P.  Co.,  403. 
Stolze  V.  Manitowoc  T.  Co.,  430. 
Stolze  V.  M.  &  L.  W.  R.  Co.,  544. 


Iviii 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Stone  V.  Dodge,  288. 
Stone  V.  Omaha  Fire  Ins.  Co.,  955. 
Stone  V.  Taylor,  747. 
Stone  V.  Wetmore,  29,  30,  886. 
Stone  V.  Wishart,  98,  105,  875. 
Stoner  v.  Bitters,  167. 
Stoors  V.  Kelsey,  585. 
Storm  V.   Ermantrout,  831. 
Storm  V.  Waddell,  74,  71,  626. 
Story  V.  Furman,  393. 
St.  Paul  Title,  I.  &  T.  Co.  v.  Diago- 
nal Coal  Co.,  959. 
St.  Paul  Trust  Co.  v.  Alintzer,  735. 
Strain  v.  Palmer,  162,  915. 
Strang  v.  M.  &  E.  R.  Co.,  521. 
Stratton  v.  Davidson,  136. 
Strauss  v.  Inter-State  B.  &  L.  Assn., 

367. 
Street   v.   Anderton,    756,   757,   758, 

913. 
Streit    V.    Citizens    Fire    Insurance 

Co.,  360. 
Stretch  v.  Gowdey,  915,  950. 
Strong  V.  Carlyle  Press,  804. 
Strong  V.  Goldman,  599. 
Strong  V.  Southworth,  448. 
Stuart  V.  Boulware,  919,  955. 
Stuart  V.  Hayden,  448. 
Stubbs,  In  re,  804. 
Stuparich    Mfg.     Co.    v.    Superior 

Court,  175. 
Sturch  V.  Young,  788. 
Sturgeon  v.  Douglas,  775. 
Sturgis  V.  Knapp,  155. 
Stuyvesant  Bank,  In  re,  105. 
Suflfern  v.  Butler,  980. 
Sullivan  v.  Colby,  172. 
Sullivan  v.  Gage,  955. 
Sullivan  v.  Judah,  195. 
Sullivan  v.  Miller,  800. 
Sullivan  Electric  L.  &  P.  Co.  v.  Blue, 

35,  129. 
Suit  V.  Hochsletter  Oil  Co.,  7. 
Sunflower  Oil  Co.  v.  Wilson,  533. 
Sutherland  v.   Lake    Superior   Ship 

Canal  R.  &  I.  Co.,  802. 


Sutro  V.  Wagner,  667,  669,  903. 

Sutton  V.  Jones,  104,  855. 

Suydam  v.  Dequindre,  600. 

Suydam  v.  Receivers  of  Bank  of 
New  Brunswick,  420. 

Swaby  V.  Dickon,  966. 

Swan  V.  Mitchell,  790. 

Swann  v.  Clark,  567,  572. 

Swann  v.  Wright's  Executor,  572. 

Sweeny  v.  Mayhew,  33. 

Sweet  V.   Partridge,  605,   606. 

Sweet  &  Clark  Co.  v.  Union  Na- 
tional Bank,  818. 

Swing  V.  Townsend,  44. 

Swope  V.  Villard,  358,  546. 

Sykes  v.  Hastings,  98,  104,  855, 
875. 

Sylvester  v.  Reed,  614,  868. 

Syme  v.  Bunting,  150. 


Tabor  v.  Bank  of  Leadville,  916. 

Tait  V.  Jenkins,  874. 

Talbot  V.  Hope  Scott,  715,  716,  718, 

719. 
Talladega  Mercantile  Co.  v.  Jenifer 

Iron  Co.,  159. 
Talmage  v.  Pell,  256,  385. 
Tampa  Suburban  R.  Co.,  In  re,  43. 
Tandrup  v.  Sampsell,  301. 
Tanfield  v.  Irvine,  835,  838,  844. 
Tapp  V.  Rankin,  884. 
Tappan  v.  Gray,  29,  8S5. 
Tapscott  V.  Lyon,  180. 
Tarvin  v.  Walker's  Creek  C.  &  C. 

Co.,  886.  < 

Taylor  v.  Allen,  250. 
Taylor  v.  Baldwin,  294,  295. 
Taylor  v.   Canaday,  238. 
Taylor  v.  Columbian  Insurance  Co., 

66,  67,  275,  277. 
Taylor  v.  Cuban  L.  &  S.  Co.,  350. 
Taylor  v.  Decatur  M.  &  L.  Co.,  343. 
Taylor  v.  Dickinson,  980. 
Taylor  v.  Emerson,  597,  742. 


TABLE    OF    CASES    CITED. 


lix 


[BEFBBBNCES   ABU   TO    PAtiKB.] 


Taylor  v.  Fanning,  40i. 
'I'aylor  v.  Giileau,  iiiu,  181, 
Taylor  v.  Kirby,  36, 
Taylor  v.  Life  Association  of  Amer- 
ica, 97,  143. 
Taylor  v.  Mitciieii,  402. 
Tayior  V.  iNeate,  665. 
Taylor  z;.  P.  &  R.  R.  Co.,  471,  514, 

i)ZO,  56S,  567. 
Tayior  v.  Sweet,  209, 
Teller  v.  Randall,  643. 
Tempest  v.  Ord,  946. 
Temple  v.  Glasgow,  141,  157,  591. 
Temple  v.  Williams,  674. 
Tenorook  v.  Jessup,  732, 
Tennis  liros,   Co.  v.   Wetzel  &  T, 

Ry.  Co.,  322. 
Terrell  v.  Goddard,  666. 
Terrell  v.  Ingersoll,  320, 
ierry  v.  Bamberger,  2o3,  390, 
Terry  v.  iVlarlin,  4y,  217. 
Texas  Consolidated  C.  &  M,  Assn. 

V.  Storrow,  43,  353,  591. 
Texas  &  Pacific  R.  Co.  v.  Adams, 

563, 
Texas  &  Pacific  R,  Co.  v.  Bloom, 

555. 
Texas   &  Pacific  R.   Co.   v.   Brick, 

555. 
Texas  &  Pacific  R.  Co,  v.  Collins, 

553. 
Texas  &  Pacific  R.  Co,  v.  Comstock, 

555,  563. 
Texas  &  Pacific  R.  Co.  z/.Cox,  547. 
Texas  &  Pacific  R.  Co.  v.  Gay,  5,  55, 

550,  556. 
Texas  &  Pacific  R.  Co.  v.  Geiger, 

555,  558. 
Texas  &.  Pacific  R,   Co,  v.  Griffin, 

556, 
Texas  &  Pacific  R,  Co.  v.  Huffman, 

556, 
Texas  &  Pacific  R.  Co.  v.  Johnson, 

555. 
Texas  &   Pacific  R.   Co.  v.   Miller, 


Texas  &  Pacific  R.  Co.  v.  Overheis- 

er,  555. 
Texas  Trunk  R.  Co.  v.  State,  461. 
Tharpe  v.  Tharpe,  91,  92,  97. 
Thayer  v.  Swift,  583,  588. 
The  Anvil  v.  Savery,  13. 
The  Jonas  H.  French,  170. 
The    Willamette   Valley,   66,    190. 
Thom  V.  Pittard,  312. 
Thomas  v.  Brigstocke,  809,  991. 
Thomas  v.   Cincinnati,   N.  O.  &  T. 

P.  R.  Co.,  194,  499. 
Thomas  v.  Davies,  126,  806,  807. 
Thomas  v.  Dawkin,  91,  92. 
Thomas  v.  Gartner,  628. 
Thomas  v.  Nantahala  M,  &  T.  Co., 

759. 
Thomas  v.  Thomas,  776. 
Thomas  v.  Van  Meter,  8,  22,  257. 
Thomas  v.  Western  Car  Co.,   521, 

531. 
Thomas  v.  Whallon,  241,  286,  399, 

412,  413,  416,  417. 
Thompsen  v.   DifTenderfer,  33,  591, 

594,  897. 
Thompson  v.  Adams,  10,  18,  591. 
Thompson  v.  Allen  County,  587. 
Thompson  v.  Greeley,  240,  391. 
Thompson  v.  Holladay,  53,  225. 
Thompson  v.  McCleary,  167,  169. 
Thompson  v.  Northern  Pac.  R,  Co., 

561,  562. 
Thompson  v.  Orser,  861. 
Thompson  v.  Phenix  Insurance  Co., 

256,  945. 
Thompson  v.  Schartzel,  456, 
Thompson  v.  Scott,  294,  295, 
Thompson  v.  Selby,  118. 
Thompson  v.  Sherrard,  739. 
Thompson  v.  Silverthome,  29. 
Thompson  v.  Tower  M.  Co.,  128. 
Thompson  v.   Willamette   S.  M.  L. 

&  M.  Co.,  928. 
Thomson  v.  MacGregor,  148. 
Thornhill  v.  Thornhill,  213, 
Thornley  v.  Walsh  Co.,  373. 


Ix 


TABLE    OF    CASES    CITED. 


[BBFERENCES   AEB    TO    PAGES.] 


Thornton  v.  Highland  A.  &  B.  R. 

Co.,  50. 
Thornton    v.    Washington    Savings 

Bank,  173. 
Thornton-Thomas  Mercantile  Co.  v. 

Bretherton,  57. 
Threadgill  v.   Colcord,  53,  107,  223, 

234. 
Thum  V.  Pyke,  67. 
Thurman  v.  Cherokee  R.  Co.,  539. 
Tillinghast  v.   Champlin,  699,  703. 
Tillotson  V.  Wolcott,  625,  626. 
Tiltow  V.  Cascade  O.  M.  Co.,  265. 
Timothy  v.   Day,  20. 
Tindall  v.  Nisbet,  333,  942. 
Tink  V.  Rundle,  163,  164,  294,  304, 

305,  888,  889. 
Tinkham  v.   Borst,   260. 
Tippecanoe   Township    v.    Manlove, 

413,  414. 
Titherington's  Adm'r  v.  Hodge,  224. 
Title  Insurance  &  T.  Co.  v.  Grider, 

53,  55. 
Tobey  v.  Russell,  407. 
Tobias  v.  Tobias,  297. 
Tobin  V.  Central  Vermont  Ry.  Co., 

550,  561,  562. 
Tobin    V.    Portland    Flouring    Co., 

933. 
Todd  V.  Crooke,  601. 
Todd  V.  Lee,  597,  899. 
Todd  V.  Rich,  667,  705,  932. 
Toledo,  W.  &  W.  R.  Co.  v.  Beggs, 

258. 
Tome  V.  King,  837,  923. 
Tomlinson  v.  Ward,  25,  139,  669. 
Tomlinson   &   Webster   M.    Co.    v. 

Shatto,  601. 
Tompkins  Co.  v.  Catawba  Mills,  348, 

591. 
Tompson  v.  Huron  L.  Co.,  919,  921, 

937. 
Torbert  v.  Jeffrey,  63. 
Tornanses  v.  Melsing,  219. 
Totten  &  Hogg  I.  &  S.  F.  Co.  v. 

Muncie  Nail  Co.,  159,  222. 


Towle  V.  American  B.,  L.  &  I.  So- 
ciety, 367. 
Town  of  Vandalia  v.  St.  L.,  V.  & 

T.  H.  R.  R.  Co.,  36,  Z7,  53,  54, 

55,  153,  199,  568. 
Towne  v.  Campbell,  601. 
Tozer  v.  O'Gorman,  221. 
Tracy   v.    First    National    Bank    of 

Selma,  306. 
Traders  Insurance  Co.  v.  Mann,  4. 
Travelers  Insurance  Co.  v.  Brouse, 

807. 
Tredennick  v.  Graydon,  605. 
Tregaskis    v.    Judge    of    Superior 

Court,  7. 
Trenton  Banking  Co.  v.  Woodruff, 

833,  834. 
Triebert  v.  Burgess,   129,  130. 
Tripp  V.  Boardman,  216. 
Trissilian  v.  Caniflfe,  814. 
Truman  v.   Redgrave,  790. 
Trust  &  Deposit  Co.  v.  Spartanburg 

W.  Co.,  26,  348. 
Try  V.  Try,  169. 

Trye  v.  Earl  of  Aldborough,  814. 
Tuckerman  v.  Brown,  400. 
Tufts  V.  Little,  764. 
Tumlin  v.  Vanhorn,  764. 
Turner  v.  Cross,  553. 
Turner  v.  Hannibal  &  St.  Joseph  R. 

Co.,  550. 
Turner  v.  I.,  B.  &  W.  R.  Co.,  509, 

510,  511,  512,  523. 
Turner    v.    P.    &    S.    R.    Co.,    567, 

569. 
Turnipseed  v.  Kentucky  Wagon  Co., 

16. 
Tuttle  V.  Blow,  35,  132. 
Tuttle  V.  National  Bank,  395. 
Twin   City   Power   Co.   v.   Barrett, 

16,  17. 
Twitty  V.  Logan,  719. 
Tylee  v.  Tylee,  138. 
Tyler,  In  re,  165. 
Tyler  v.  Whitney,  588,  590,  650. 
Tyler  v.  Willis,  588,  590,  650. 


TABLE   OF    CASES    CITED. 


Ixi 


[RKI'EEENCES    ABB   TO    PAGES.] 


Tyrrell  v.  Painton,  586. 
Tysen  v.  Wabash  R.  Co.,  478. 
Tyson  v.  Fairclough,  756,  760. 

U. 


Ueland  v.  Haugan,  238. 
Uhl  V.  Dillon,  897,  591,  592. 
Ulman  v.  Clark,  741. 
Underwood  v.  Sutcliffe,  638. 
Union  Bank  Case,  330,  915. 
Union  Bank  of  Chicago  v.  Kansas 

City  Bank,  9,  12. 
Union  Boom  Co.  v.   Samish  Boom 

Co.,  13,  113. 
Union  M.  L.  I.  Co.  v.  Union  M.  P. 

Co.,  790. 
Union  National  Bank  v.  Mills,  915, 

917,  919,  921,  938. 
Union    Street   Ry.    Co.   v.    City   of 

Saginaw,  470. 
Union  Trust  Co.  v.  Atchison,  T.  & 

S.  F.  R.  Co.,  69,  541. 
Union  Trust  Co.  v.  C.  &  L.  H.  R. 

Co.,  569. 

Union  Trust  Co.  v.  Illinois  Midland 

R.  Co.,  504,  509,  511,  514,  518.  566, 

567,  574. 

Union  Trust  Co.  v.  Morrison,  528. 

Union  Trust   Co.   v.   Souther,   511, 

519. 
Union  Trust  Co.  v.  St.  L.,  I.  M.  & 

S.  R.  Co.,  478. 
Union  Trust  Co.  v.  The  Rockford, 
Rock  Island  &  St.  Louis  R.  Co., 
74,  75,  84,  486,  488. 
Union  Trust  Co.  v.  Walker,  519. 
Union  Trust  Co.  v.  Weber,  160. 
United   States  v.   Church,  122,   174, 

239,  343,  915,  930. 
United   States  v.  De  Coursey,  501. 
United  States  v.  Duluth,  880. 
United   States  v.  Kane,  499. 
United  States  v.  Masich.  834. 
United  States  Investment  Corpora- 
tion V.  Portland  Hospital,  51,  378 


United  States  Rubber  Co.  v.  Ameri- 
can O.  L.  Co.,  42. 

United  States  Shipbuilding  Co.  v. 
Conklin,  13,  433. 

United  States  Trust  Co.  v.  Harris, 
290. 

United  States  Trust  Co.  v.  Mercan- 
tile Trust  Co.,  535. 

United  States  Trust  Co.  v.  New 
York,  W.  S.  &  B.  R.  Co.,  516, 
525. 

United  States  Trust  Co.  v.  Omaha 
&  St.  L.  R.  Co.,  499. 

United  States  Trust  Co.  v.  Wabash 

Western  R.  Co.,  322,  533. 
United  States  Vinegar  Co.  v.  Spam- 

er,  257. 
University  of  Illinois  v.  Globe  Sav- 
ings Bank,  8. 
Utica  Insurance  Co.  v.  Lynch,  951, 
957. 


Vail  V.  Hamilton,  402. 

Vail   V.   Knapp,  887. 

Valley  National  Bank  v.  Claflin  Co., 
13,  230. 

Van  Allen,  In  re,  216,  419. 

Van  Alstyne  v.  Cook,  623,  674. 

Van  Antwerp  v.  Hulburd,  445. 

Van     Bianchi     v.     Wayne     Circuit 
Judge,  182. 

Van  Brocklin  v.  Queen  City  P.  Co., 
922. 

Van  Buren  v.  Chenango  County  Mu- 
tual Insurance  Co.,  930. 

Vanderbilt  v.  Central  R.  Co.,  494. 

Van  Dusen  v.  Worrell,  262. 

Van  Dyck  v.  McQuade,  288. 

Van  Epps  v.  Van  Epps,  226. 

Vann  v.  Bamett,  121,  122,  123,  729. 

Van  Rensselaer  v.  Emer>',  3,  4,  684, 
702,  902,  908. 

Van  Wagenen  v.  Clark,  407. 


Ixii 


TABLE    OF    CASES    CITED. 


[bbferences  are  to  pages.] 


Van  Wagoner  v.  Paterson  Gas  Light 

Co.,  286,  288,  289. 
Varnum  v.  Leek,  760. 
Vasele  v.   Grant   Street  E.  R.   Co., 

30L 
Vaughan  v.  Vaughan,  140. 
Vaughan  v.  Vincent,  755. 
Vause  V.  Woods,  604,  718,  719. 
Veatch   v.   American  L.   &  T.   Co., 

528,  529. 
Veith  V.   Ress,    115,   132,    181,   217, 

659. 
Venner  v.  W.  W.  Co.,  102,  430. 
Veret  v.  Duprez,  65. 
Vermont  &  Canada  R.  Co.  v.  Ver- 
mont Central  R.  Co.,  161,  192,  240, 

490,  491,  498,  887,  896. 
Verplanck  v.   Mercantile  Insurance 

Co.,  128,  132,  933. 
Very  v.  Watkins,  188. 
Vestel  V.  Tasker,  163. 
Vila   V.   Grand    Island   E.   L.,   I.   & 

C.  S.  Co.,  10,  14,  24,  50,  342. 
Vilas  V.  Page,  508. 
Villere  v.  New  Orleans  P.  M.  Co., 

51,  955. 
Vincent  v.  Parker,  176. 
Virginia    &    Alabama    Coal    Co.    v. 

Central  R.  &  B.  Co.,  504,  506,  509, 

511,  513. 
Virginia-Carolina    Chemical    Co.   v. 

Provident  S.  L.  A.  Society,  591. 
Virginia,  T.  &  C.  Steel  &  I.  Co.  v. 

Bristol  Land  Co.,  164,  165,  888. 
Virginia,  T.  &  C.  Steel  &  Iron  Co. 

V.  Wilder,  61. 
Visage  v.   Schofield,  987. 
Visalia  City  Water  Co.  v.  Superior 

Court,  995. 
Vizard  v.  Moody,  740. 
Von  Roun  v.   Superior  Court,   159. 
Von    Schlemmer  v.    Keystone   Life 

Ins.   Co.,  356. 
Voorhees  v.   Indianapolis   C.  &  M. 
Co.,  302,  387. 


Vose  V.  Reed,  14,  15,  18,  850. 
Voshell  V.  Hynson,  34,  129,  131,  980. 

W. 

Wabash    R.    Co.   v.    Dykeman,    129, 

132,  461,  463. 
W^abash,    St.    L.    &    P.    R.    Co.    v. 

Central  Trust  Co.,  463. 
Wachtel  v.  Wilde,  591. 
Wagar  v.  Stone,  790. 
Wales  V.  Dennis,  692. 
Walker,  Ex  parte,  881,  867. 
Walker  v.  Denne,  604. 
Walker  v.  Drew,  870. 
Walker  v.  Fitzgerald,  719. 
Walker   v.    George    Taylor   C.    Co., 

181. 
Walker  v.  Green,  294. 
Walker  v.  House,  696,  697,  906. 
Walker  v.  Morris,  783. 
Wall  V.  Piatt,  554. 
Wallace  v.  Loomis,  565,  566,  569. 
Wallace  v.  Milligan,  704. 
Wallace  v.  Pierce-Wallace  Publish- 
ing Co.,  342,  350. 
Wallace  v.  Yeager,  703. 
Walla  Walla  v.  Walla  Walla  Water 

Co.,  17. 
Waller  v.  Hamer,  392,  395. 
Walling  V.  Miller,  167,  168. 
Wall  Street  Fire  Ins.  Co.  v.  Loud, 

825. 
Walsh  V.  Byrnes,  636. 
Walsh  V.  Raymond,  321. 
Walsh  V.  Walsh,  779. 
Walters   v.    Anglo-American   M.   & 

T.  Co.,  343. 
Walton  V.  Develing,  199. 
Ward   V.    Hotel   Randolph   Co.,    10, 

358. 
Ward  V.   Pacific   M.   L.   I.   Co.,  67, 

272. 
Ward  V.  Petrie,  241. 
Ward  V.  Swift,  184,  205. 
Wardell  v.  Leavenworth,  615. 


TABLE    OF    CASES    CITED. 


Ixiii 


[nBt'EBKNCES    AUE    TO    PAGES.] 


Wardle  v.  Hudson,  241,  242. 

Wardle  v.  Townsend,  414. 

Ware  v.  Supreme  Sitting,  371. 

Ware  v.  Ware,  871. 

Waring  v.  Robinson,  673. 

Warner  v.  Gouverneur's  Ex'rs,  819, 
820. 

Warner  v.  Imbeau,  431. 

Warner  v.  Rising  Fawn  Iron  Co., 
790. 

Warren  v.  Bunch,  189. 

Warren  v.  Monnish,  111. 

Warren  v.  Pitts,  13,  818. 

Warren  v.  Sprague,  259. 

Warren  v.  Union  National  Bank, 
272,  275. 

Warwick  v.  Hammell,  845. 

Warwick  v.  Stockton,  666. 

Washer  v.  Brown,  34,  980. 

Washington  City  &  P.  L.  R.  Co.  v. 
S.  M.  R.  Co.,  988. 

Washington  I.  W.  Co.  v.  Jensen, 
800. 

Washington  Life  Insurance  Co.  v. 
Fleischauer,  840. 

Washington  Mill  Co.  v.  Sprague 
Lumber  Co.,  400. 

Waterbury  v.  Merchants  Union  Ex- 
press Co.,  342,  343.  892. 

Waterhouse  v.  Comer,  499,  500. 

Waters  v.  Carroll,  2,  99,  100. 

Waters   v.    Melson,    150. 

Waters  v.  Taylor,  49. 

Watkins  v.  Brent,  64. 

Watkins  V.  Minnesota  T.  M.  Co., 
234. 

Watkins  v.  National  Bank  of  Lau- 
rence,  454. 

Watkins  v.  Pinkney,  74,  11,  78. 

Watson  V.  Arundel,  98. 

Watson  V.  McKinnon,  690. 

Watson  V.   Sutherland,  17. 

Watterson  v.   IMasterson,  394. 

Wayne  Pike  Co.  v.  Hammons,  358. 

Wayne  Pike  Co.  v.  State,  294. 

Webb  V.   Overmann,  617. 


Webb  V.  Van  Zandt,  747. 
Weber  v.  Weber,  704,  705. 
Webster  v.  Couch,  16,  883. 
Weed  V.  Central  of  Georgia  Ry.  Co., 

961. 
Weed  V.  Smull,  631. 
Weeks  v.  Weeks,  772. 
Weems  v.  Lathrop,  15,  148. 
Wehrs  v.   Sullivan,  153,  975. 
Weigand  v.  Alliance  S.  Co.,  929. 
Weigen  v.  Council  Bluffs  Ins.  Co., 

431. 
Weill  V.  First  National  Bank,  246. 
Weise  v.  Welsh,  759. 
Welch  V.  Henry,  800. 
Welles  V.  Stout,  459. 
Wellman  v.  Harker,  675. 
Wells,  In  re,  863. 

Wells  V.  Hartford  Manilla  Co.,  321. 
Wells  V.  Higgins,  779. 
Welton  V.  Dickson,  17. 
Wenar  v.  Schwartz,  35. 
Wenzel  v.  Palmetto  B.  Co.,  358. 
Werborn's  Adm'r  v.  Kahn,  129. 
Werner  v.  Murphy,  406. 
Weslosky  v  Quarterman,  357, 
West  V.  Chasten,  120,  673. 
West  V.  Conant,  827. 
West  V.  Mercer,  858. 
West  V.  Swan,  123,   124. 
West  V.  Weaver,  60. 
Western   Electric  Co.  v.   Williams- 
Abbott  Electric  Co.,  44. 
Western    Union    Telegraph    Co.  v. 

Atlantic  &  Pacific  Telegraph  Co., 

467. 
Westinghouse    Co.    v.    Christensen 

Co.,  44. 
Wetter  v.  Schleiper,  976. 
Wheatley  v.  Glover,  394. 
Wheeler    v.    Clinton    Canal    Bank, 

347. 
Wheeler    v.    Dime    Savings    Bank, 

371. 
Wheeler  v.  Smith,  544. 
Whelan  v.  Enterprise  T.  Co.,  642. 


Ixiv 


TABLE    OF    CASES    CITED. 


[befeeences  are  to  pages.] 


Whelpley  v.  Erie  Railway  Co.,  13,  14, 

466,  881. 
Whightsel  v.  Felton,  496. 
Whilden  v.  Chapman,  584,  591. 
Whipple  V.  Lee,  691. 
White,  In  re,  195. 
White  V.  Baugh,  328. 
White  V.  Bishop  of  Peterborough, 

748. 
White  V.  Britton,  100,  109. 
White  V.  Colfax,  667,  670. 
White  V.  Ewing,  87. 
White  V.  Griggs,  827. 
White  V.  Haight,  389,  390. 
White    V.    Lord    Westmeath,    120, 

968,  989. 
White  V.  Low,  265,  266. 
White  Water  Valley   Canal   Co.  v. 

Vallette,  830. 
Whitehead  v.  Hale,  13,  787. 
Whitehead  v.  Wooten,  6,   123,  124, 

129,  133,  824. 
Whitehouse  v.  P.  D.,  T.  &  E.  Ry. 

Co.,  111. 
Whitelaw  v.  Sandys,  743. 
Whitely  v.  Central  Trust  Co.,  527. 
Whitely  v.  Lowe,  215. 
Whiteside  v.  Prendergast,  140,  986. 
Whitesides  v.  Lafferty,   706. 
Whitfield,  Ex  parte,  874. 
Whitley  v.  Berry,  111. 
Whitley  v.  Challis,  804,  826. 
Whitman   v.    Robinson,   667,   904. 
Whitney  v.  Buckman,  119,  741,  753, 

886. 
Whitney  v.  Hanover  National  Bank, 

55,  56. 
Whitney  v.  N.  Y.  &  A.  R.  Co.,  476. 
Whittlesey  v.  Delaney,  403. 
Whittlesey  v.   Frantz,  650. 
Whitworth  v.  Whyddon,  15,  64. 
Whitworth  v.  Wofford,  739. 
Whyte  V.  Spransy,  721. 
Wickens  v.  Townshend,  140. 
Wiggins    V.    Armstrong,    897,    591, 

593. 


Wigton  V.   Bosler,   271,   396. 
Wilber  v.  Wooley,  195. 
Wilder  v.  Reed,  972. 
Wildridge  v.  McKane,  971. 
Wildy  V.  Mid-Hants  R.  Co.,  804. 
Wiles  V.  Cooper,  749. 
Wilkins  V.  Williams,  91. 
Wilkinson  v.  Culver,  283. 
Wilkinson  v.  Dibbie,  14. 
Wilkinson  v.  Lehman-Durr  Co.,  2, 

3,   154,  155. 
Wilkinson  v.  Washington  Trust  Co., 

916,  958. 
Willamette  Valley,  66,  190. 
Williams  v.  Babcock,  240,  241,  286, 

398,  399,  412,  415. 
Williams  v.  Des  Moines  L.  &  T.  Co., 

993. 
Williams  v.   Green,  749,  913. 
Williams  v.  Hintermeister,  64,  372, 

473. 
Williams    v.    Hogeboom,    588,    589, 

590. 
Williams  v.  Hubbard,  588. 
Williams  v.  Jenkins,   122,   135,  756, 

913. 
Williams  v.  Robinson,  792. 
Williams  v.  Traphagen,  290. 
Williams  v.  Turner,  401. 
Williams  v.  Wilson,  709,  908. 
Williams  Co.  v.  U.  S.  Banking  Co., 

38. 
Williamson  v.  Gerlach,  842. 
Williamson  v.  Monroe,  671,  672. 
Williamson  v.  New  Albany  R.  Co., 

478. 
Williamson  v.  Pender,  172,  200. 
Williamson  v.  Wilson,  3,  4,  93,  95, 

667,  668,  678,  903,  906,  976. 
Williamson's  Adm'r  v.  W.  C.  V.  M. 

&  G.  S.  R.  Co.,  13,  509. 
Willink  V.  Morris  Canal  &  Banking 

Co.,  308,  438. 
Willis  V.   Corlies,  718,  726,  910. 
Willitts  V.  Waite,  66,  67,  275. 
Wills  V.  Luff,  808. 


TABLE   OF    CASES    CITED. 


Ixv 


[RBFEBBNCHS   ABB   TO   PAOBB.] 


Wills  Valley  Mining  &  Mfg.  Co.  v. 

Galloway,  964. 
Wilmer  v.  Atlanta  &  R.  A.  L.  R.  Co., 

75.  480,  488. 
Wilmington  Star  Mining  Co.  v.  Al- 
len, 434. 
Wilson  V.  Allen,  251,  626,  627. 
Wilson  V.  Barney,  975. 
Wilson  V.  Book,  394. 
Wilson  V.  Davis,  35. 
Wilson  V.   Fitchter,  685. 
Wilson  V.  Greenwood,  691,  692,  694. 
Wilson  V.  Keels,  68. 
Wilson  V.  Maddox,  34,  110. 
Wilson  V.  Poe,  96. 
Wilson  V.  Rankin,  297. 
Wilson  V.  Welch,  139,  248. 
Wilson  V.  Wilson,  307,  626,  745. 
Winans  v.  Gibbs  &  S.  M.  Co.,  388. 
Winchester    v.    Davis    Pyrites    Co., 

299. 
Winchester   E.   L.    Co.   v.   Gordon, 

130. 
Wincock  v.  Turpin,  393. 
Winfield  v.  Bacon,  311,  890,  968. 
Wing  V.  Disse,  629. 
Winkler  v.  Magdeburg,  818,  825. 
Winkler  v.  Winkler,  16,  883. 
Winslow  V.  Wallace,  703. 
Winthrop  Iron  Co.  v.   Meeker,  42. 
Wisconsin  Trust  Co.  v.  Jenkins,  248. 
Wise  V.  Ashe,  142,  744. 
Wise  V.  Wise  Co.,  166. 
Wiswall  V.  Kunz,  3,  967. 
Wiswall  V.   Sampson,  167,  169,  610. 
Witz  V.  Gray,  12. 
Woerishoffer  v.  North  River  C.  Co., 

163. 
Wolbert   v.   Harris,    663,   664,    687, 

691. 
Wolf  V.  National  Bank  of  Illinois, 

326,  327,  446. 
Wolfe  V.  Claflin,  591. 
Wood  V.  Brewer,  35. 
Wood  V.  Gaynon,  780. 
Wood  V.  Grayson,  13. 


Wood  V.  Hitchings,  866,  867. 
Wood  V.  McCardle  W.  &  F.  C.  Co., 

324. 
Wood  V.  N.  Y.  &  N.  E.  R.  Co.,  512, 

515,  517. 
Wood  V.  Oregon  Development  Co., 

977. 
Wood  V.  Sutcliffe,  885. 
Wood  V.  Wood,  335,  660. 
Woodburn  v.  Smith,  163,  888. 
Wooden  v.  Wooden,  16,  883,  884. 
Woodhull    V.    Farmers'    Trust    Co., 

189. 
Woodruff  V.  Erie  R.  Co.,  506,  549. 
Woodruff  V.  Jewett,  316,  994. 
Woods  V.  Ellis,  139,  141. 
Woodward  v.  Earl  of  Lincoln,  195. 
Woodward  v.   Ellsworth,  458. 
Woodyatt  v.  Gresley,  121,  752. 
Wooley  V.  Holt,  787. 
Wormser    v.     Merchants    National 

Bank,  814,  815. 
Worrill  v.  Coker,  764. 
Worth  V.  Piedmont  Bank,  70,  183. 
Worth  Manufacturing  Co.  v.  Bing- 
ham, 353,  358. 
Woven  Tape  Skirt  Co.,  In  re,  206, 

928. 
Wray  v.  Hazlett,  294. 
Wray  v.  Jamison,  248,  252. 
Wren  v.  Kirton,  327. 
Wreyham,  M.  &  C.  Q.  Ry.  Co.,  In  re, 

505. 
Wright  V.  Merchants  National  Bank, 

451,   453. 
Wright  V.  Nostrand,  637,  644. 
Wright  V.  Vernon,  126. 
Wrixon  v.  Vize,  213,  215. 
Wyatt  V.  O.  &  M.  R.  Co.,  550. 
Wyckoff  V.  Scofield,  780. 
Wyman  v.  Eaton,  272,  409. 
Wyman  v.  Kimberly-Clark  Co.,  413. 
Wyman  v.  Williams,  408,  409. 
Wynne  v.  Lord  Newborough,  91,  93, 

96,  98,  245,  752,  913. 


Ixvi 


TABLE   OF    CASES    CITED. 


[befeebnces  are  to  pages.] 


Yeager  v.  Wallace,  248,  249. 
Yetzer  v.  Applegate,  228. 
Yoakum  v.  Selph,  553. 
Young,  In  re,  305,  309. 
Young  V.  Clapp,  639. 
Young  V.  Frier,  591,  897. 
Young  V.   Hughes,  48. 
Young  V.  Irish,  922,  979. 
Young  v.  M.  &  E.  R.  Co.,  70. 


Young  V.  Rollins,  70,  360,  377. 
Young  V.   Stevenson,  388. 
Young  V.  Wempe,  448. 
Youngblood  v.  Comer,  539. 


Z. 


Zacher  v.  Fidelity  T.  &  S.  Co.,  67, 

68,  276. 
Zieverink  v.  Kemper,  52,  397. 


THE   LAW  OF   RECEIVERS. 


CHAPTER  I. 
OF  THE  GENERAL  FEATURES  OF  THE  JURISDICTION. 

i  1.     A  receiver  defined;  distinguished  from  trustee. 

2.  An  executive  officer;  compared  with  sheriff;  not  a  public  officer, 

when  agent  of  plaintiff. 

3.  The  jurisdiction  a  preventive  one;  cautiously  exercised. 

4.  Beneficial  nature  of  the  relief;  possession  of  the  receiver  that  of 

the  court. 

5.  The  remedy  a  sequestration;   title  net  changed. 

6.  Remedy  a  provisional  one;  not  decisive  of  ultimate  right,  nor 

conclusive  of  merits;  not  granted  on  final  hearing;  present 
necessity  must  exist. 

7.  Discretionary  character  of  the  jurisdiction;  discretion  defined. 

8.  Probability  as   to  final   decree;   plaintiff  must  present   a  prima 

facie  case;  proof  on  interlocutory  application. 

9.  When  power  may  be  invoked;  not  when  property  is  of  little 

value;  bond  in  lieu  of  receiver. 

10.  Relief  similar  to  that  by  injunction;  not  granted  when  there  is  a 

remedy  at  law;  remedy  at  law  defined. 

11.  Plaintifif  must  show  his  own  right,  and  danger  to  the  property. 

12.  Plaintiff    must    have    existing    interest;    relief    not    granted    to 

stranger;  no  receiver  of  gratuity. 

13.  Receiver  not  allowed  for  benefit  of  stranger  to  the  cause. 

14.  Diligence  necessary;  laches  and  acquiescence  a  bar  to  relief. 

15.  The  remedy  compared  with  that  by  injunction. 

16.  Receiver  not  necessarily  appointed  because  injunction  granted. 

17.  Suit  must  be  actually  pending;  allegations  must  be  specific. 

18.  Insolvency  as  a  ground  for  relief. 

19.  Courts  averse  to  interfering  with  defendant  in  possession;  con- 

siderations governing  court  in  exercise  of  discretion. 

20.  Averse  to  interference  with  tenants  in  common  of  personalty. 

21.  The  jurisdiction  not  extended  to  conflict  as  to  public  offices. 

22.  Receiver  may  be  appointed  over  fees  and  emoluments  of  an  of- 

fice; salary  of  school-teacher;  of  clerk  of  court. 

Receivers — 1. 


2  RECEIVERS.  [chap.    I. 

§  23.     The    jurisdiction  as   affected  by  codes   of  procedure;   Supreme 
Court  of  Judicature  Act  in  England. 

24.  Receiver  not  granted  when  equities  of  bill  are  denied  by  answer. 

25.  Conflict  of  authority  as  to  whether  appeal  will  lie. 

26.  Appeal  not  allowed  in  certain  states. 

27.  The  question  dependent  upon  whether  the  order  affects  a  sub- 

stantial right. 
27a.  Decree  appealable  if  right  finally  determined. 
276.  Appeals  under  Court  of  Appeals  Act. 

28.  Reversal  by  certiorari. 

29.  Effect   of   appeal    on   functions   of   receiver;   supersedeas  not   a 

matter  of  right. 

30.  Same  relief  sought  in  different  suits. 

31.  Test  as  to  defendant's  interest;  receiver  over  a  pension;  secret 

code. 

32.  Not  granted  when  court  can  not  control  property;  license;  rates 

and  taxes. 

33.  Relief  refused  as  against  innocent  purchasers. 

34.  Peril  to  the  fund;  infringement  of  patent. 

35.  Receiver  not  granted  to  compel  payment  of  money;  subscrip- 

tions to  a  fund. 

36.  Management   of  business   by   a   receiver;   preferring   debts  in- 

curred. 

37.  Effect  of  acquiescence  in  appointment. 

38.  Receiver  held  to  strict  accountability. 

39.  Statute  authorizing  appointment  by  governor, 
39a.  Appointment  can  not  be  questioned  collaterally. 
396.  The  same;  illustrations. 

39c.  Otherwise  where  court  is  without  jurisdiction;  not  a  proceeding 

in  rem. 
39d.  Damages  for  wrongful  appointment;  measure  of  damages. 
39(?.  Death  of  receiver;  when  successor  not  appointed  at  instance  of 

defendant. 

§  1.  A  receiver  defined;  distinguished  from  trustee.    A 

receiver  is  an  indifferent  person  between  the  parties  to  a  cause, 
appointed  by  the  court  to  receive  and  preserve  the  property  or 
fund  in  litigation  pendente  lite,  when  it  does  not  seem  reason- 
able to  the  court  that  either  party  should  hold  it.l     He  is  not 

1  Booth  V.  Clark,  17  How.,  322;  Lehman-Durr  Co.,  136  Ala.,  463,  34 

Waters    v.    Carroll,    9    Yerg.,    102;  So.,  216;    State   v.   Ross,    122   Mo., 

Baker  v.  Administrator  of  Backus,  435,  25  S.  W.,  947,  23  L.  R.  A.,  534; 

32  111.,  79 ;  Devendorf  v.  Dickinson,  St.  Louis,  C.  G.  &  F.  S.  Ry.  Co.  v. 

21    How.    Pr.,    275;    Wilkinson    v.  Holladay,  131   Mo.,  440,  33  S.  W., 


CHAP.  I.] 


GENERAL  FEATURES. 


the  agent  or  representative  of  either  party  to  the  action,  but  is 
uniformly  regarded  as  an  officer  of  the  court,  exercising  his 
functions  in  the  interest  of  neither  plaintiff  nor  defendant,  but 
for  the  common  benefit  of  all  parties  in  interest.^  He  should 
be  a  person  wholly  impartial  and  indifferent  to  all  parties  in  in- 
terest.2  Being  an  officer  of  the  court,  the  fund  or  property  in- 
trusted to  his  care  is  regarded  as  being  in  ciistodia  legis  for  the 
benefit  of  whoever  may  finally  establish  title  thereto,  the  court 
itself  having  the  care  of  the  property  by  its  receiver,  who  is 
merely  its  creature  or  officer,  having  no  powers  other  than 
those  conferred  upon  him  by  the  order  of  his  appointment,  or 
such  as  are  derived  from  the  established  practice  of  courts  of 
equity.^  A  trustee  differs  in  many  respects  from  a  receiver. 
He  may  be  appointed  by  deed  or  will  or  in  other  ways  without 
any  order  of  a  court  and  his  powers  and  duties  are  prescribed 


49;  Gardner  v.  Caldwell,  16  Mont., 
221,  40  Pac,  590;  Wiswall  v.  Kunz, 
173  111.,  110,  50  N.  E.,  184;  Nevitt 
V.  Woodburn,  190  111.,  283,  60  N.  E., 
500;  Harman  v.  McMullin,  85  Va., 
187,  7  S.  E.,  349. 

2  Davis  V.  Duke  of  Marlborough, 
2  Swans.,  108;  Booth  v.  Clark,  17 
How.,  322;  Hooper  v.  Winston,  24 
111.,  353;  Baker  v.  Administrator  of 
Backus,  32  111.,  79;  Kaiser  v.  Kellar, 
21  Iowa,  95 ;  King  v.  Cutts,  24  Wis., 
627;  Osborn  v.  Heyer,  2  Paige,  342; 
Curtis  V.  Leavitt,  1  Ab.  Pr.,  274; 
Brown  v.  Northrup,  15  Ab.  Pr.,  N. 
S.,  2)ZZ ;  Corey  v.  Long,  43  How. 
Pr.,  497;  S.  C,  12  Ab.  Pr.,  N.  S., 
427;  Williamson  v.  Wilson,  1  Bland, 
418;  Ellicott  v.  Warford,  4  Md.,  80; 
Wilkinson  v.  Lehman-Durr  Co., 
136  Ala.,  463,  34  So.,  216;  McGar- 
rah  V.  Bank,  117  Ga.,  556,  43  S.  E., 
987;  Van  Rensselaer  v.  Emery,  9 
How.  Pr.,  135;  Meier  v.  Kansas 
Pacific  R.  Co.,  5  Dill.,  476.  But  in 
Louisiana  it  is  held  that  a  receiver 
of  partnership   funds,  appointed  by 


consent  of  both  partners,  pending 
a  suit  for  the  dissolution  of  the 
firm,  is  not  an  officer  of  the  court, 
but  merely  an  agent  of  the  parties, 
and  that  the  principles  governing 
receivers  generally  are  inapplicable 
to  such  a  case.  Kellar  v.  Williams, 
3  Rob.  (La.),  321.  Since  a  receiver 
is  the  representative  of  all  parties 
in  interest,  he  is  bound  to  exercise 
his  powers  for  the  equal  benefit  of  all 
and  consequently  an  agreement  to 
place  the  property  and  business  in 
his  hands  under  the  control  and 
management  of  a  single  party  to  the 
suit  is  void.  Shadewald  v.  White, 
74  Minn.,  208,  77  N.  W.,  42. 

3  Coy  V.  Title  G.  &  T.  Co.,  157 
Fed.,  794. 

4  Booth  V.  Clark,  17  How.,  322 ; 
Hunt  V.  Wolfe,  2  Daly,  303;  Deven- 
dorf  V.  Dickinson,  21  How.  Pr., 
275;  Corey  v.  Long,  43  How.  Pr., 
497;  S.  C,  12  Ab.  Pr.,  N.  S.,  427; 
Skinner  v.  Maxwell,  66  N.  C,  45, 
and  see  S.  C,  68  N.  C,  400;  Battle 
V.  Davis,  66  N.  C,  252;  Hooper  v. 


RECEIVERS. 


[chap.  I. 


by  the  instrument  creating  the  trust  and  not  by  the  court ;  nor 
is  property  in  his  possession  regarded  as  being  in  custodia  Icgis, 
as  in  the  case  of  a  receiver,  and  he  may  be  called  to  account  not 
merely  by  the  court  which  may  have  appointed  him  but  by  any 
court  which  may  acquire  the  proper  jurisdiction.^ 

§  2.  An  executive  officer ;  compared  with  sheriff ;  not  a 
public  officer ;  v^^hen  agent  of  plaintiff.  A  receiver  is  fre- 
quently spoken  of  as  the  "hand  of  the  court,"  and  the  expres- 
sion very  aptly  designates  his  functions,  as  well  as  the  relation 
which  he  sustains  to  the  court.^  He  is  regarded  as  the  execu- 
tive officer  of  a  court  of  chancery  in  much  the  same  sense  that 
a  sheriff  is  the  executive  officer  of  a  court-  of  law,  and  the 
assets  and  property  in  his  hands  are  as  much  in  the  custody  of 
the  law  as  if  levied  upon  under  an  execution  or  attachment. 
Indeed,  the  purpose  for  which  a  receiver  takes  possession  is 


Winston,  24  111.,  353;  Nevitt  v. 
Woodburn,  190  111.,  283,  60  N.  E., 
500;  Kaiser  v.  Kellar,  21  Iowa,  95; 
Ellicott  V.  Warford,  4  Md.,  80;  Co- 
burn  V.  Ames,  57  Cal.,  201 ;  Howell 
V.  Hough,  46  Kan.,  152,  26  Pac,  436; 
Carswell  v.  F.  L.  &  T.  Co.,  20  C.  C. 
A.,  282,  74  Fed.,  88,  43  U.  S.  App., 
300.  And  see  Gayle  v.  Johnson,  80 
Ala.,  388;  Ashurst  v.  Lehman,  86 
Ala.,  370,  5  So.,  731. 

5  Nevitt  V.  Woodburn,  190  111., 
283,  60  N.  E.,  500.  As  to  the  dis- 
tinction between  a  receiver  and  a 
trustee  in  bankruptcy,  see  Traders 
Insurance  Co.  v.  Mann,  118  Ga., 
381,  45  S.  E.,  426.  And  see  State 
Bank  v.  Domestic  S.  M.  Co.,  99  Va., 
411,  39  S.  E.,  141,  86  Am.  St.  Rep., 
891,  for  the  distinction  between  a 
passive  receiver  who  merely  holds 
the  possession  of  the  res  and  an  ac- 
tive receiver  to  whom  is  confided  the 
management  of  a  going  business 
concern. 

6  See  Runyon  v.  Farmers  &  Me- 
chanics Bank  of  New  Brunswick,  3 


Green  Ch.,  480;  Van  Rensselaer  v. 
Emery,  9  How.  Pr.,  135;  William- 
son V.  Wilson,  1  Bland,  418;  Ellicott 
V.  Warford,  4  Md.,  80.  "The  ap- 
pointment of  a  receiver,"  observes 
Mr.  Justice  Eccleston,  in  Ellicott 
V.  Warford,  4  Md.,  85,  "does  not 
determine  any  right,  or  affect  the 
title  of  either  party,  in  any  manner 
whatever.  He  is  the  officer  of  the 
court,  and  truly  the  hand  of  the 
court.  His  holding  is  the  holding 
of  the  court  from  him  from  whom 
the  possession  was  taken.  He  is 
appointed  on  behalf  of  all  parties, 
and  not  of  the  plaintiff  or  of  one 
defendant  only.  His  appointment  is 
not  to  oust  any  party  of  his  right 
to  the  possession  of  the  property, 
but  merely  to  retain  it  for  the  ben- 
efit of  the  party  who  may  ultimately 
appear  to  be  entitled  to  it."  And 
see  Williamson  v.  Wilson,  1  Bland, 
418,  for  a  learned  and  exhaustive 
discussion  of  the  general  principles 
governing  the  jurisdiction  of  equity 
by  the  appointment  of  receivers. 


CHAP.  I.]  GENERAL  FEATURES.  5 

closely  allied  to  that  of  a  sheriff  in  levying  under  execution, 
except  that  the  scope  of  the  receiver's  authority  is  more  com- 
prehensive, since  he  is  usually  required  to  pay  all  demands 
upon  the  fund  in  his  hands  to  the  extent  of  that  fund;  while 
a  sheriff  is  only  obliged  to  make  payment  of  the  debt  mentioned 
in  the  execution  out  of  the  property  levied  upon.*^  And  a 
receiver  is  not  a  public  officer  within  the  meaning  of  a  statute 
which  exempts  public  officers  from  garnishment  as  to  funds 
in  their  hands  as  such  officers. ^  And  it  has  been  held  that  the 
appointment  of  a  receiver  is,  in  effect,  an  equitable  execution.^ 
But  where  a  receiver  is  appointed  at  the  instance  or  in  the 
interest  of  the  person  whose  property  is  to  be  taken  into  his 
custody,  he  is  not  to  be  regarded  as  the  hand  of  the  court  but 
merely  as  the  agent  or  representative  of  the  person  who  has 
thus   procured    his   appointment.^^ 

§  3.  The  jurisdiction  a  preventive  one ;  cautiously  exer- 
cised. The  jurisdiction  exercised  by  courts  of  equity  in  ad- 
ministering relief  by  the  extraordinary  remedy  of  a  receiv- 
er pendente  lite  is  a  branch  of  their  general  preventive  ju- 
risdiction, being  intended  to  prevent  injury  to  the  thing  in  con- 
troversy, and  to  preserve  it  for  the  security  of  all  parties  in 
interest,  to  be  disposed  of  as  the  court  may  finally  direct.^! 
The  power  is  justly  regarded  as  one  of  a  very  high  nature,  and 

"^  In  re  Merchants  Insurance  Co.,  ing  him,  and  not  the  agent  of  the 

3  Biss.,  162.  owner,  whose  property  is  placed  in 

8  Cohnen  v.  Sweenie,  105  Mich.,  his  possession,  is  that  the  property 
643,  63  N.  W.,  641 ;  Citizens'  Com-  to  be  controlled  is  taken  from  the 
mercial  &  Savings  Bank  v.  Bay  Cir-  custody  and  management  of  its  own- 
cuit  Judge,  110  Mich.,  633,  68  N.  W.,  er  and  made  subject  to  the  control 
649.  of  the   court   without   his   consent; 

9  Hunt  V.  Wolfe,  2  Daly,  303.  but  when  the  defendant  owner  asks 

10  Texas  &  Pacific  R.  Co.  v.  Gay,  the  court  to  do  this,  he,  in  effect, 
86  Tex.,  571,  605,  26  S.  W.,  599,  asks  the  court  to  make  an  appoint- 
613;  Harrigan  v.  Gilchrist,  121  Wis.,  ment  for  him,  and  it  is  but  just  that 
127,  292,  99  N.  W.,  909,  956.  In  a  receiver  so  appointed  should  be 
Texas    &    Pacific    R.    Co.    v.    Gay,  held  to  be  his  agent." 

supra,   Stayton,   C.  J.,   says:     "The  H  Mays  i;.  Rose,  Freem.  (Miss.), 

theory  on  which  a  receiver  is  held       703. 
to  be  an  officer  of  the  court  appoint- 


6  RECEIVERS.  [chap.    I. 

not  to  be  exercised  when  it  would  be  productive  of  serious  in- 
justice or  injury  to  private  rights.  12  The  exercise  of  the  extra- 
ordinary power  of  a  chancellor  in  appointing  receivers,  as  in 
granting  writs  of  injunction  or  ne  exeat,  is  an  exceedingly  deli- 
cate and  responsible  duty,  to  be  discharged  by  the  court  with 
the  utmost  caution,  and  only  under  such  special  or  peculiar 
circumstances  as  demand  summary  relief. ^^  Indeed,  the  ap- 
pointment of  a  receiver  is  regarded  as  one  of  the  most  difficult 
and  embarrassing  duties  which  a  court  of  equity  is  called  upon 
to  perform.i^  j^  jg  ^  peremptory  measure,  whose  effect,  tem- 
porarily at  least,  is  to  deprive  of  his  property  a  defendant  in 
possession,  before  a  final  judgment  or  decree  is  reached  by  the 
court  determining  the  rights  of  the  parties.l^  It  is  therefore 
not  to  be  exercised  doubtingly,  but  the  court  must  be  convinced 
that  the  relief  is  needful,  and  that  it  is  the  appropriate  means  of 
securing  an  appropriate  end.^^  And  since  it  is  a  serious  inter- 
ference with  the  rights  of  the  citizen,  without  the  verdict  of  a 
jury  and  before  a  regular  hearing,  it  should  be  granted  only 
for  the  prevention  of  manifest  wrong  and  injury.^^  And  be- 
cause it  divests  the  owner  of  property  of  its  possession  before 
a  final  hearing,  it  is  regarded  as  a  severe  remedy,  not  to  be 
adopted  save  in  a  clear  case,  and  never  unless  plaintiff  would 
otherwise  be  in  danger  of  suffering  irreparable  loss.^^  And 
since  a  receivership  is  a  harsh  and  costly  remedy,  interfering 
seriously  with  the  rights  of  persons  in  possession,  courts  of 

12  Opinion  of  Frick,  J.,  in  Mining  Co.  v.  United  States  Petro- 
Speights  V.  Peters,  9  Gill,  476;  As-  leum  Co.,  57  Pa.  St.,  83;  S.  C,  6 
hurst  V.  Lehman,  86  Ala.,  370,  5  So.,      Philad.,  521. 

731  17  Crawford  v.   Ross,  39  Ga.,  44. 

13  Crawford  v.  Ross.  39  Ga.,  44;  The  court  say:  "The  high  preroga- 
Furlong  v.  Edwards,  3  Md.,  112;  tive  act  of  taking  property  out  of  the 
Latham  v.  Chafee,  7  Fed.,  525.  hands  of  one,  and  putting  it  in 
See,  also,  Beverley  v.  Brooke,  4  pound,  under  the  order  of  a  judge, 
Grat.,  187.  ought   not   to  be   taken,    except    to 

14  Drummond,  J.,  in  Bill  v.  New  prevent  manifest  wrong,  imminently 
Albany,  etc.,  R.  Co.,  2  Biss.,  390.  impending." 

15  Whitehead  v.  Wooten,  43  Miss.,  18  Pullan  v.  Cincinnati  &  Chicago 
523.  R.  Co.,  4  Biss.,  47;  Hayes  v.  Jasper 

16  Chicago    ^    Allegheny    Oil    &  Land  Co.,  147  Ala.,  340,  41  So.,  909. 


CHAP.  I.]  GENERAL  FEATURES.  7 

equity  exercise  extreme  caution  in  the  appointment  of  receivers 
and  withhold  the  remedy  until  a  proper  case  has  been  made 
therefore.  ^^ 

§  4.  Beneficial  nature  of  the  relief ;  possession  of  the  re- 
ceiver that  of  the  court.  The  power  exercised  by  courts  of 
equity  in  the  appointment  of  receivers  is  invoked  upon  many 
occasions  with  great  advantage  to  the  parties.  It  is  especially 
beneficial  when  there  is  danger  that  the  subject-matter  in  con- 
troversy may  be  wasted,  destroyed,  injured  or  removed  during 
the  progress  of  the  litigation,  the  object  of  the  relief  being  to 
secure  the  fund  for  the  person  who  may  ultimately  be  found 
entitled  thereto,  with  as  little  prejudice  as  possible  to  any  of 
those  concerned. 20  And  a  receivership  is  one  of  those  remedial 
agencies  originally  devised  to  preserve  the  fund  or  thing  in 
controversy  from  removal  beyond  the  jurisdiction,  or  from 
spoliation,  waste  or  deterioration  pendente  lite,  to  the  end  that 
it  may  be  appropriated  as  the  final  decree  shall  direct. 21  A 
court  of  equity,  by  its  order  appointing  a  receiver,  takes  the 
entire  subject-matter  of  the  litigation  out  of  the  control  of  the 
parties  and  into  its  own  hands,  and  ultimately  disposes  of  all 
questions,  leg"al  or  equitable,  growing  out  of  the  proceeding. 

19  Suit  V.  Hochsletter  Oil  Co.,  63  hearing,  to  be  entitled,  and  to  pro- 
West  Va.,  317,  61  S.  E.,  307.  duce  as  little  prejudice  as  possible  to 

20  Lenox  v.  Notrebe,  Hemp.,  225 ;  any  of  those  concerned.  When  one 
Smith  V.  Lusk,  119  Ala.,  394,  24  So.,  party  has  a  clear  right  to  the  pos- 
256.  "The  application  for  a  re-  session  of  property,  and  when  the 
ceiver,"  says  Mr.  Justice  Clayton  in  dispute  is  as  to  the  title  only,  the 
Lenox  v.  Notrebe,  supra,  "is  ad-  court  would  very  reluctantly  dis- 
dressed  to  the  sound  discretion  of  turb  that  possession.  But  when  the 
the  court,  regulated  by  legal  princi-  property  is  exposed  to  danger  and 
pies,  and  is  exercised  by  the  courts  to  loss,  and  the  party  in  possession 
upon  many  occasions  with  great  has  not  a  clear  legal  right  to  the 
benefit  to  the  parties.  It  is  par-  possession,  it  is  the  duty  of  the 
ticularly  serviceable  when  there  is  court  to  interpose  and  to  have  it 
danger  that  the  subject-matter  of  secured."  See,  also,  Tregaskis  v. 
controversy  may  be  wasted  or  de-  Judge  of  Superior  Court,  47  Mich., 
stroyed,  impaired,  injured  or  re-  509,  11  N.  W.,  293;  McElwaine  v. 
moved  during  the  progress  of  the  Hosey,  135  Ind.,  481,.  35  N.  E.,  272. 
suit.  The  object  is  to  secure  the  21  Myers  v.  Estell,  48  Miss.,  401. 
fund  for  the  party  found,  upon  final 


8  RECEIVERS.  [chap.    I. 

And  the  receiver's  possession  being  the  possession  of  the  court 
appointing  him,  any  attempt  to  disturb  such  possession  without 
leave  of  the  court  may  be  treated  as  a  contempt  of  court,  and 
punished  accordingly.22 

§  5.  The  remedy  a  sequestration;  title  not  changed 
A  receiver  being  appointed  for  the  preservation  of  the  fund 
or  property  pendente  lite,  and  for  its  uhimate  disposal  accord- 
ing to  the  rights  and  priorities  of  the  parties  entitled,  the  rem- 
edy is  regarded  as  in  the  nature  of  a  sequestration  rather  than 
as  an  attachment  of  the  property,  and  it  ordinarily  gives  no  ad- 
vantage or  priority  to  the  person  at  whose  instance  the  appoint- 
ment is  made,  over  other  parties  in  interest. 23  Nor  does  the  ap- 
pointment of  a  receiver,  in  the  absence  of  statute,  vest  him  with 
any  title  to  the  property  in  controversy,  the  effect  of  the  ap- 
pointment being  merely  to  give  him  the  right  to  the  possession 
of  the  property  without  changing  the  title  or  creating  any  lien 
upon  it.24  Its  purpose  in  this  respect  is  rather  like  that  of  an 
injunction  pendente  lite,  to  preserve  the  subject-matter  until 
the  rights  of  all  parties  may  be  judicially  determined. ^^    And 

22  Beverley  v.  Brooke,  4  Grat.,  liams,  22  R.  I.,  547,  48  Atl.,  798; 
211.  Krohn  v.  Weinberger,  47  West  Va., 

23  Beverley  v.  Brooke,  4  Grat.,  127,  34  S.  E.,  746;  Peirce  v.  Van 
187;  Ellis  v.  Boston,  Hartford  &  Dusen.  24  C.  C.  A.,  280,  78  Fed., 
Erie  R.  Co.,  107  Mass.,  1 ;  Southern  693,  47  U.  S.  App.,  339 ;  Central  Ap- 
Granite  Co.  v.  Wadsworth,  115  Ala.,  palachian  Co.  v.  Buchanan,  33  C.  C. 
570,  22  So.,  157.  A.,  598,  90  Fed.,  454,  62  U.  S.  App., 

24  Southern  Granite  Co.  v.  Wads-  195 ;  ZZ  C.  C.  A.,  682,  91  Fed.,  1001. 
worth,  115  Ala.,  570,  22  So.,  157;  And  where  a  receiver  of  an  insol 
HefTron  v.  Gage,  149  III,  182,  36  N.  vent  bank  was  ordered  to  take  pos- 
E.,  569;  Thomas  v.  VanMeter,  164  session  of  certain  securities  which 
111.,  304,  45  N.  E.,  405;  Bartlett  v.  appeared  to  belong  to  the  bank,  it 
Cicero  L.,  H.  &  P.  Co.,  177  III,  68,  was  held  that  his  possession  vested 
52  N.  E.,  339;  Manufacturers  Paper  no  title  in  him  nor  created  any  lien 
Co.  V.  Lindblom,  80  III  App.,  267 ;  but  that  he  merely  held  the  property 
Harrison  v.  Warren  Co.,  183  Mass.,  pending  the  final  determination  of 
123,  66  N.  E.,  589;  Rogers  &  Bald-  the  title  thereto.  University  of  Ill- 
win  Hardware  Co.  v.  Cleveland  B.  inois  v.  Globe  Savings  Bank,  185 
Co.,  132  Mo.,  442,  34  S.  W.,  57,  31  III,  514,  57  N.  E.,  417. 

L.  R.  A.,  335,  53  Am.  St.  Rep.,  494 ;  25  Ellis    v.    Boston,    Hartford    & 

Sigua  Iron  Co.  v.  Brown,  171  N.  Y.,  Erie  R.  Co.,  107  Mass.,  1 ;  Southern 
488,  64  N.  E.,  194;  Greene  v.  Wil-      Granite  Co.  v.  Wadsworth,  115  Ala., 


CHAP.  I.]  GENERAL  FEATURES.  9 

in  the  exercise  of  this  branch  of  its  extraordinary  jurisdiction, 
equity  reverses  the  ordinary  course  of  administering  justice, 
and  levies  upon  the  property  a  kind  of  equitable  execution,  by 
means  of  which  it  makes  a  general  appropriation  thereof,  leav- 
ing the  question  of  who  may  finally  be  entitled  to  be  determined 
thereafter.  It  follows,  therefore,  from  the  peculiar  nature  of 
the  remedy  as  thus  shown,  as  well  as  from  the  fact  that  the 
court  must  often  act  before  the  merits  of  the  controversy  have 
been  fully  developed,  and  when  the  parties  in  interest  are  not 
all  before  the  court,  that  it  proceeds  with  extreme  caution,  in 
order  to  avoid  any  unnecessary  disturbance  of  legal  rights  or 
equitable  priorities.^^ 

§  6.  Remedy  a  provisional  one ;  not  decisive  of  ultimate 
right,  nor  conclusive  of  merits ;  not  granted  on  final  hear- 
ing ;  present  necessity  must  exist.  It  necessarily  follows 
from  the  nature  of  the  jurisdiction  as  thus  far  disclosed,  as 
well  as  from  the  purpose  and  object  usually  had  in  view  in 
the  appointment  of  a  receiver  pendente  lite,  that  the  remedy  is 
a  provisional  or  auxiliary  one,  invoked  as  an  adjunct  or  aid  of 

570,  22  So.,  157.  See,  also,  Ex  court  in  a  seasonable  time,  and  due 
parte  Dunn,  8  S.  C,  207;  Union  course  of  proceeding,  to  assert  and 
Bank  of  Chicago  v.  Kansas  City  establish  their  pretensions.  The  re- 
Bank,  136  U.  S.,  223,  10  Sup.  Ct.  ceiver  appointed  is  the  officer  and 
Rep.,  1013.  representative  of  the  court,  subject 
26  Beverley  v.  Brooke,  4  Grat.,  to  its  orders,  accountable  in  such 
187.  The  nature  and  functions  of  manner  and  to  such  persons  as  the 
this  extraordinary  jurisdiction  of  court  may  direct,  and  having  m  his 
courts  of  equity  are  very  clearly  character  of  receiver  no  personal  in- 
stated in  the  opinion  of  the  court  in  terest  but  that  arising  out  of  his 
this  case,  by  Baldwin,  J.,  as  follows,  responsibility  for  the  correct  and 
p.  208 :  "By  means  of  the  appoint-  faithful  discharge  of  his  duties.  It 
ment  of  a  receiver,  a  court  of  equity  is  of  no  consequence  to  him  how  or 
takes  possession  of  the  property  when,  or  to  whom,  the  court  may 
which  is  the  subject  of  the  suit,  pre-  dispose  of  the  funds  in  his  hands, 
serves  it  from  waste  or  destruction,  provided  the  order  or  decree  of  the 
secures  and  collects  the  proceeds  or  court  furnishes  to  him  a  sufficient 
profits,  and  ultimately  disposes  of  protection.  The  order  of  appoint- 
them  according  to  the  rights  and  ment  is  in  the  nature,  not  of  an 
priorities  of  those  entitled,  whether  attachment,  but  a  sequestration;  it 
regular  parties  in  the  cause,  or  only  gives  in  itself  no  advantage  to  the 
parties  in  interest  coming  before  the  party    applying    for    it    over    other 


10 


RECEIVERS. 


[chap.  I. 


the  principal  relief  sought  by  the  action  and  never  as  the  ulti- 
mate object  of  that  action.  The  court  must  have  jurisdiction 
independent  of  the  receivership  and  a  receiver  is  never  ap- 
pointed except  as  a  measure  in  aid  of  the  enforcement  of  some 
recognized  equitable  right.  The  appHcation  for  a  receiver 
may  succeed  or  fail,  and  yet  in  no  manner  affect  the  principal 
controversy  or  determine  the  final  result. 27  And  in  this  respect 
the  appointment  of  a  receiver  in  limine  bears  no  closer  relation 
to  the  action  in  which  this  extraordinary  relief  is  sought  than 
an  attachment  in  aid  of  an  action  upon  a  promissory  note  bears 
to  such  action.28  The  appointment  of  a  receiver  in  limine, 
therefore,  like  the  granting  of  a  preliminary  or  interlocutory 
injunction,  is  not  an  ultimate  determination  of  the  right  or 


claimants;  and  operates  prospect- 
ively upon  rents  and  profits,  which 
may  come  to  the  hands  of  the  re- 
ceiver, as  a  lien  in  favor  of  those 
interested,  according  to  their  rights 
and  priorities  in  or  to  the  principal 
subject  out  of  which  those  rents 
and  profits  issue.  In  the  exercise 
of  this  summary  jurisdiction,  a 
court  of  equity  reverses,  in  a  great 
measure,  its  ordinary  course  of  ad- 
ministering justice;  beginning  at 
the  end,  and  levying  upon  the  prop- 
erty a  kind  of  equitable  execution, 
by  which  it  makes  a  general  instead 
of  a  specific  appropriation  of  the 
issues  and  profits,  and  afterwards 
determining  who  is  entitled  to  the 
benefit  of  its  quasi  process.  But 
acting,  as  it  often  must  of  necessity, 
before  the  merits  of  the  cause  have 
been  fully  developed,  and  not  un- 
frequently  when  the  proper  parties 
in  interest  are  not  all  before  the 
court,  it  proceeds  with  much  cau- 
tion and  circumspection,  in  order  to 
avoid  disturbing  unnecessarily  or 
injuriously  legal  rights  and  equi- 
table priorities." 


27  Barber  v.  International  Co.,  73 
Conn.,  587,  48  Atl.,  758 ;  Hottenstein 
V.  Conrad,  9  Kan.,  435;  Cooke  v. 
Gwyn,  3  Atk.,  689;  Vila  v.  Grand 
Island  E.  L.,  I.  &  C.  S.  Co.,  68  Neb., 
222,  94  N.  W.,  136,  97  N.  W.,  613; 
Mann  v.  German-American  I.  Co., 
70  Neb.,  454,  97  N.  W.,  600;  Smiley 
V.  Sioux  B.  S.  Co.,  71  Neb.,  581,  101 
N.  W.,  253,  99  N.  W.,  263;  Balti- 
more Bargain  House  v.  St.  Clair,  58 
West  Va.,  565,  52  S.  E.,  660; 
Thompson  v.  Adams,  60  West  Va., 
463,  55  S.  E.,  668;  Ward  v.  Hotel 
Randolph  Co.,  65  West  Va.,  721, 
—  S.  E.,  — .  See,  also,  Rainey  v. 
Freeport  S.  C.  &  C.  Co.,  58  West 
Va.,  424,  52  S.  E.,  528;  Mays  v. 
Rose,  Freem.  (Miss.)  703;  Chicago 
and  Allegheny  Oil  and  Mining  Co. 
V.  United  States  Petroleum  Co.,  57 
Pa.  St.,  83,  6  Philad.,  521;  Fellows 
V.  Heermans,  13  Ab.  Pr.,  N.  S.,  1; 
McCarthy  v.  Peakc,  18  How.  Pr., 
138,  9  Ab.  Pr.,  164. 

28  Hottenstein  v.  Conrad,  9  Kan., 
435. 


CHAP.    I.]  GENERAL   FEATURES.  11 

titlt,  and  the  court,  in  passing  upon  the  application,  in  no 
manner  decides  the  questions  of  right  involved,  nor  antici- 
pates its  final  decision  upon  the  merits  of  the  controversy ;  the 
leading  idea  upon  the  preliminary  application  being  merely  to 
husband  the  property  or  fund  in  litigation  for  the  benefit  of 
whoever  may  be  determined  in  the  end  to  be  entitled  thereto.29 
The  decision  upon  the  application  for  a  receiver  pendente  lite  is, 
therefore,  without  prejudice  to  the  final  decree  which  the  court 
may  be  called  upon  to  make,  and  the  court  expresses  no  opinion 
as  to  the  ultimate  questions  of  right  involved.  And  if  the 
plaintiff  presents  a  prima  facie  case,  showing  an  apparent  right 
or  title  to  the  thing  in  controversy,  and  that  there  is  imminent 
danger  of  loss  without  the  intervention  of  the  court,  the  relief 
may  be  granted  without  going  further  into  the  merits  upon 
the  preliminary  application.30  Indeed,  upon  an  interlocutory 
application  for  a  receiver,  a  court  of  equity  usually  confines 
itself  strictly  to  the  point  which  it  is  called  upon  to  decide,  and 
will  not  go  into  the  merits  of  the  case  at  large,  since  the  court 
is  bound  to  express  its  opinion  only  to  the  extent  necessary 

29Huguenin  v.  Baseley,  13  Ves.,  brought    to    a    hearing    for    a    final 

106;   Cooke  v.  Gvvyn,  3  Atk,  689;  decree;  but  it  does  not  follow  that 

Ellicott    V.    Warford,    4    Md.,    80;  a    decisive    opinion    is    to    be    ex- 

Blakeney  v.   Dufaur,   15  Beav.,  40;  pressed  in  this  stage  of  the  cause 

Leavitt  v.  Yates,  4  Edw.  Ch.,  162;  upon  the  rights  of  all  the  parties; 

Brown  v.  Northrup,  15  Ab.  Pr.,  N.  for,  whatever  may  be  the  result  of 

S.,  333;  Ex  parte  Walker,  25  Ala.,  a  motion  of  this  kind,  the  general 

104;   Bitting  v.  Ten  Eyck,  85  Ind.,  understanding  is  that  it  is  without 

357  prejudice   to    the    ultimate   decision 

30  Leavitt  v.   Yates,  4  Edw.   Ch.,  which  the  court  may  be  called  upon 

162;    Brown    v.    Northrup,    15    Ab.  to  make.     Insolvency  and  danger  to 

Pr.,   N.    S.,   333.     Leavitt  v.   Yates  the  fund  pending  the  litigation,  with 

was  a  bill   to  set  aside  a  deed   of  a    prima    facie    case    and    probable 

trust  transferring  certain  securities,  cause  for  sustaining  the  bill,  are  or 

and    a    motion    upon    bill    and    an-  ought  to  be  sufficient  in  the  first  in- 

swers  for  an  injunction  and  for  a  stance  to  found  an  injunction  and 

receiver  to  take  charge  of  the  secu-  a  receivership  upon,  without  going 

rities  pendente  lite.     McCoun,  Vice-  minutely  into  the  merits.     My  own 

Chancellor,   observes:      "The   argu-  observation  has  taught  me  that,  in 

ment  has   embraced   all   the   points  general,  it  is  most  prudent  and  best 

which  the  pleadings  are  calculated  promotes  the  ends  of  justice  to  go 

to  present  when  the  cause  shall  be  no  further  upon  the  motion." 


12  RECEIVERS.  [chap.    I. 

to  show  the  gfrounds  upon  which  it  disposes  of  the  appHca- 
tion.^^  And  since  a  receiver  derives  his  title  from  the  court, 
rather  than  from  the  act  of  the  parties  upon  whose  appHcation 
or  by  whose  consent  he  is  appointed,  it  necessarily  follows  that ' 
the  effect  of  his  appointment  is  to  place  the  property  in  his 
custody  as  an  officer  of  the  court,  for  the  benefit  of  whoever 
may  ultimately  prove  to  be  entitled  thereto,  but  without  effect- 
ing any  change  of  title  to  the  property.^2  \nd  since  the 
appointment  of  a  receiver  is  a  provisional  remedy,  it  should 
not  be  made  by  final  decree  except  where  necessary  to  carry 
such  decree  into  effect. ^^  And  for  the  same  reason,  if  it  ap- 
pears upon  an  application  for  such  appointment  that  the  plaintiff 
will  in  no  event  be  entitled  to  the  principal  relief  sought,  the 
receiver  should  be  denied. 2"*  And  a  receiver  should  not  be 
appointed  simply  because  an  occasion  for  such  appointment 
is  anticipated  or  may  arise  in  the  future,  but  the  occasion  must 
exist  when  the  appointment  is  made.^^ 

§  7.  Discretionary  character  of  the  jurisdiction;  discre- 
tion defined.  The  appointment  of  a  receiver  pendente  lite, 
like  the  granting  of  an  interlocutory  injunction,  is  to  a  con- 
siderable extent  a  matter  resting  in  the  discretion  of  the  court 
to  which  the  application  is  made,  to  be  governed  by  a  considera- 
tion of  the  entire  circumstances  of  the  case.^^    And  since  the 

31  Skinners  Company  v.  Irish  34  Witz  v.  Gray,  116  N.  C,  48,  20 
Society,    1    Myl.   &   Cr.,   162.     See,      S.  E.,  1019. 

also,   Conro  v.   Gray,  4  How.    Pr.,  35  Chadron  Banking   Co.   v.    Ma- 

166.  honey,  43  Neb.,  214,  61  N.  W.,  594. 

32  Union  Bank  of  Chicago  v.  ,  30  Owen  v.  Homan,  3  Mac.  &  G., 
Kansas  City  Bank,  136  U.  S.,  223,  378,  affirmed  on  appeal  to  the  House 
10  Sup.  Ct.  Rep.,  1013;  Central  Ap-  of  Lords,  4  H.  L.  Rep.,  997;  Ham- 
palachian  Co.  v.  Buchanan,  33  C.  C.  burgh  Manufacturing  Co.  v.  Edsall, 
A.,  598,  90  Fed.,  454,  62  U.  S.  App.,  4  Halst.  Ch.,  141 ;  Chicago  and  Alle- 
195 ;  33  C.  C.  A.,  682,  91  Fed.,  1001 ;  gheny  Oil  and  Mining  Co.  v.  United 
Central  Trust  Co.  v.  Worcester  Cy-  States  Petroleum  Co.,  57  Pa.  St.,  83 ; 
cle  Co.,  86  Fed.,  35.  Beaumont  v.  Beaumont,  166  Pa.  St., 

33Chadm   Banking  Co.   v.    Ma-  615,  31  Atl.,  336;   S.  C,  6  Philad., 

honey,  43  Neb.,  214,  61  N.  W.,  594,  521;  Pullan  v.  Cincinnati  &  Chicago 

distinguished  in  Buck  v.  Stuben,  63  R.  Co..  4  Biss.,  47 ;  Crane  v.  McCoy, 

Neb.,  273,  88  N.  W.,  483.  1  Bond,  422;  Mays  v.  Rose,  Freem. 


CHAP.    I.]  GENERAL    FEATURES.  13 

appointment  of  a  receiver  is  thus  a  discretionary  measure,  the 
action  of  the  lower  court  in  appointing  or  denying  a  receiver 
pendente  lite  will  not  be  disturbed  upon  appeal  unless  there 
has  been  a  clear  abuse. 3?  But  the  discretion  thus  vested  in 
the  chancellor  in  the  matter  of  appointing  receivers  pendente 
lite  is  not  an  absolute  or  arbitrary  one  but  it  is  a  sound  judicial 
discretion  in  view  of  all  the  circumstances  of  the  case,  to  be 
exercised  for  the  promotion  of  justice  where  no  other  adequate 
remedy  exists.38  And  where  the  court  is  unable  to  see  that 
any  benefit  will  result  from  appointing  a  receiver  in  the  cause, 
or  that  any  injury  will  follow  from  refusing  the  relief,  it  will 
not  interfere,  especially  if  it  is  apparent  that  great  confusion 
and  difficulty  in  the  management  of  the  property  may  result  to 
both  parties  from  a  receivership.39  So,  if  upon  a  consideration 
of  all  the  circumstances  of  the  case,  it  is  apparent  that  greater 
injury  will  ensue  from  appointing  a  receiver  than  from  leaving 
the  property  in  its  present  possession,  or  if  other  considerations 
of  propriety  or  of  convenience  render  the  appointment  im- 

(Miss.),  703;  Greville  v.  Fleming,  2  v.  Neal,  56  C.  C.  A.,  572,  120  Fed., 

Jo.  &  Lat.,  335;  Morrison  v.  Buck-  224,  affirming  S.  C,  110  Fed.,  477; 

ner.  Hemp.,  442;  Whelpley  v.  Erie  United    States    Shipbuilding   Co.   v. 

Railway  Co.,  6  Blatchf.,  271 ;  Hanna  Conklin,  60  C.  C.  A.,  680,  126  Fed., 

V.  Hanna,  89  N.  C,  68;  Whitehead  132;  Heinze  v.  Butte  &  B.  C.  M.  Co.] 

V.   Hale,   118  N.   C,  601,  24  S.   E.,  61  C.  C.  A.,  63,  126  Fed.,  1;  Moore 

360;  Williamson's  Adm'r  v.  W.  C.  v.  Bank,  106  Fed.,  574;  Ford  v.  Tay- 

V.  M.  &  G.  S.  R.  Co.,  33  Grat.,  624;  lor,   137  Fed.,  149.     And  see  State 

Norris  V.  Lake,  89  Va.,  513,  16  S.  E.,  v.  Bank  of  New  England,  55  Minn., 

663;    Lyle  v.   Commercial   National  139,  56  N.  W.,  575. 
Bank,  93  Va.,  487,  25   S.   E.,   547;  37  Clark  v.   Bradley   Co.,  6  App. 

Warren  z;.  Pitts,  114  Ala.,  65,  21  So.,  D.   C,  437;   Wood  v.   Grayson,    16 

494;  Ray  v.  Robert  Price  Coal  Co.,  App.  D.  C,  174;  Coming  v.  Siesel, 

80  Conn.,  558,  69  Atl.,  355 ;  Clark  v.  101  Ga.,  389,  28  S.  E.,  861 ;  Heinze 

Bradley    Co.,   6   App.    D.    C,   437;  v.  Butte  &  B.  C.  M.  Co.,  61  C.  C. 

Wood  V.   Grayson,   16  App.  D.   C,  A.,  63,  126  Fed.,  1. 
174;  The  Anvil  v.  Savery,  116  Ga.,  38  Union    Boom    Co.    v.    Samish 

321,  42  S.  E.,  495;   McGarragh  v.  Boom  Co.,  ZZ  Wash.,  144,  74  Pac, 

Bank,  117  Ga.,  556,  43   S.   E.,  987;  53;  Baltimore  Bargain  House  v.  St. 

Valley  National  Bank  v.  Claflin  Co.,  Clair,  58  West  Va.,  565,  52  S.   E , 

108  Iowa,  504,  79  N.  W.,  279 ;  Balti-  660. 

more  Bargain  House  v.  St.  Clair,  58  39  Hamburgh   Manufacturing  Co. 

West  Va,  565,  52  S.  E.,  660;  Briggs  v.  Edsall,  4  Halst.  Ch.,  141. 


14 


RECEIVERS. 


[chap.  I. 


proper  or  inexpedient,  the  court  will  refuse  to  interf ere.^^  ]^or 
will  a  receiver  be  appointed  in  an  improper  case,  even  by  con- 
sent of  the  parties,  especially  when  the  rights  of  third  persons 
are  concerned  and  may  be  jeopardized  by  the  appointment.^^ 
And  he  who  seeks  the  appointment  of  a  receiver  must  himself 
come  into  court  with  clean  hands.'*^ 

§  8.  Probability  as  to  final  decree ;  plaintiff  must  present 
a  prima  facie  case;  proof  on  interlocutory  application. 
While  it  has  already  been  shown  that  the  court,  in  passing  upon 
the  application  for  a  receiver,  in  no  manner  forestalls  or  antici- 
pates the  final  decision  upon  the  merits,  the  probability  that 
plaintiff  will  ultimately  be  entitled  to  a  decree  in  his  action  is 
still  a  material  element  to  be  considered  by  the  court.  And  when 
upon  the  entire  record  this  is  a  matter  of  much  doubt,  the 
court  is  justified,  in  its  discretion,  in  refusing  a  receiver.^s 
To  warrant  the  relief,  therefore,  plaintiff  should  present  at  least 


40Vose  V.  Reed,  1  Woods,  647; 
Provident  Life  &  Trust  Co.  v.  Ken- 
iston,  53  Neb.,  86,  73  N.  W.,  216; 
Equitable  Life  Assurance  Society  v. 
Brown,  213  U.  S.,  25,  29  Sup.  Ct. 
Rep.,  404,  reversing  S.  C,  81  C.  C. 
A.,  1,  151  Fed.,  1. 

41  Whelpley  v.  Erie  Railway  Co., 
6  Blatchf.,  271.  To  the  same  effect, 
see  Hutchinson  v.  American  P.-C. 
Co.,  104  Fed.,  182. 

42  Hyde  Park  Gas  Co.  v.  Kerber, 
5  Bradw.,  132. 

43  Owen  V.  Homan,  3  Mac.  &  G., 
378,  affirmed  on  appeal  to  the  House 
of  Lords,  4  H.  L.  Rep.,  997;  Wilkin- 
son V.  Dibbie,  12  Blatchf.,  298;  Bank 
of  Florence  v.  United  States  S.  &. 
L.  Co.,  104  Ala.,  297,  16  So.,  110; 
Builders'  &  Painters'  Supply  Co.  v. 
Lucas,  119  Ala.,  202,  24  So.,  416; 
Hayes  v.  Jasper  Land  Co.,  147  Ala., 
340,  41  So.,  909;  Vila  v.  Grand  Is- 
land E.  L.,  I.  &  C.  S.  Co.,  68  Neb., 
222,  94  N.  W.,  136,  97  N.  W.,  613; 


Lancaster  v.  Asheville  St.  Ry.  Co., 
90  Fed.,  129;  Kelley  v.  Boettcher, 
89  Fed.,  125.  In  Owen  v.  Homan,  3 
Mac.  &  G.,  378,  Lord  Truro  ob- 
serves, p.  411,  as  follows:  "I  am  of 
opinion  that  the  case  upon  the  whole 
record  presents  too  much  doubt  as 
to  the  plaintiffs'  right  to  a  decree  to 
warrant  the  possession  of  the  prop- 
erty being  disturbed.  It  is  unneces- 
sary to  do  more  than  to  state  that 
the  granting  a  receiver  is  a  matter 
of  discretion,  to  be  governed  by  a 
view  of  the  whole  circumstances  of 
the  case ;  one  most  material  of 
which  circumstances  is  the  probabil- 
ity of  the  plaintiff  being  ultimately 
entitled  to  a  decree.  In  this  case 
many  of  the  important  points  arise 
upon  the  construction  of  the  deeds, 
and  not  upon  disputed  facts ;  and  I 
repeat  that  in  my  opinion  that  con- 
struction is  attended  with  too  much 
doubt  and  difficulty  to  entitle  the 
plaintiff  to  a  receiver." 


CHAP.   I.J  GENERAL   FEATURES.  15 

a  prima  facie  case,  and  the  court  should  be  satisfied  that  there 
is  imminent  danger  of  loss  unless  a  receiver  is  appointed.'** 
But  it  is  not  necessary  in  an  application  for  ancillary  relief  by 
the  appointment  of  a  receiver  that  the  proof  should  be  as  full 
and  complete  as  would  be  required  upon  a  final  hearing  upon 
the  merits. *5 

§  9.  When  power  may  be  invoked;  not  when  property 
is  of  little  value ;  bond  in  lieu  of  receiver.  The  power  of  ap- 
pointing receivers  is  necessarily  inherent  in  courts  possessed 
of  equitable  jurisdiction,  and  may  be  invoked  whenever  there  is 
an  estate  or  fund  in  existence  and  no  competent  person  en- 
titled to  hold  it,  or  when  the  person  entitled  occupies  the  rela- 
tion of  a  trustee  and  is  misusing  or  misapplying  the  property. 
And  when  property  constituting  the  subject-matter  of  the  liti- 
gation is  subject  to  clear  equities  in  favor  of  a  party  to  the 
action  who  is  out  of  possession,  the  court  may  appoint  a  receiv- 
er when  the  relief  seems  to  be  just  and  necessary  to  preserve 
the  thing  in  dispute  from  the  control  of  either  party  until  the 
controversy  is  determined.*^  So  a  receiver  will  be  appointed 
for  the  protection  of  the  fund  when  plaintiff  has  an  equitable 
interest,  and  defendant  having  possession  of  the  property  is 
wasting  it,  or  removing  it  beyond  the  jurisdiction  of  the 
court.^'^  And  if  the  order  does  not  in  terms  fix  or  limit  the 
duration  of  the  receivership,  it  will  be  construed  as  continuing 
during  the  pendency  of  the  suit,  unless  the  receiver  is  sooner 
discharged.*^  But  to  warrant  a  court  of  equity  in  incurring 
the  expense  of  a  receivership,  it  must  clearly  appear  that  there 
is  actual  property  in  existence  which  ought  to  be  protected,  and 
the  courts  are  averse  to  interfering  when  the  property  is  of 
trifling  value.^^    And  where  the  property  involved  is  such  that 

44  Norris  v.  Lake,  89  Va.,  513,  16      518.     And   see  Clark  v.   Brown,  57 
S.  E.,  663.  C.  C.  A.,  76,  119  Fed.,  130. 

45Pearce    v.    Elwell,    116    N.    C,  ^I  ^°'^  ^-  ^''^'   ^  ^^°°d^'  ^7- 

595   21  S    E    305  Weems    v.    Lathrop,    42    Tex., 

207. 

46  Skinner  v.  Maxwell,  66  N.  C,  49  Whitworth  v.  Whyddon,  2  Mac. 

45 ;  Flagler  v.  Blunt,  32  N.  J.  Eq.,      &  G.,  52. 


16  RECEIVERS.  [chap.    I. 

it  is  not  likely  to  sufifer  injury  by  remaining  in  the  hands  of  the 
defendant  and  it  appears  that  the  latter  is  perfectly  solvent,  it 
has  been  held  error  to  appoint  a  receiver  pendente  lite  without 
affording  the  defendant  the  alternative  of  giving  bond  for  the 
protection  of  the  plaintiff.^^  And  it  may  be  stated  generally 
that  a  court  of  equity  has  inherent  power  to  impose  conditions 
upon  the  appointment  and  discharge  of  receivers,  and  it  may 
properly  discharge  a  receiver  previously  appointed  upon  the 
giving  by  defendant  of  a  bond  properly  conditioned  to  save 
the  plaintiff  harmless  from  the  injuries  complained  of.^^ 

§  10.  Relief  similar  to  that  by  injunction;  not  granted 
when  there  is  a  remedy  at  law;  remedy  at  law  defined. 
A  receiver  being  appointed  by  a  court  of  equity  in  the  exercise 
of  its  extraordinary  jurisdiction,  applications  for  the  relief 
are  governed  by  many  of  the  principles  which  control  the 
courts  in  administering  the  extraordinary  remedy  of  an  in- 
junction. And  as  it  is  always  a  sufficient  objection  to  the 
granting  of  an  injunction  that  the  person  aggrieved  has  a  full 
and  adequate  remedy  at  law,^^  so  courts  of  equity  will  not 
lend  their  aid  by  the  appointment  of  receivers  when  the  persons 
seeking  the  relief  have  ample  redress  by  the  usual  course  of  pro- 
ceedings at  law,  or  when  the  law  affords  any  other  safe  or  ex- 
pedient remedy.^^  Thus,  when  proceedings  are  instituted  by 
a  creditor  of  a  banking  corporation  for  the  appointment  of  a 

50  Stillwell  V.  Savannah  Grocery  v.  Jennings,  1  Stockt.,  192 ;  Wooden 
Co,  88  Ga,  100,  13  S.  E.,  963;  Biv-  v.  Wooden,  2  Green  Ch,  429;  Sher- 
ins  V.  Marvin,  96  Ga,  268,  22  S.  E,      man  v.  Clark,  4  Nev,  138. 

923;  Conquest  v.  Bank,  97  Ga,  500,  53  Sollory  v.  Leaver,  L.  R,  9  Eq., 

25  S.  E.,  343;  Turnipseed  v.   Ken-  22;    Cremen    v.    Hawkes,    2   Jo.    & 

tucky  Wagon   Co,  97  Ga,  258,  23  Lat.,   674;    Parmly  v.   Tenth  Ward 

S.  E.,  84 ;  Cordele  Ice  Co.  v.  Sims,  Bank,   3    Edw.    Ch,   395 ;    Corey  v. 

120  Ga,  428,  48  S.  E,  12.     And  see  Long,  43  How.   Pr.,  497 ;   S.  C,  12 

§§  124,  308  and  478,  /'o.r^.  Ab.    Pr,    N.    S.,    427;    Opinion    of 

51  Twin  City  Power  Co.  v.  Bar-  Frick,  J.,  in  Speights  v.  Peters,  9 
rett,  61  C.  C.  A.,  288,  126  Fed.,  302.  Gill,    476;     Morrison    v.    Buckner, 

52Coughron  v.  Swift,  18  111.,  414;  Hemp,  442;  Rice  v.  St.  Paul  &  Pa- 

Winkler   v.    Winkler,   40    111.,    179;  cific  R.  Co,  24  Minn.,  464;  Bush  v. 

Poage  V.  Bell,  3  Rand,  586;  Web-  Mattox,  110  Ga.,  472,  35  S.  E.,  640; 

ster  V.  Couch,  6  Rand.,  519;  Mullen  Griffin  v.  Henderson,   116  Ga.,  310, 


CHAP.    I.]  GENERAL   FEATURES.  17 

receiver  to  wind  up  its  affairs,  but  it  is  apparent  from  his  bill 
that  whatever  rights  he  may  have  are  cognizable  at  law  and 
may  be  remedied  by  following  the  course  prescribed  by  law  for 
that  purpose,  the  application  will  be  denied  and  the  plaintiff  will 
be  left  to  pursue  his  legal  remedy. ^^  So  where  plaintiff  has  an 
adequate  remedy  at  law  by  attachment  or  garnishment,  a  re- 
ceiver is  properly  refused. ^^  Nor  does  it  necessarily  follow, 
because  the  remedy  at  law  is  attended  with  difficulty,  that 
plaintiff  may  have  relief  in  equity  by  a  receiver.^^  So  when 
the  person  aggrieved,  having  a  remedy  at  law,  loses  that 
remedy  by  his  own  laches,  he  can  not  come  into  equity  and  have 
a  receiver.^'?  And  there  is  no  case  in  which  a  court  of  equity 
appoints  a  receiver  simply  because  it  will  be  productive  of  no 
harm. 5^  But  in  order  that  the  existence  of  a  remedy  at  law 
may  constitute  a  bar  to  the  intervention  of  equity  by  the  ap- 
pointment of  a  receiver,  it  must  appear  that  the  legal  remedy 
is  equally  as  complete,  efficient  and  effective  as  that  in  equity, 
and  unless  this  appears,  a  court  of  equity  may  properly  inter- 
vene.^^   And  where  it  appears  that  the  remedy  at  law  is  inade- 

42  S.   E.,  482;   Carstarphen  Ware-  rett,  61  C.  C.  A.,  288,  126  Fed.,  302; 

house   Co.   V.    Fried,    124   Ga.,    544,  Columbia  National   Sand  Dredging 

52  S.  E.,  598;  Slover  v.  Coal  Creek  Co.  v.   Washed  B.   S.   D.   Co.,   136 

C.   Co.,   113  Tenn.,  421,  82  S.  W.,  Fed.,  710.    For  the  application  of  the 

1131.     And  see  McClure  v.  McGee,  same  principle  in  the  case  of  injunc- 

128  Ky.,  464,  —  S.  W.,  — .  tions,  see  Watson  v.  Sutherland,  5 

54Parmly  v.  Tenth  Ward  Bank,  Wal.,    74;    Walla    Walla    v.    Walla 

3  Edw.  Ch.,  395.  Walla    Water    Co.,    172    U.    S.,    1, 

55  Bush  V.  Mattox,  110  Ga.,  472,  19  Sup.  Ct.  Rep.,  77;  Irwin  v. 
35  S.  E.,  640;  Carstarphen  Ware-  Lewis,  50  Miss.,  363;  Beaser  v. 
house  Co.  V.  Fried,  124  Ga.,  544.  52  City  of  Ashland,  89  Wis.,  28, 
S.  E.,  598;  Slover  v.  Coal  Creek  C.  61  N.  W.,  77;  Welton  v.  Dick- 
Co.,  113  Tenn.,  421,  82  S.  W.,  1131.  son,  38  Neb.,  767,  57   N.  W.,  559, 

56Cremen   v.    Hawkes,   2   Jo.    &  22    L.    R.    A.,    496,    41    Am.    St. 

Lat.,  674.  Rep.,  771 ;  Kellogg  v.  King,  114  Cal., 

57  Drewry  v.  Barnes,  3  Russ.,  94.  378,  46  Pac,  166,  55  Am.  St.  Rep., 

58  Orphan  Asylum  v.  McCartee,  74;  Coler  v.  Board  of  Commission- 
Hopk.  Ch.,  429;  Corey  v.  Long,  43  ers,  89  Fed.,  257;  Bank  of  Kentucky 
How.  Pr.,  498;  S.  C,  12  Ab.  Pr.,  v.  Stone,  88  Fed.,  383;  Drew  v. 
N.  S.,  427.  Town  of  Geneva,  150  Ind.,  662,  SO 

59  Twin  City  Power  Co.  v.  Bar-  N.  E.,  871,  48  L.  R.  A.,  814. 

Receivers — 2. 


18  RECEIVERS.  [chap.    I. 

quate  and  ineffectual,  it  is  not  necessary  that  the  plaintiff  should 
exhaust  that  remedy  before  appealing  to  a  court  of  equity.^^ 
§  11.  Plaintiff  must  show  his  own  right,  and  danger  to 
the  property.  The  principal  grounds  upon  which  courts  of 
equity  grant  their  extraordinary  aid  by  the  appointment  of 
receivers  pendente  lite  are  that  the  person  seeking  the  relief 
has  shown  at  least  a  probable  interest  in  the  property,  and  that 
there  is  danger  of  its  being  lost  unless  a  receiver  is  allowed, 
the  element  of  danger  being  an  important  consideration  in  the 
case.61  And  where  there  is  no  danger  to  the  property  and 
nothing  else  to  show  the  necessity  for  a  receiver,  one  should 
not  be  appointed. ^2  And  a  remote  or  past  danger  will  not 
suffice  as  a  ground  for  the  relief,  but  there  must  be  a  well- 
grounded  apprehension  of  immediate  injury. ^^  The  power  of 
appointment  is  usually  invoked  either  for  the  prevention  of 
fraud,  to  save  the  subject  of  litigation  from  material  injury, 
or  to  rescue  it  from  threatened  destruction. 6"*  And  to  warrant 
the  interposition  of  a  court  of  equity  by  the  aid  of  a  receiver, 
it  is  essential  that  plaintiff  should  show,  first,  either  a  clear 
legal  right  in  himself  to  the  property  in  controversy,  or  that  he 
has  some  lien  upon  it,  or  that  it  constitutes  a  special  fund  out 
of  which  he  is  entitled  to  satisfaction  of  his  demand.  And, 
secondly,  it  must  appear  that  possession  of  the  property  was 
obtained  by  defendant  through  fraud;  or  that  the  property 
itself,  or  the  income  from  it,  is  in  danger  of  loss  from  the 
neglect,  waste,  misconduct  or  insolvency  of  the  defendant.^^ 

60  Chicago    &    Southeastern    Ry.  62  Beaumont  v.  Beaumont,  166  Pa. 
Co.  V.  Kenney,  159  Ind.,  72,  62  N.       St.,  615,  31  Atl.,  336. 

E.,  26;    Sallee  v.   Soules,   168  Ind.,  63  Kean  v.  Colt,  1  Halst.  Ch.,  365. 

624,  81  N.  E.,  587.  64  Baker     v.     Administrator     of 

61  Goodyear  v.  Betts,  7  How.  Pr.,      Backus,  32  111.,  70. 

187;  Flagler  v.  Blunt,  32  N.  J.  Eq.,  65  Mays  v.  Rose,  Freem.  (Miss.), 

518;   Mead  v.   Burk,   156  Ind.,   577,  703;  Kanawha  Coal  Co.  v.  Ballard 

60  N.  E.,  338;  Attorney-General  v.  &  W.  C.  Co.,  43  West  Va.,  721,  29 

Clavin,  (also  sub.  nom.  McCarter  v.  S.  E.,  514;  Thompson  v.  Adams,  60 

Clavin),  72  N.  J.  Eq.,  642,  —  Atl,  West  Va.,  463,  55  S.  E.,  668;  Inter^ 

— .     See,   also.    Orphan   Asylum   v.  national  Trust  Co.  v.  Decker  Bros., 

McCartee,  Hopk.  Ch.,  429;  Vose  v.  81  C.  C.  A.,  302,  152  Fed.,  78.     See 

Reed,  1  Woods.  647.  also,  Leavitt  v.  Yates,  4  Edw.  Ch., 


CHAP.    I.] 


GENERAL    FEATURES. 


19 


Not  only  must  the  plaintiff  show  a  case  of  adverse  and  conflict- 
ing claims  to  the  property,  but  he  must  also  show  some  emer- 
gency or  danger  of  loss  demanding  immediate  action,  and  that 
his  own  right  is  reasonably  clear  and  free  from  doubt. ^^  If 
the  dispute  is  as  to  title  only,  the  court  very  reluctantly  disturbs 
possession  by  a  receiver,  but  if  the  property  is  exposed  to  dan- 
ger and  to  loss,  and  the  person  in  possession  has  not  a  clear 
legal  right  thereto,  the  court  will  interpose  by  a  receiver  for 
the  security  of  the  property.^"^ 

§  12.  Plaintiff  must  have  existing  interest;  relief  not 
granted  to  stranger;  no  receiver  of  gratuity.  It  is  in  all 
cases  essential  to  the  exercise  of  the  jurisdiction  that  the  plain- 
tiff should  have  a  present  existing  interest  in  the  property  over 
which  he  seeks  to  have  a  receiver  appointed.^^    And  when  it  is 


162 ;  Beecher  v.  Bininger,  7  Blatchf., 
170.  "An  application  for  the  ap- 
pointment of  a  receiver,"  say  the 
court  in  Mays  v.  Rose,  Freem. 
(Miss.),  p.  718,  "is  one  which  is  ad- 
dressed to  the  sound  discretion  of 
the  court,  to  be  exercised  as  an 
auxiliary  to  the  attainment  of  the 
ends  of  justice.  It  is  one  of  the 
modes  in  which  the  preventive  jus- 
tice of  a  court  of  equity  is  admin- 
istered. The  great  object  is  to  se- 
cure the  property  or  thing  in  con- 
troverisy,  so  that  it  may  be  subjected 
to  such  order  or  decree  as  the  court 
may  make  in  the  particular  case.  It 
is  intended  equally  for  the  security 
of  both  plaintiff  and  defendant.  The 
possession  of  the  receiver  is  not  ad- 
verse to  or  in  hostility  to  the  rights 
of  the  defendant ;  that  possession  is 
the  possession  of  the  court,  held 
equally  for  the  greater  safety  of  all 
the  parties  concerned.  A  reference 
to  the  various  decisions  upon  mo- 
tions for  the  appointment  of  re- 
ceivers shows  that  each  case  has 
been  made  to  depend  upon  its  own 


peculiar  features,  and  throws  but 
little  light  upon  any  new  case,  ex- 
cept so  far  as  they  establish  the 
general  principles  which  should  gov- 
ern the  court  in  the  exercise  of  its 
discretion  upon  these  motions.  These 
principles  are:  that  the  plaintiff 
must  show,  first,  either  that  he  has 
a  clear  right  to  the  property  itself, 
or  that  he  has  some  lien  upon  it; 
or  that  the  property  constitutes  a 
special  fund  to  which  he  has  a  right 
to  resort  for  the  satisfaction  of  his 
claim.  And  secondly,  that  the  pos- 
session of  the  property  by  the  de- 
fendant was  obtained  by  fraud ;  or 
that  the  property  itself,  or  the  in- 
come arising  from  it,  is  in  danger 
of  loss  from  the  neglect,  waste,  mis- 
conduct or  insolvency  of  the  defend- 
ant. These  are  believed  to  be  the 
general  rules  governing  all  applica- 
tions of  this  kind." 

66  Beecher  v.  Bininger,  7  Blatchf., 
170. 

67  Opinion     of     Clayton,     J.,     in 
Lenox  v.  Notrebe,  Hemp.,  225. 

68  Smith  V.   Wells,  20  How.   Pr., 


20  RECEIVERS.  [chap.    I. 

apparent  that  he  has  parted  with  his  entire  interest  in  and  title 
to  the  property,  the  court  will  not  interfere,  even  though  suffi- 
cient grounds  may  be  shown  to  have  warranted  the  relief, 
when  the  offense  complained  of  was  committed,  and  when 
plaintiff  still  had  an  interest  in  the  subject-matter. ^9  And  a 
receiver  will  not  be  appointed  over  a  gratuity  which  amounts 
to  nothing  more  than  a  mere  allowance  in  which  the  defendant 
has  no  property  right  or  interest  and  which  has  been  appropriat- 
ed for  his  own  personal  benefit.'^^^  And  a  receiver  will  be  ap- 
pointed only  in  behalf  of  a  party  in  interest  in  the  litigation; 
and  a  stranger  to  the  suit,  who  represents  no  interest  at  stake, 
is  not  entitled  to  participate  in  the  proceedings,  or  to  thrust 
himself  forward  and  obtain  a  receiver,  especially  when  the 
parties  to  the  action  are  not  desirous  of  having  one  appointed.'^^ 
So  the  right  to  propose  a  suitable  and  proper  person  for  re- 
ceiver, after  the  order  for  his  appointment  has  been  granted, 
rests  in  the  first  instance  with  the  parties  in  interest  in  the 
cause,  and  the  court  will  not  permit  a  stranger  to  the  action  to 
come  in  and  propose  a  person  for  the  officeJ^ 

§  13.  Receiver  not  allowed  for  benefit  of  stranger  to  the 
cause.  A  receiver  pendente  lite  is  appointed  only  for  the 
benefit  of  such  of  the  parties  to  the  cause  as  appear  to  be  en- 
titled to  the  fund  in  controversy,  and  not  for  the  benefit  of 
strangers  to  the  suit.  And  if  the  receivership  interferes  with 
the  rights  of  a  stranger,  he  may  apply  to  the  court  to  be  heard 
pro  interesse  suo,  and  his  rights  will  be  protected  against  any 
inequitable  interference  therewith  by  the  officer  of  the  court. 
But  the  appointment  of  the  receiver  does  not  give  a  mere 

158;   Steele  v.  Aspy,  128  Ind.,  367,  70  Timothy  v.  Day,    (1908)   2  L. 

27  N.  E.,  739.  R.  Ir.,  26. 

69  Smith  V.  Wells,  20  How.  Pr..  71  O'Mahoney  v.  Belmont,  62  N. 

158.    And  this  principle  would  seem  Y.,   133,  affirming  S.   C,  37   N.   Y. 

to  hold  good,  even  though  plaintiff  Sup'r  Ct.  R.,  223. 

still  has   a   right   of  action   against  72  Attorney   -   General     v.     Day, 

defendants   for  the   injury   done   to  Madd.,   246,    1st   American   edition, 

the  property   while   he  yet   had   an  470. 
interest  therein.     Id. 


CHAP.    1.]  GENERAL    FEATURES.  21 

Stranger  to  the  suit  the  benefit  of  the  proceedings,  so  that  he 
may  claim  what  he  would  not  otherwise  have  been  entitled  to.'^^ 
§  14.  DiHgence  necessary;  laches  and  acquiescence  a 
bar  to  relief.  It  is  important  to  observe,  at  the  outset,  that 
courts  of  equity  lend  their  extraordinary  aid  by  the  appoint- 
ment of  receivers,  as  in  the  granting  of  injunctions,  only  in 
behalf  of  those  who  have  used  due  diligence  in  the  assertion 
of  their  rights  and  in  invoking  the  aid  of  the  court.  And  a 
plaintiff,  whose  right  is  otherwise  clear,  and  sufficient  to  en- 
title him  to  the  relief,  may  be  entirely  debarred  from  the  aid  of 
the  court  by  his  own  laches,  which  will  be  construed  as  a  waiver 
of  the  right  if  he  delays  an  unreasonable  time  in  its  assertion."^^ 
So  an  application  for  a  receiver  is  not  entitled  to  favorable 
consideration,  when  the  plaintiff  has  lain  by  for  a  long  period 
of  years,  and  quietly  acquiesced  in  a  condition  of  affairs  which 
he  seeks  to  change  by  obtaining  a  receiver. "^^  Yot  example, 
where  plaintiffs  seek  the  aid  of  a  receiver  over  property  in 
which  they  claim  some  interest,  but  which  has  been  in  posses- 
sion of  defendants  for  a  long  period  of  years,  during  all  which 
time  plaintiffs  and  those  under  whom  they  claim  have  ac- 

73  Howell  V.  Ripley,  10  Paige,  43.  too   late    with   this   motion.     They 

74  Brown z;.  Chase,  Walk.  (Mich.),  filed  their  bill  August  13,  1839,  near- 
43;  Reynolds  &  Hamby  E.  M.  Co.  ly  three  years  ago,  and,  for  aught 
V.  Martin,  116  Ga.,  495,  42  S.  E.,  that  appears  from  their  petition, 
796.  And  see  Gould  v.  Tryon,  id.,  might  with  due  diligence  have  ob- 
353;  Gray  v.  Chaplin,  2  Russ.,  126;  tained  a  decree  long  before  this 
Fogarty  v.  Bourke,  2  Dr.  &  War.,  time,  and  had  the  mortgaged  prem- 
580;  Skinners  Company  v.  Irish  So-  ises  sold.  If  they  were  entitled  to 
ciety,  1  Myl.  &  Cr.,  162.  Brown  v.  a  receiver,  their  neglect  to  apply  for 
Chase,  Walk.  (Mich.),  43,  was  a  bill  his  appointment  at  an  earlier  day 
in  equity  for  the  foreclosure  of  a  should  be  construed  as  a  waiver  of 
mortgage,  on  which  an  application  their  right.     Motion  denied." 

was  made  for  a  receiver  of  the  rents  75  Fogarty  v.  Bourke,  2  Dr.  & 
and  profits  of  the  mortgaged  prem-  War.,  580;  Gray  v.  Chaplin,  2  Russ., 
ises,  on  the  ground  of  insufficiency  126;  Skinners  Company  v.  Irish  So- 
of  the  security  and  insolvency  of  the  ciety,  1  Myl.  &  Cr.,  162.  And  see 
mortgagor.  The  application  for  a  Municipal  Commissioners  of  Car- 
receiver  was  made  nearly  three  rickfergus  v.  Lockhart,  Ir.  Rep.,  3 
years  after  filing  the  bill.  The  court  Eq.,  515;  Hood  v.  First  National 
say:     "The  complainants  have  come  Bank,  29  Fed.,  55. 


22  RECEIVERS.  [chap.    I. 

quiesced  in  such  possession,  equity  will  not  interfere  by  a  re- 
ceiver in  limine.'^^  So  when  the  application  is  based  upon  the 
alleged  misconduct  of  defendant  as  a  trustee,  and  his  misap- 
propriation of  funds,  but  it  is  shown  that  the  state  of  affairs 
complained  of  has  existed  for  very  many  years,  with  plaintiffs' 
knowledge  and  without  objection  on  their  part,  the  court  will 
not  take  the  property  from  defendant's  hands  and  place  it  in 
the  custody  of  a  receiver. '^'^  And  when  the  wrong  complained 
of  occurred,  if  at  all,  several  years  before  the  application  for 
relief,  and  so  long  since  as  to  afford  no  ground  for  apprehen- 
sion of  impending  danger,  and  no  act  is  alleged  as  being  now 
threatened,  a  receiver  will  not  be  allowed. '^^  And  where  the 
receiver  of  a  plaintiff  in  a  foreclosure  suit  has  allowed  many 
years  to  elapse  after  the  entry  of  a  decree  in  the  action,  such 
laches  and  delay  constitute  a  bar  to  the  right  of  the  receiver 
to  have  the  proceeds  of  the  sale  paid  to  him  where  the  rights 
of  third  persons  have  intervened.''^ 

§  15.  The  remedy  compared  with  that  by  injunction. 
The  relief  granted  by  courts  of  equity  in  the  appointment  of 
receivers  pendente  lite  bears  in  many  respects  a  close  analogy 
to  that  by  preliminary  injunction.  Some  points  of  resemblance 
jin  the  two  forms  of  remedy  have  been  already  indicated, 
while  others  will  frequently  appear  throughout  the  following 
pages.  Both  are  extraordinary  equitable  remedies,  as  distin- 
guished from  the  usual  and  ordinary  modes  of  administering 
relief  either  in  courts  of  law  or  of  equity.  Both  are  essen- 
tially preventive  in  their  nature,  being  properly  used  only  for 
the  prevention  of  future  injury,  rather  than  for  the  redress  of 
past  grievances.  Both,  too,  have  one  common  object  in  so  far 
as  they  seek  to  preserve  the  res  or  subject-matter  of  the  litiga- 
tion unimpaired,  to  be  disposed  of  in  accordance  with  the 
future  decree  or  order  of  the  court.  Perhaps  the  principal  ele- 
ment of  difference  between  these  two  important  remedies  lies 

76  Gray  v.  Chaplin,  2  Russ..  126.  78  Kean  v.  Colt,  1  Halst.  Ch.,  365. 

77  Skinners  Company  v.  Irish  So-  79  Thomas  v.  VanRIeter,  164  III., 
ciety,  1  Myl.  &  Cr.,  162.                           304,  45  N.  E.,  405. 


CHAP.    I.]  GENERAL    FEATURES.  23 

in  this:  that  an  injunction  is  strictly  a  conservative  remedy, 
merely  restraining  action  and  preserving  matters  in  statu  quo, 
without  affecting  the  possession  of  the  property  or  fund  in  con- 
troversy ;  while  the  appointment  of  a  receiver  is  usually  a  more 
active  remedy,  since  it  changes  the  possession  as  well  as  the 
subsequent  control  and  management  of  the  property.  A  court 
of  equity  by  an  injunction  ties  up  the  hands  of  defendants,  and 
preserves  unchanged,  not  only  the  property  itself,  but  the  rela- 
tions of  all  parties  thereto.  But  in  appointing  a  receiver  the 
court  goes  still  farther,  since  it  wrests  the  possession  from 
defendant,  and  assumes  and  maintains  the  entire  management 
and  control  of  the  property  or  fund,  frequently  changing  its 
form,  and  retaining  possession  through  its  officer,  the  re- 
ceiver, until  the  rights  of  all  parties  in  interest  are  satisfactorily 
determined. 

§  16.  Receiver  not  necessarily  appointed  because  injunc- 
,tion  granted.  From  the  points  of  resemblance  already 
indicated  between  these  two  extraordinary  equitable  remedies, 
it  is  not  to  be  inferred  that  the  appointment  of  a  receiver  nec- 
essarily follows  from  the  granting  of  an  injunction,  or  that 
the  two  remedies  are  necessarily  inseparable.  And  while  it 
frequently  happens  that  the  courts  are  called  upon  to  adminis- 
ter both  species  of  relief  in  the  same  action,  and  at  one  and  the 
same  time,  yet  it  by  no  means  follows  that  because  an  injunc- 
tion is  granted  a  receiver  must  be  appointed,  and  the  two  are  to 
be  treated  as  distinct  and  independent  matters.  A  court  of 
equity  may  therefore  refuse  a  receiver,  although  the  case  pre- 
sented is  a  fitting  one  for  an  injunction,  and  although  an  in- 
junction has  already  been  granted.^O  It  has  been  held,  how- 
ever, that  the  power  of  appointing  a  receiver,  when  the  relief 
is  necessary  for  the  collection  and  preservation  of  property 

80  Rawnsley  v.    Trenton    Mutual  "the  rights  to  those  different  reme- 

Life  &  Fire  Insurance  Co.,  1  Stockt.,  dies  are  essentially  distinct,  and  de- 

347;    Oakley   v.    Paterson    Bank,    1  pend  upon  totally  different  grounds 

Green   Ch.,    173.     And   see   Hall  v.  and  circumstances."    And  see,  post, 

Hall.  3  Mac.  &  G.,  85,  where  it  was  §  743. 
said    by   the   Lord    Chancellor   that 


24  RECEIVERS.  [chap.    I. 

pending  an  injunction  suit,  is  a  necessary  incident  to  the  power 
of  granting  an  injunction ;  ^^  and  if  the  latter  power  be  express- 
ly conferred  by  law  upon  a  judge  in  vacation,  the  former  may 
be  regarded  as  conferred  by  implication.^^ 

§  17.  Suit  must  be  actually  pending ;  allegations  must  be 
specific.  Ordinarily,  unless  perhaps  in  the  case  of  infants 
or  lunatics,  a  suit  must  be  actually  pending  to  justify  a  court  of 
equity  in  appointing  a  receiver  ;83  and  it  follows,  necessarily, 
that  the  person  whose  property  it  is  sought  to  place  in  the  re- 
ceiver's hands  must  be  made  a  party  to  the  suit,  in  order  that  he 
may  have  an  opportunity  of  resisting  the  application,  the  grant- 
ing of  which  might  result  in  irreparable  injury  to  his  inter- 
ests.8^  And  since  the  court  is  without  jurisdiction  to  appoint 
a  receiver  before  the  bill  is  filed,  the  fact  that  the  bill  is  subse- 
quently filed  and  that  the  receiver  gives  bond  does  not  impart 
any  validity  to  the  order.85  And  the  suit  which  must  be  ac- 
tually pending  must  be  one  in  which  the  main  relief  sought  is 
independent  of  the  receivership.^e  But  where  an  order  ap- 
pointing a  receiver  may  be  void  because  made  before  the  actual 
pendency  of  an  action,  a  subsequent  order  made  after  the  court 
has  acquired  jurisdiction  and  confirming  the  original  appoint- 

81  Elk  Fork  Oil  &  Gas  Co.  v.  Va.,  565,  52  S.  E.,  660;  Popp  v. 
Foster,  39  C.  C.  A.,  615,  99  Fed.,  495.  Mining  Co.,  27  Utah,  83,  74  Pac, 

82  Penn  v.  Whiteheads,  12  Grat.,  426 ;  In  re  Brant,  96  Fed.,  257.  And 
74_  see   In  re   Hancock,  27   Hun,   575; 

83  Baker  v.  Administrator  of  Back-  Plarwell  v.  Potts,  80  Ala.,  70;  Jones 
us,  32  111.,  79;  Merchants  &  Manu-  v.  Bank  of  Leadville,  10  Colo.,  464, 
facturers  National  Bank  v.  Kent  17  Pac,  272;  Pressley  v.  Harrison, 
Circuit  Judge.  43  Mich.,  292,  5  N.  102  Ind.,  14,  1  N.  E.,  188;  Greene 
W.,  627;  Jones  v.  Schall,  45  Mich.,  v.  Star  C.  &  P.  Car  Co.,  99  Fed., 
379,  8  N.  W.,  68 ;  Hardy  v.  McClel-  656. 

Ian,  53  Miss.,  507 ;  Barber  v.  Manier,  84  Baker     v.      Administrator     of 

71  Miss.,  725,  15  So.,  890;  State  v.  Backus,  32  111.,  79.     See,  also,  Dale 

Union  National  Bank,  145  Ind.,  537,  v.  Kent,  58  Ind.,  584. 

44  N.  E.,  585,  57  Am.  St.  Rep.,  209;  85  Harwell  v.  Potts,  80  Ala.,  70. 

State  V.  Ross,  122  Mo.,  435,  25   S.  86  Vila  v.  Grand  Island  E.  L.,  I. 

W.,  947,  23  L.  R.  A.,  534;  Rainey  &  C.  S.  Co.,  68  Neb.,  222,  94  N.  W., 

V.  Freeport  S.  C.  &  C.  Co.,  58  West  136,  97  N.  W.,  613 ;  Mann  v.  Ger- 

Va.,  424,  52  S.  E.,  528;   Baltimore  man- American  I.  Co.,  70  Neb..  454, 

Bargain  House  v.  St.  Clair,  58  West  97  N.  W.,  600. 


CHAP.    I.]  GENERAL   FEATURES.  25 

ment  will  operate  as  an  appointment  as  of  that  date  and  will  be 
binding  upon  the  parties  and  their  privies.  Such  confirmatory 
order,  therefore,  constitutes  a  good  defense  to  an  action  against 
the  receiver  to  recover  funds  received  by  him  brought  by  a 
person  who  is  in  privity  with  a  party  to  the  suit  in  which  such 
order  was  entered.^''  The  facts  relied  upon  as  the  ground  for 
the  relief  should  be  distinctly  and  specifically  set  forth,  in  order 
that  defendant  may  be  fully  apprised  thereof  and  have  an  oppor- 
tunity to  resist  the  application.^^  It  will  not  therefore  suffice 
to  allege  in  general  terms  that  plaintiff  is  entitled  on  principles 
of  equity  to  the  interposition  of  the  court,  but  the  facts  relied 
upon  should  specifically  appear.^^  And  while  fraudulent  con- 
duct on  the  part  of  defendant,  or  danger  to  the  property  or 
fund  in  controversy,  is  frequently  made  the  foundation  for  a 
receivership,  it  will  not  suffice  merely  to  allege  such  fraud  or 
danger  upon  information  generally,  without  specifying  the 
sources  of  the  information.  And  a  bill  whose  only  allegations 
upon  these  points  are  thus  vague  and  general  does  not  present 
such  a  case  as  to  justify  the  court  in  interfering  by  a  receiver.^^ 
Nor  will  mere  general  averments  of  plaintiff's  belief  that  the 
property  in  controversy  will  be  wasted  or  destroyed,  unless  a 
receiver  is  appointed,  warrant  the  court  in  interfering,  but 
the  grounds  upon  which  such  belief  is  founded  should  be  set 
forth.9i 

§  18.  Insolvency  as  a  ground  for  relief.  While  insolven- 
cy of  a  defendant  in  possession,  and  against  whom  a  receiver  is 
sought,  is  frequently  relied  upon  by  the  courts  as  a  ground  for 
granting  the  relief,^^  j^  [^  to  be  observed  that  insolvency  will 
not  of  itself  warrant  a  court  in  appointing  a  receiver.  It  must 
also  appear  that  plaintiff  has  a  probable  cause  of  action  against 

87  Anderson  v.  Riddle,  10  Wyo.,  90  Blondheim  v.  Moore,  11  Md., 
277,  68  Pac,  829.  365. 

88  Tomlinson  v.  Ward,  2  Conn.,  91  Hanna  v.  Hanna,  89  N.  C,  68. 
396;  Blondheim  v.  Moore,  11  Md.,  92  See  Leavitt  v.  Yates,  4  Edw. 
365.  Ch.,  162. 

89  Tomlinson  v.   Ward,  2   Conn., 
396. 


26  RECEIVERS.  [chap.    L 

the  defendant,  and  that  the  benefit  to  result  from  his  recovery 
will  either  be  wholly  lost  or  substantially  impaired  by  reason 
of  such  insolvency,  unless  a  receiver  is  appointed.^^  Upon  the 
other  hand,  if  the  case  is  in  other  respects  a  proper  one  for  the 
appointment  of  a  receiver,  the  relief  may  be  granted  although 
it  appears  that  the  defendant  is  entirely  solvent.^^ 

§  19.  Courts  averse  to  interfering  with  defendant  in 
possession;  considerations  governing  court  in  exercise  of 
discretion.  As  against  a  defendant  in  the  possession  and 
enjoyment  of  property  which  is  the  subject-matter  of  the  liti- 
gation, equity  always  proceeds  with  extreme  caution  in  ap- 
pointing a  receiver.9^  Where  the  property  has  been  held  and 
enjoyed  by  defendants  in  possession  for  a  long  series  of  years, 
and  plaintiff  shows  no  real  danger,  a  receiver  will  not  ordi- 
narily be  appointed  in  limine. ^^  And  where  plaintiff's  object 
is  to  assert  a  right  to  property  possessed  by  defendant,  a  re- 
ceiver, if  appointed  at  all,  is  appointed  only  upon  the  principle 
of  preserving  the  subject-matter  pending  a  litigation  which  is 
to  determine  the  rights  of  the  parties.  In  all  such  cases,  a 
court  of  equity  necessarily  exercises  a  large  discretion  as  to 
whether  it  will  or  will  not  take  possession  of  the  property  by 
its  receiver,  and  this  discretion  is  governed  by  a  consideration 
of  all  the  circumstances  of  the  case.  It  is  therefore  difficult  to 
establish  any  fixed  rule  in  such  cases,  although  it  may  be  said 
generally,  that  if  the  case  as  presented  upon  the  application  for 

93  Gregory  v.  Gregory,  33  N.  Y.  Carrickfergus  v.  Lockhart,  Ir.  Rep., 
Supr.  Ct.  R.,  opinion  of  Jones,  J.,  3  Eq.,  515;  Rees  v.  Andrews,  169 
p.  39;  Lawrence  Iron-Works  v.  Mo.,  177,  69  S.  W.,  4;  State  v.  Dis- 
Rockbridge  Co..  47  Fed.,  755;  Trust  trict  Court,  13  Mont.,  416,  34  Pac, 
&  Deposit  Co.  V.  Spartanburg  W.  609;  dictum  in  Hall  v.  Wayne  Cir- 
Co.,  91  Fed.,  324;  Ryder  v.  Bate-  cuit  Judge,  111  Mich.,  395,  69  N. 
man,  93  Fed.,  16.  W.,  643. 

94  Mead  v.  Burk,  156  Ind.,  577,  60  96  Municipal  Commissioners  of 
N.  E.,  338;  Fink  v.  Montgomery,  Carrickfergus  v.  Lockhart,  Ir.  Rep., 
162  Ind.,  424,  68  N.  E.,  1010.  3  Eq.,  515;  Kelley  v.  Boettcher,  89 

95  Owen  v.  Homan,  4  H.  L.  Rep.,  Fed.,  125 ;  Ryder  v.  Bateman,  93 
997,  affirming  S.   C,  3   Mac.  &  G.,  Fed.,  16. 

378;    Municipal    Commissioners    of 


CHAP.    I.] 


GENERAL    FEATURES. 


27 


a  receiver  is  clearly  in  favor  of  plaintiff,  indicating  that  he  will 
probably  be  entitled  to  a  final  recovery,  the  risk  of  injury  to 
defendant  is  very  small,  and  the  court  does  not  hesitate  to  in- 
terfere. If  there  be  more  doubt  as  to  plaintiff's  right,  there 
is  of  course  more  difficulty  in  passing  upon  the  application,  the 
question  being  one  of  degree,  as  to  which  it  is  impossible  to 
lay  down  any  precise  rule.^"^ 


97  Owen  v.  Homan,  4  H.  L.  Rep., 
997,  affirming  S.  C,  3  Mac.  &  G., 
378.  The  doctrine  of  the  text  is 
well  stated  in  this  case  in  the  opin- 
ion of  the  Lord  Chancellor,  as  fol- 
lows, page  1032 :  "The  receiver,  if 
appointed  in  this  case,  must  be  ap- 
pointed on  the  principle  on  which 
the  court  of  chancery  acts,  of  pre- 
serving property  pending  the  liti- 
gation which  is  to  decide  the  right 
of  the  litigant  parties.  In  such 
eases  the  court  must  of  necessity 
exercise  a  discretion  as  to  whether 
it  will  or  will  not  take  possession  of 
the  property  by  its  officer.  No  pos- 
itive, unvarying  rule  can  be  laid 
down  as  to  whether  the  court  will 
or  will  not  interfere  by  this  kind  of 
interim  protection  of  the  property. 
Where  indeed  the  property  is  as  it 
were  in  medio,  in  the  enjoyment 
of  no  one,  the  court  can  hardly  do 
wrong  in  taking  possession.  It  is 
the  common  interest  of  all  parties 
that  the  court  should  prevent  a 
scramble.  Such  is  the  case  when 
a  receiver  of  a  property  of  a  de- 
ceased person  is  appointed,  pend- 
ing a  litigation  in  the  ecclesiastical 
court  as  to  the  right  of  probate  or 
administration.  No  one  is  in  the 
actual,  lawful  enjoyment  of  property 
so  circumstanced,  and  no  wrong  can 
be  done  to  any  one  by  taking  and 
preserving  it  for  the  benefit  of  the 
successful  litigant.     But  where  the 


object  of  the  plaintiff  is  to  assert  a 
right  to  property  of  which  the  de- 
fendant is  in  the  enjoyment,  the  case 
is  necessarily  involved  in  further 
questions.  The  court,  by  taking  pos- 
session at  the  instance  of  the  plain- 
tiff, may  be  doing  a  wrong  to  the 
defendant;  in  some  cases  an  irrepar- 
able wrong.  If  the  plaintiff  should 
eventually  fail  in  establishing  his 
right  against  the  defendant,  the 
court  may,  by  its  interim  interfer- 
ence, have  caused  mischief  to  the 
defendant  for  which  the  subsequent 
restoration  of  the  property  may  af- 
ford no  adequate  compensation.  In 
all  cases,  therefore,  where  the  court 
interferes  by  the  appointment  of  a 
receiver  of  property  in  the  posses- 
sion of  the  defendant  before  the 
title  of  the  defendant  is  established 
by  decree,  it  exercises  a  discretion 
to  be  governed  by  all  the  circum- 
stances of  the  case.  When  the  evi- 
dence on  which  the  court  is  to  act 
(here  the  only  evidence  is  the  an- 
swer of  Mrs.  Homan)  is  very  clear- 
ly in  favor  of  the  plaintiff,  then  the 
risk  of  eventual  injury  to  the  de- 
fendant is  very  small,  and  the  court 
does  not  hesitate  to  interfere.  Where 
there  is  more  of  doubt  there  is  of 
course  more  of  difficulty;  the  ques- 
tion is  one  of  degree,  as  to  which, 
therefore,  it  is  impossible  to  lay 
down  any  precise  and  unvarying 
rule.     In  this  case  Lord  Truro  did 


28  RECEIVERS.  [chap.    I. 

§  20.  Averse  to  interference  with  tenants  in  common  of 
personalty.  As  between  tenants  in  common  of  personal 
property,  the  courts  are  usually  averse  to  appointing  a  receiver 
over  the  joint  property  upon  the  application  of  one  co-tenant 
against  the  other.^^  And  one  co-tenant  can  not,  on  the  ground 
of  a  refusal  of  the  other  to  divide  the  property,  maintain  a  bill 
in  equity  for  a  receiver  and  for  a  sale  and  division,  when  it 
is  not  shown  that  the  chattels  were  agreed  to  be  or  were  used 
in  carrying  on  any  business  for  the  joint  benefit  of  the  parties, 
as  partners  or  otherwise ;  or  that  the  tenancy  in  common  was  of 
such  a  nature  as  to  require  a  sale  of  the  chattels  or  a  termina- 
tion of  the  tenancy;  and  when  it  does  not  appear  that  there  is 
any  necessity  for  a  division  of  the  property,  on  account  of  the 
death  or  insolvency  of  one  of  the  co-tenants.  And  this  is  true, 
even  though  the  bill  charges  the  defendant  with  having  the 
sole  and  exclusive  use  of  the  property,  and  that  he  is  diminish- 
ing its  value  and  refuses  to  make  a  division  thereof,  since  the 
remedy  for  such  grievances,  if  they  amount  to  a  conversion  of 
the  property,  must  be  sought  by  an  action  at  law.^^  So  in  the 
case  of  joint  owners  of  the  machinery  and  material  of  a  print- 
ing office,  upon  a  bill  by  one  joint  owner  or  tenant  in  common 
against  the  other  for  a  partition  of  the  property,  which  is  in 
defendant's  possession,  the  court  will  refuse  a  receiver  if  the 
defendant  in  possession  will  give  adequate  security  for  the 
rents  and  profits  pendente  lite.^  And  if,  pending  proceed- 
ings for  the  partition  of  personalty,   one  of  the  co-owners 

not   think  the   title  of  the  plaintiff  personal  property  in  an  action   for 

was  so  clearly  made  out  as  to  justify  its  sale  and  for  a  distribution  of  the 

the  court  in  turning  the  defendant  proceeds  among  tenants  in  common, 

out  of  possession  before  the  plain-  see  Andrews  v.  Betts,  8  Hun,  322; 

tiffs    had    finally    established    their  Shehan  v.  Mahar,  17  Hun,  129.     See 

right,  and  I  am  not  prepared  to  say  Laing  v.   Williams,    135    Wis.,   253, 

that  the  conclusion  at  which  he  ar-  115  N.  W.,  821,  as  to  the  appoint- 

rived  was  wrong;  on  the  contrary,  ment  of  a  receiver  in  an  action  for 

I  think  it  was  right."  the  partition  of  personal  property. 

98  Low  V.  Holmes,  2  C.  E.  Green,  99  Blood  v.  Blood,  110  Mass.,  545. 

148;  Blood  v.  Blood,  110  Mass.,  545.         1  Low  v.  Holmes,  2  C.  E.  Green, 

As  to  the  right  to  a  receiver  over  148. 


CHAP.    I.]  GENERAL   FEATURES.  29 

threatens   the   destruction   or   removal   of   the   property,   the 
court  may  properly  appoint  a  receiver.2 

§  21.  The  jurisdiction  not  extended  to  conflict  as  to 
public  offices.  The  subject-matter  of  the  jurisdiction  of 
equity  being  property  rights,  a  court  of  equity  is  not  the  proper 
forum  for  determining  controversies  concerning  the  right  to 
hold  public  offices,  all  such  questions  being  of  a  purely  legal 
nature  and  cognizable  only  in  courts  of  law.  Equity  will 
not  therefore  extend  its  extraordinary  jurisdiction  by  the  grant- 
ing of  injunctions  and  the  appointment  of  receivers,  to  the  ex- 
tent of  determining  the  rights  of  conflicting  claimants  to  a  pub- 
lic office,  but  will  leave  all  such  questions  to  be  determined  in 
the  manner  provided  by  law.^  And  where  there  are  rival  claim- 
ants to  an  office  of  a  public  nature,  held  by  appointment  from 
the  executive  of  the  state,  a  court  of  equity  will  not,  in  behalf 
of  one  of  such  claimants,  enjoin  the  other  from  receiving  the 
fees  and  emoluments  of  the  office,  and  will  not  appoint  a  re- 
ceiver of  such  fees,  although  it  is  alleged  that  defendant,  who 
has  intruded  into  the  office,  is  insolvent.  The  appointment  of 
a  receiver  in  such  a  case  would  be,  in  effect,  the  assumption  by 
the  court  of  a  right  to  make  a  temporary  appointment  to  the 
office,  which  is  by  law  required  to  be  filled  by  the  executive  de- 
partment of  the  government,  and  would  be  utterly  foreign  to 
the  jurisdiction  of  a  court  of  equity.-*     So  when  a  controversy 

2  Thompson   v.   Silverthorne,   142  fore  the  right  to  the  office  could  be 

N.  C,  12,  54  S.  E.,  782.  determined    by    legal    proceedings; 

STappan  v.  Gray,  9  Paige,  507.  and  prayed  an  injunction  and  a  re- 
See,  also,  People  v.  Draper,  24  ceiver.  The  Vice-Chancellor  decided 
Barb.,  265;  Stone  v.  Wetmore,  42  that  the  bill  showed  a  prima  facie 
Q^    501  case  of  intrusion  by  defendant  into 

4'Tappan  V.  Gray,  9  Paige,  507.  complainant's  office;  and  that  de- 
Complainant,  claiming  to  be  entitled  fendant's  insolvency  was  sufficient  to 
to  the  office  of  flour  inspector  of  the  sustain  the  bill  until  the  right  could 
city  of  New  York,  filed  his  bill  al-  be  determined  upon  an  information 
leging  that  defendant  had  usurped  in  the  nature  of  a  quo  warranto. 
the  office  and  was  receiving  its  fees  Upon  appeal,  Walworth,  Chancellor, 
and  emoluments ;  that  he  was  wholly  held  as  follows :  "If  the  Vice-Chan- 
insolvent  and  unable  to  respond  for  cellor  was  right  in  the  conclusion 
the  fees  which  he  might  receive  be-  that  the  complainant  was  entitled  to 


30 


RECEIVERS. 


[chap.  1. 


is  pending  in  quo  warranto  to  test  the  right  to  a  public  office, 
equity  will  not  assume  jurisdiction  over  the  matter,  or  appoint 
a  receiver  to  take  charge  of  the  fees  and  emoluments  of  the  of- 
fice, A  receiver  is  appointed  by  a  court  of  equity  only  when  a 
controversy  is  actually  pending  in  that  court,  and  a  proceeding 
in  quo  warranto  being  a  legal  proceeding,  and  depending  upon 
legal  and  not  equitable  rights,  equity  will  not  interfere,  the  ex- 
ercise of  its  jurisdiction  in  such  a  case  being  contrary  to  pub- 
lic policy  as  well  as  unsustained  by  authority.^ 

§  22.  Receiver  may  be  appointed  over  fees  and  emolu- 
ments of  an  office;  salary  of  school-teacher;  of  clerk  of 
court.  When,  however,  the  question  is  not  one  which 
affects  the  right  or  title  to  the  office  in  controversy,  but  merely 


discharge  the  duties  of  the  office  of 
flour  inspector,  after  the  appoint- 
ment by  the  governor  during  the 
recess  of  the  senate,  and  that  such 
appointment  of  the  defendant  to  the 
office  was  illegal  and  unauthorized, 
I  think  he  erred  in  supposing  that 
this  court  had  jurisdiction  to  afford 
the  complainant  any  relief  at  this 
time.  This  court  certainly  ought 
not  to  assume  the  jurisdiction  to 
oust  an  officer  in  no  way  connected 
with  the  administration  of  justice 
here,  and  over  whose  appointment 
it  has  no  control,  from  an  office,  the 
duties  of  which  he  is  discharging 
under  color  of  an  appointment  from 
the  executive  of  the  state,  until  his 
right  to  such  office  has  been  settled 
in  the  mode  prescribed  by  the  Re- 
vised Statutes  for  the  determination 
of  his  claim.  That,  however,  would 
be  the  necessary  effect  of  an  injunc- 
tion such  as  is  prayed  for  in  this 
case.  For  the  receiving  and  inter- 
meddling with  and  enjoying  the  fees, 
profits  and  advantages  of  the  office 
are  so  connected  with  the  proper 
discharge  of  the  duties  of  the  office 


itself,  that  they  could  not  be  sepa- 
rated without  rendering  the  office 
of  no  benefit  whatever  to  the  de- 
fendant, should  he  finally  succeed  in 
establishing  his  right  to  it  on  the 
quo  warranto.  Such  relief,  there- 
fore, could  not  be  granted  without 
depriving  the  public  of  the  benefit 
which  the  inspection  law  contem- 
plates, until  the  termination  of  this 
litigation.  And  it  would  be  equally 
inconsistent  with  public  policy  and 
the  rights  of  those  who  are  inter- 
ested in  having  the  duties  of  the  of- 
fice properly  discharged,  to  appoint 
a  receiver  of  the  fees  and  emolu- 
ments of  such  an  office.  The  ap- 
pointment of  a  receiver  to  discharge 
the  duties  of  the  office,  in  connection 
with  the  receipt  of  the  fees  and 
emoluments,  would  be  still  more  ob- 
jectionable in  principle,  as  it  would, 
in  effect,  be  the  assumption  of  a 
right  by  this  court  to  make  a  tem- 
porary appointment  of  a  public  of- 
ficer, whose  appointment  is  by  law 
required  to  be  made  by  the  execu- 
tive department  of  the  government." 
5  Stone  V.  Wetmore,  42  Ga.,  601. 


CHAP.    I.]  GENERAL    FEATURES.  31 

the  right  to  its  fees  or  profits  as  property,  in  which  plaintiff 
claims  a  right  or  interest  by  virtue  of  contract  relations  with  the 
officer,  there  would  seem  to  be  no  objection  upon  principle  to 
interfering  by  a  receiver  in  a  case  otherwise  appropriate  for 
the  relief.^  And  when  a  public  officer  has  assigned  the  profits 
and  emoluments  of  his  office  to  trustees  to  secure  payment  of 
his  debts,  a  receiver  was  appointed  pendente  lite,  upon  j.  bill 
to  compel  the  execution  of  the  trust,  but  without  prejudice  to 
the  question  of  whether  the  profits  were  assignable^  So  when 
a  deputy  clerk  was  employed  by  a  clerk  of  the  court  upon  a 
contract  providing  that  he  should  receive  as  compensation  for 
his  services  one-half  the  fees  of  the  office,  in  an  action  by  the 
deputy  against  the  principal  to  recover  the  amount  due  under 
the  contract,  an  injunction  was  granted  and  a  receiver  appoint- 
ed to  collect  the  fees  pending  the  litigation,  plaintiff  alleging 
the  insolvency  of  defendant  and  his  inability  to  satisfy  any 
judgment  which  might  be  had  against  him.  And  the  relief 
was  based  upon  the  ground  that  the  collection  of  the  fees  was 
not  an  official  duty,  but  a  right  pertaining  to  the  officer  indi- 
vidually, and  that  plaintiff,  under  his  contract,  was  entitled  to 
the  same  right,  since  a  portion  of  the  fees  belonged  to  him,  and 
they  might  be  collected  by  a  receiver  without  in  any  manner 
interfering  with  the  defendant's  official  duties.^  And  a  receiver 
has  been  appointed  upon  behalf  of  a  judgment  creditor  over  an 
installment  of  the  salary  of  a  school-teacher  which  had  become 
due  him.9  But  it  is  held,  upon  principles  of  public  policy,  that 
a  judgment  creditor  is  not  entitled  to  a  receiver  by  way  of 

6  Palmer  v.  Vaughan,  3  Swans.,  9  Picton  v.  Cullen,  (i900)  2  L.  R. 
173;  Cheek  v.  Tilley,  31  Ind.,  121.  Ir.,  612.  But  in  Ireland  it  is  held 
And  see  Stern  v.  State  Board,  50  that  a  receiver  should  not  be  ap- 
Wash.,  100,  96  Pac,  693.  pointed  by  way  of  equitable  execu- 

7  Palmer  v.  Vaughan,  3  Swans.,  tion  over  future  installments  of  a 
173.  But  the  court  directed  that  if  superannuation  allowance  granted 
the  parties  should  consent  to  such  under  the  Superannuation  Act  of 
an  arrangement,  the  fees  and  profits  1859.  MacDonald  z;.  O'Toole,  (1908) 
of  the  office  might  be  paid  into  court,  2  L.  R.  Ir.,  386. 

in  lieu  of  appointing  a  receiver. 
S  Cheek    v.    Tilley,    31    Ind.,    121. 


32  RECEIVERS.  [chap.    I. 

equitable  execution  over  the  future  salary  of  the  clerk  of  a 
court.i^'  And  equity  will  not  appoint  a  receiver  of  the  salary 
of  a  public  officer  when  there  is  no  permanent  fund  out  of  which 
it  is  payable,  it  being  paid  out  of  an  allowance  voted  by  parlia- 
ment from  year  to  year,  and  when  no  action  can  be  maintained 
to  recover  the  allowance  or  to  enforce  its  payment.^i 

§  23.  The  jurisdiction  as  affected  by  codes  of  procedure ; 
Supreme  Court  of  Judicature  Act  in  England.    In  many  of 
the  states  of  this  country  the  jurisdiction  of  the  courts  over  the 
subject  of  receivers  has  been,  to  a  considerable  degree,  fixed  or 
controlled  by  legislation,  enlarging  or  abridging  the  jurisdic- 
tion as  exercised  by  courts  of  equity  independent  of  statute. 
This  is  especially  true  of  those  states  which  have  adopted  codes 
of  procedure  similar  to  that  of  New  York.    And  in  New  York 
it  is  held  that  the  appointment  of  a  receiver,  like  other  provi- 
sional remedies  prescribed  in  the  code  of  procedure,  is  a  mere 
incident  of  the  general  jurisdiction  of  the  courts,  and  not  an 
essential  part  of  such  jurisdiction.    And  the  legislature,  having 
prescribed  the  cases  in  which  a  receiver  may  be  appointed 
pendente  lite,  and  as  a  proceeding  in  the  action,  have  as  care- 
fully excluded  all  other  cases,  thus  prohibiting  the  appointment 
except  as  authorized  by  the  code.12     g^t  in  North  Carolina, 
while  the  code  of  procedure  has  specified  certain  cases  in  which 
a  receiver  may  be  appointed,  it  is  held  that  the  code  has  not  ma- 
terially altered  the  general  equity  jurisdiction  of  the  courts  over 
the  subject,  which  remains  as  before. ^^     In  England,  under 
the  Supreme  Court  of  Judicature  Act  of  1873,  the  power  of  ap- 
pointing receivers  has  been  extended  to  all  cases  where  it  shall 
appear  to  the  court  to  be  just  or  convenient,  and  the  relief  may 
be  granted  either  unconditionally,  or  upon  such  terms  as  the 
court  may  deem  just.^* 

lOM'Creery  v.  Bennett,   (1904)  2  13  Skinner  v.  Maxwell,  66  N.  C, 

L.  R.  Ir.,  69.  45.     See,  also,  Battle  v.  Davis,  id., 

11  Cooper  V.  Reilly,  1  Russ.  &  M.,      252. 

560,  aflfirming  S.  C,  2  Sim.,  560.  l'*  Supreme    Court   of   Judicature 

12  Fellows   V.   Heermans,    13   Ab.       Act,  August  5,  1873.     Paragraph  8 
Pr.    N.  S.,  1.  of  section  25  provides   as   follows: 


CHAP.    I.] 


GENERAL    FEATURES. 


33 


§  24.  Receiver  not  granted  when  equities  of  bill  are 
denied  by  answer.  An  important  principle  of  general  ap- 
plication in  the  exercise  of  this  branch  of  the  extraordinary 
jurisdiction  of  equity  is  that  plaintiff  is  never  entitled  to  a  re- 
ceiver when  the  equities  of  his  case  are  fully  and  fairly  denied 
by  the  sworn  answer  of  defendant.  When,  therefore,  the  ap- 
plication for  a  receiver  is  made  after  the  coming  in  of  the 
answer,  and  the  equities  of  the  bill  upon  which  the  receiver  is 
sought  are  fully  denied  by  defendant's  answer  under  oath,  and 
the  evidence  adduced  in  support  of  the  bill  does  not  overcome 
the  denials  of  the  answer,  the  court  will  refuse  to  appoint  a  re- 
ceiver.15  In  such  cases,  the  plaintiff,  having  addressed  himself 
to  the  conscience  of  the  defendant,  has  made  him  a  witness  and 
must  take  his  answer  as  true,  unless  he  can  overcome  it  by 
other  testimony.l^  And  the  question  is  no  longer  regarded  as 
one  addressed  to  the  discretion  of  the  court,  but  it  is  judicial 
error  to  appoint  a  receiver  when  the  charges  of  the  bill  are  thus 


"A  mandamus  or  an  injunction  may 
be  granted  or  a  receiver  appointed 
by  an  interlocutory  order  of  the 
court  in  all  cases  in  which  it  shall 
appear  to  the  court  to  be  just  or 
convenient  that  such  order  should 
be  made ;  and  any  such  order  may 
be  made  either  unconditionally  or 
upon  such  terms  and  conditions  as 
the  court  shall  think  just,"  etc.  See 
this  act  construed  in  Pease  v. 
Fletcher,  1  Ch.  D.,  273;  Porter  v. 
Lopes,  7  Ch.  D.,  358;  Anglo-Italian 
Bank  v.  Davies,  9  Ch.  D.,  275; 
Bryant  v.  Bull,  10  Ch.  D.,  153; 
Smith  V.  Cowell,  6  Q.  B.  D.,  75; 
Fuggle  V.  Bland,  11  Q.  B.  D.,  711; 
Howell  V.  Dawson,  13  Q.  B.  D.,  67 ; 
In  re  Coney,  29  Ch.  D.,  993 ;  Stanger 
Leathes  v.  Stanger  Leathes,  Weekly 
Notes,  1882,  p.  71 ;  Mason  v.  West- 
oby,  32  Ch.  D.,  206;  Manchester  & 
L.  D.  B.  Co.  V.  Parkinson,  22  Q.  B. 
Receivers — 3. 


D.,  173;  Holmes  v.  Millage,  (1893), 
1  Q.  B.,  551 ;  Harris  v.  Beauchamp 
Brothers,  (1894),  1  Q.  B.,  801. 
These  decisions  indicate  the  marked 
tendency  of  the  English  courts  to 
limit  the  relief,  notwithstanding  the 
language  above  quoted,  to  cases  in 
which  the  High  Court  of  Chancery 
would  have  interposed  prior  to  the 
passage  of  the  Judicature  Act. 

15  Thompsen  v.  Diffenderfer,  1 
Md.  Ch.,  489;  Simmons  v.  Hender- 
son, Freem.  (Miss.),  493;  Henn  v. 
Walsh,  2  Edw.  Ch.,  129;  Buchanan 
V.  Comstock,  57  Barb.,  581 ;  Fair- 
bairn  V.  Fisher,  4  Jones  Eq.,  390; 
Sweeny  v.  Mayhew,  6  Idaho,  455, 
56  Pac,  85 ;  Callanan  v.  Shaw,  19 
Iowa,  183 ;  Rhodes  v.  Lee,  32  Ga., 
470;  Crombie  v.  Order  of  Solon,  157 
Pa.  St.  588,  27  Atl.,  710. 

16  Thompsen  v.  Diffenderfer,  1 
Md.  Ch.,  489. 


34  RECEIVERS  [chap.    I, 

denied.l'^  So  if  a  receiver  has  already  been  appointed,  he 
will  be  discharged  upon  the  coming  in  of  defendant's  answer 
fully  denying  the  equities  of  the  bill.^^  Indeed,  the  rule  as  here 
stated  is  analogous  to  the  well-established  rule  which  governs 
applications  for  the  dissolution  of  interlocutory  injunctions, 
which  is,  that  defendant  is  entitled  to  a  dissolution  of  the  in- 
junction upon  filing  his  answer  fully  denying  the  equities  of  the 
bill.lS 

§  25.  Conflict  of  authority  as  to  whether  appeal  will  lie. 
The  question  whether  an  appeal  will  lie  from  an  order  granting 
or  refusing  a  receiver  in  limine  is  one  of  considerable  impor- 
tance, upon  which  the  authorities  are  far  from  reconcilable. 
The  conflict  of  authority  upon  this  point  is  attributable  in  part 
to  the  difference  in  practice  in  the  different  states  with  regard 
to  appeals,  and  in  part  to  the  different  views  of  the  courts  as 
to  whether  such  orders  are  final  in  their  nature  and  affect  the 
substantial  rights  of  the  parties.  It  may  be  safely  said  that, 
since  the  appointing  or  refusing  a  receiver  is  largely  a  matter 
of  sound  judicial  discretion,  even  in  those  states  where  an  ap- 
peal is  allowed  from  such  interlocutory  order,  if  the  testimony 
addressed  to  the  court  below  is  conflicting,  and  if  that  court, 
after  duly  weighing  and  considering  the  testimony,  either  ap- 
points or  refuses  to  appoint  a  receiver,  an  appellate  court  will 
not  interfere  with  the  exercise  of  this  discretion,  in  the  absence 
of  any  facts  showing  that  it  has  been  abused.20    And  when  the 

17  Fairbairn  v.  Fisher,  4  Jones  20  Njmocks  t;.  Shingle  Co.,  110  N. 
Eq.,  390.  And  see  Wilson  v.  Mad-  C,  230,  14  S.  E.,  6S4;  Reid  v.  Reid, 
dox,  46  West  Va.,  641,  33  S.  E.,  775.  38  Ga.,  24;  Gunby  v.  Thompson,  56 

18  Drury  z'.  Roberts,  2  Md.  Ch.,  Ga.,  316;  Crawford  v.  Spurling,  56 
157 ;  Voshell  t;.  Hynson,  26  Md.,  83.  Ga.,    611;    Gardner    v.    Howell,    60 

19  Simmons  t'.  Henderson,  Freem.  Ga.,  11;  Sheridan  Brick  Works  zl 
(Miss.),  493.  And  see  for  applica-  Marion  Trust  Co.,  157  Ind.,  292,  61 
tion  of  the  rule  to  cases  of  injunc-  N.  E.,  666,  87  Am.  St.  Rep.,  207; 
tions,  Parkinson  v.  Trousdale,  3  Chicago  &  Southeastern  Ry.  Co.  v. 
Scam.,  367;  Roberts  v.  Anderson,  Kenney,  159  Ind.,  72,  62  N.  E.,  26; 
2  Johns.  Ch.,  202 ;  Hollister  v.  Bark-  Cameron  v.  Groveland  Imp.  Co.,  20 
ley,  9  N.  H.,  230;  Hatch  v.  Daniels,  Wash.,  169,  54  Pac,  1128,  72  Am.  St. 
1  Halst.  Ch.,  14;  Washer  v.  Brown,  Rep.,  26  and  note.  As  to  the  ap- 
id.,  81.  pealability  of  an  order  directing  the 


CHAP.    I.]  GENERAL    FEATURES.  35 

testimony  is  conflicting  and  the  court  below  has,  after  hearing, 
refused  to  revoke  its  appointment  of  a  receiver,  an  appellate 
court  will  refuse  to  control  the  discretion  of  the  inferior  tribu- 
nal.2i 

§  26.  Appeal  not  allowed  in  certain  states.  It  has  been 
said  in  general  terms,  upon  the  question  under  consideration, 
that  since  the  appointment  of  a  receiver  to  take  charge  of  prop- 
erty pendente  lite  is  an  interlocutory  order,  no  appeal  will  lie 
therefrom.22  And  it  was  formerly  held  in  Indiana  that  an  ap- 
peal would  not  lie  from  the  refusal  of  a  court  below  to  set  aside 
the  appointment  of  a  receiver,  all  orders  touching  the  appoint- 
ing or  removing  of  receivers  being  regarded  as  interlocutory 
orders,  and  the  statute  authorizing  appeals  from  interlocutory 
orders  not  embracing  such  cases.23  But  by  a  later  statute  an 
appeal  is  authorized  from  an  order  appointing  or  refusing  a 
receiver. 24  And  upon  such  an  appeal,  the  evidence  upon  which 
the  court  below  acted  in  making  the  appointment  being  con- 
flicting, the  appellate  court  will  not  ordinarily  interfere  with 
such  action. 25  And  upon  an  appeal  from  an  interlocutory 
order  appointing  a  receiver  pendente  lite,  the  appellate  tribunal 
will  not  consider  the  case  upon  its  merits  except  in  so  far  as 
it  may  incidentally  become  necessary  to  do  so  in  determining 
the  correctness  of  the  action  of  the  lower  court  in  making  the 
appointment.26    And  it  is  held  in  Nevada,  under  the  practice 

sale  in  bulk  of  all  the  property  of  24  Dale  v.  Kent,  58  Ind.,  584.   And 

a  corporation  over  which  a  receiver  see  Buchanan  v.  Berkshire  Life  Ins. 

has   been   appointed,   see   Wenar  v.  Co.,  96  Ind.,  510. 

Schwartz,  116  La.,  151,  40  So.,  599.  25  Naylor  z;.  Sidener,  106  Ind.,  179, 

21  Robenson  v.  Ross,  40  Ga.,  375;  6  N.  E.,  345. 

Cohen  V.  Meyers,  42  Ga.,  46.  26  Sullivan  Electric  L.  &  P.  Co.  v. 

22  Wilson  V.  Davis,  1  Mont.,  98;  Blue,  142  Ind.,  407,  41  N.  E.,  805; 
Emmons  v.  Garnett,  18  District  of  Gray  v.  Oughton,  146  Ind.,  285,  45 
Columbia,  52.  As  to  the  amount  of  N.  E.,  191;  Levin  v.  Florsheim,  161 
the  penalty  in  an  appeal  bond  upon  Ind.,  457,  68  N.  E.,  1025 ;  Tuttle  v. 
an  appeal  from  an  order  appointing  Blow,  163  Mo.,  625,  63  S.  W.,  839. 
a  receiver,  see  Home  Savings  &  In  such  case  it  is  enough  if  upon 
Trust  Co.  V.  Polk  District  Court,  the  verified  pleadings  and  affidavits 
121  Iowa,  1,  95  N.  W.,  522.  there  was  a  sufficient  showing   for 

23  Wood  V.  Brewer,  9  Ind.,  86,  the     appointment     of     a     receiver. 


36 


RECEIVERS. 


[chap.  I. 


and  procedure  in  that  state,  that  an  appeal  will  not  lie  from  an 
interlocutory  order  appointing  a  receiver,  and  that  the  action 
of  the  inferior  court  in  such  matters  can  only  be  revised  upon 
an  appeal  from  the  final  judgment  in  the  cause. ^"^  So  in  Penn- 
sylvania, where  an  appeal  lies  only  from  a  final  order  or  decree, 
an  order  granting  an  injunction  and  appointing  a  receiver,  up- 
on the  filing  of  a  bill  for  the  settlement  of  partnership  affairs, 
is  not  such  a  final  order  within  the  intent  of  the  statute,  and  no 
appeal  will  lie  therefrom,  it  being  purely  an  interlocutory  mat- 
ter.28  And  it  is  held  in  Ohio,  that  an  order  appointing  a  re- 
ceiver to  take  the  revenues  of  a  railway  and  bring  them  into 
court,  subject  to  its  order  and  without  making  any  application 
of  the  funds,  except  as  to  certain  accrued  costs,  is  not  a  final 
order  from  which  an  appeal  will  lie.29  So  in  Illinois,  in  the  ab- 
sence of  legislation,  a  writ  of  error  will  not  lie  to  a  purely  inter- 
locutory order  appointing  a  receiver,  no  final  decree  having 
been  rendered  determining  the  rights  of  the  parties. ^^     So  in 


Goshen  Woolen  Mills  Co.  v.  City 
National  Bank,  150  Ind.,  279,  49  N. 
E.,  154. 

27  Meadow  Valley  Mining  Co.  v. 
Dodds,  6  Nev.,  261. 

28  Holden's  Administrators  v.  Mc- 
Makin.  Par.  Eq.  Cas.,  270. 

29  Eaton  &  Hamilton  R.  Co.  v. 
Varnum,  10  Ohio  St.,  622.  But  see 
C.  S.  &  C.  R.  Co.  V.  Sloan,  31  Ohio 
St.,  1,  for  a  full  discussion  of  the 
right  of  appeal  in  such  cases  as  af- 
fected by  the  code  of  procedure,  as 
well  as  the  power  to  appoint  or  dis- 
charge a  receiver  by  a  judge  at 
chambers.  Under  the  statute  of 
Washington,  it  is  held  that  an  ap- 
peal will  lie  from  an  order  denying 
a  motion  to  vacate  the  appointment 
of  a  receiver.  Davis  v.  Edwards, 
41  Wash.,  480,  84  Pac,  22. 

30  Coates  v.  Cunningham,  80  111., 
467;  Farsow  v.  Gorham,  117  111.,  137, 
7  N.  E.,  104;  Town  of  Vandalia  v. 


St.  L.,  V.  &  T.  H.  R.  R.  Co.,  209 
111.,  73,  70  N.  E.,  662.  But  in  Illi- 
nois, by  an  act  approved  June  14, 
1887,  an  appeal  is  now  allowed  from 
an  interlocutory  order  or  decree  ap- 
pointing a  receiver  or  giving  other 
or  further  powers  or  property  to  a 
receiver  already  appointed.  Chica- 
go Steel  Works  v.  Illinois  Steel  Co., 
153  111.,  9,  38  N.  E.,  1033.  As  to  the 
constitutionality  of  certain  provi- 
sions of  this  statute  as  not  embraced 
in  its  title,  see  Taylor  v.  Kirby,  31 
111.  App.,  658;  City  of  Chicago  v. 
Beck,  44  111.  App.,  47.  See  Eau 
Claire  Canning  Co.  z/.  Western  Brok- 
erage Co.,  213  111.,  561,  n  N.  E., 
430,  as  to  the  right  of  the  receiver 
of  a  foreign  corporation  appointed 
in  a  proceeding  in  a  foreign  state 
to  dissolve  the  corporation,  to  main- 
tain a  writ  of  error  in  this  state  in 
the  name  of  the  corporation. 


CHAP.    I.]  GENERAL   FEATURES.  Z7 

the  absence  of  statutory  provision  an  appeal  will  not  lie  from  an 
interlocutory  order  appointing  a  receiver.3l  And  in  Tennes- 
see, even  under  a  statute  authorizing  the  supreme  court  to 
grant  writs  of  supersedeas  to  interlocutory  orders,  as  in  case  of 
a  final  decree,  an  order  appointing  a  receiver,  being  within  the 
discretion  of  the  court  for  the  purpose  of  preserving  property 
pendente  lite,  can  not  be  superseded  by  the  supreme  court.32 
Nor  will  a  bill  of  review  lie  to  revise  or  correct  the  action  of  the 
court  in  appointing  a  receiver,  since,  the  order  being  interlocu- 
tory, it  may  be  revised  or  corrected  by  the  same  court ;  or,  if 
improvidently  made,  it  may  be  corrected  upon  the  final  hear- 
ing.33  So  under  the  statute  of  California  regulating  appeals, 
no  appeal  lies  from  an  order  appointing  a  receiver.^'*  So  in 
Utah  it  is  held  that  an  order  appointing  a  receiver  pendente 
lite,  being  interlocutory,  is  not  appealable  and  that  an  appeal 
from  such  an  order  should  be  dismissed.^s  So,  under  the 
statute  of  Missouri  governing  appeals,  an  appeal  will  not  lie 
from  an  order  appointing  a  receiver  and  directing  certain  prop- 
erty to  be  turned  over  to  him.36    And  in  Kansas,  an  order  of 

31  Town  of  Vandalia  v.  St.  L.,  V.  33  Johnston  v.  Hanner,  2  Lea,  8. 

&  T.  H.  R.  R.  Co.,  209  111.,  7Z,  70  34  French  Bank  Case,  S3  Cal..  495; 

N.  E.,  662.    In  this  case  it  was  held  Emeric  v.  Alvarado,  64  Cal.,  529,  2 

that    where   the    statute   authorized  Pac,  418. 

appeals  to  the  Appellate  Court  from  35  Popp  v.  Mining  Co.,  22  Utah, 
interlocutory  orders  appointing  re-  457,  63  Pac,  185. 
ceivers  but  further  provided  that  36  Greeley  v.  Missouri  Pac.  Ry. 
"no  appeal  shall  lie  or  writ  of  error  Co.,  123  Mo.,  157,  27  S.  W.,  613. 
be  prosecuted  from  the  order  en-  But  by  the  statute  of  1895  an  appeal 
tered  by  said  Appellate  Court  in  any  will  lie  from  an  order  "refusing  to 
such  appeal,"  the  judgment  of  the  revoke,  modify  or  change  an  inter- 
Appellate  Court  affirming  such  in-  locutory  order  appointing  a  receiver 
terlocutory  order  did  not  change  the  or  receivers."  Laws  of  1895,  p.  91 ; 
character  of  such  order  and  that  the  1  Mo.  Annotated  Stat.,  1906,  §  806. 
propriety  of  granting  such  interlocu-  This  statute  is  remedial  in  its  char- 
tory  order  could  therefore  be  re-  acter  and  should  therefore  be  liber- 
viewed  in  the  Supreme  Court  only  ally  construed.  Merriam  v.  St. 
upon  an  appeal  from  a  final  order  Louis,  C.  G.  &  F.  S.  Ry,  Co.,  136 
or  decree  in  the  cause.  Mo.,  145,  36  S.  W.,  630. 

32  Baird  v.  Turnpike  Co.,  1  Lea, 
394;  Bramley  v.  Tyree,  1  Lea,  531; 
Roberson  v.  Roberson,  3  Lea,  50. 


38  RECEIVERS.  [chap.    I. 

a  judge  at  chambers  appointing  a  receiver  is  not  a  final  order 
involving  the  merits  of  the  action,  but  a  mere  provisional  or 
interlocutory  order  from  which  no  appeal  will  lie-^"^  So  in 
Texas,  the  appointment  of  a  receiver  upon  an  interlocutory 
order  in  a  suit  brought  by  attaching  creditors  to  set  aside  prior 
attachments  upon  the  ground  of  fraud,  no  adjudication  bemg 
made  upon  the  merits  of  the  controversy,  which  yet  remain  to 
be  determined,  is  not  a  final  judgment  from  which  an  appeal 
will  lie.38  And  in  Mississippi,  an  appeal  formerly  would  not 
lie  from  an  order  vacating  the  appointment  of  a  receiver  and 
directing  the  return  of  th^  property  to  the  persons  from  whom 
it  was  taken.39  But  under  the  later  code  the  rule  in  Mississippi 
has  been  changed  and  it  is  now  held  that  an  order  discharging 
a  receiver  is  appealable.^^  But  in  Montana  an  order  refusing 
to  appoint  a  receiver  is  not  appealable^^  So  in  Maryland  an 
appeal  will  not  lie  from  an  order  refusing  to  rescind  a  previous 
order  appointing  a  receiver.42  Nor  may  an  appeal  be  main- 
tained from  an  order  appointing  a  receiver  by  consent.43  And 
where,  pending  an  appeal  from  an  order  appointing  a  tempo- 
rary receiver,  the  temporary  receivership  has  ceased  and  a  per- 
manent receiver  has  been  appointed,  the  appeal  should  be  dis- 
missed.44  g^t  under  the  code  of  Wyoming  it  is  held  that  an 
order  appointing  a  receiver  at  the  instance  of  a  second  mort- 
■^agee  and  denying  a  motion  of  the  defendant,  the  first  mort- 
gagee, for  the  vacation  of  such  appointment  is  appealable.^^ 
And  questions  as  to  the  propriety  of  the  appointment  of  a  re- 

37  Hottenstein  v.  Conrad,  5  Kan.,  42  Hull  v.  Caughy,  66  Md.,  104,  6 
249;  Kansas  Rolling  Mill  Co.  t;.  A.,  Atl.,  591;  Williams  Co.  v.  U.  S. 
T.  &  S.  F.  R.  Co.,  31  Kan.,  90,  1  Banking  Co.,  86  Md.,  475,  38  Atl., 
Pac,  274;  Boyd  v.  Cook,  40  Kan.,  990;  Stockley  v.  Thomas,  89  Md., 
675,  20  Pac,  477.  663,  43  Atl.,  766. 

38  East  &  West  T.  Lumber  Co.  v.  43  Smith  v.  Lowery,  56  S.  C,  493, 
Williams,  71  Tex.,  444,  9  S.  W.,  436.  35  S.  E.,  129. 

39  Planon  v.  Weil,  69  Miss.,  476,  44  Kelso  v.  American  I.  &  I.  Co., 
13  So.,  878.  48  Wash.,  5,  92  Pac,  673. 

40  Pearson  v.  Kendrick,  74  Miss.,  45  Anderson  v.  Matthews,  8  Wye, 
235,  21  So.,  37.  307,  57  Pac,  156. 

41  Cotter  V.  Cotter,  16  Mont.,  63, 
40  Pac,  63. 


CHAP,    I.]  GENERAL    FEATURES.  39 

ceiver  can  be  raised  only  by  appeal  from  the  order  itself,  and 
they  will  not  be  reviewed  upon  an  appeal  from  an  order  direct- 
ing a  distribution  of  the  estate  in  the  hands  of  the  receiver.^^ 
§  27.  The  question  dependent  upon  whether  the  order 
affects  a  substantial  right.  In  Michigan,  where  the  laws  of 
the  state  restrict  the  right  of  appeal  to  decrees  and  final  orders, 
the  question  under  discussion  has  been  made  to  turn  upon 
whether  the  appointment  of  a  receiver  is  a  substantial  decision 
of  the  merits  involved,  and  the  principal  relief  sought,  or 
whether  it  is  merely  ancillary,  or  incidental  to  the  principal 
relief.  Thus,  where  the  object  of  the  action  is  to  remove  the 
administrators  of  an  estate,  and  to  procure  a  receiver  to  take 
charge  of  the  assets  until  the  question  of  removal  is  deter- 
mined, the  order  appointing  a  receiver,  although  nominally 
interlocutory,  is  regarded  as  in  effect  a  final  order  or  decree, 
from  which  an  appeal  will  lie,  since  it  gives  the  relief  prayed 
for  as  the  end  and  object  of  the  bill  upon  that  branch  of  the 
case.^'^  And  it  is  held  in  Michigan,  that  an  order  appointing 
a  receiver  is  appealable  when  it  deprives  a  defendant  of  prop- 
erty to  which  he  is  of  right  entitled.'*^  So  an  appeal  will  lie 
from  an  order  whereby  the  possession  of  property  is  divested.*^ 
And  an  order  for  the  sale  by  a  receiver  of  the  entire  assets  of 
the  receivership  is  an  order  from  which  an  appeal  will  lie  in 
behalf  of  intervening  petitioners.^^  So  upon  a  bill  by  the 
executor  of  a  deceased  partner  for  an  account  of  the  partner- 
ship transactions,  an  order  for  a  receiver  to  take  charge  of  the 
property  held  by  defendant  as  surviving  partner,  although  in- 
terlocutory in  point  of  time,  is  in  substance  and  effect  a  decree 
of  the  court  to  the  extent  that  an  appeal  will  lie  therefrom. 
The  order  is  therefore  to  be  considered  as  regards  its  effect 

46  Jones  z;.  North  P.  F.  &  O.  Co.,      Ill    Mich.,    395,    69    N.    W.,    643; 

42  Wash.,   332,   84    Pac,    1122,    114  Mardian   v.    Wayne   Circuit   Judge, 
Am.  St.  Rep.,  131.  118  Mich.,  353,  76  N.  W.,  497. 

47  Lewis  V.  Campau,  14  Mich.,  458.  50  First  National  Bank  v.  Barnum 

48  Brown  v.  Ring,  77  Mich.,  159,  Wire  &  Iron  Works,  58  Mich.,  315, 

43  N.  W.,  770,  1152.  24  N.  W.,  543,  25  N.  W.,  202. 

49  Hall  V.   Wayne  Circuit  Judge, 


40 


RECEIVERS. 


[chap.  I. 


upon  the  rights  of  the  parties,  rather  than  as  to  the  stage  of 
the  cause  when  made.  And  since  the  defendant,  who  would 
otherwise  be  entitled  to  possession  of  all  the  assets  and  to  close 
up  the  firm  business,  is  by  the  order  divested  of  all  control  over 
the  matter,  and  the  entire  management  of  the  business  is  placed 
in  the  receiver's  hands,  the  order  partakes  of  the  nature  of  a 
decree,  to  the  extent,  at  least,  of  being  appealable.^^  Where, 
however,  the  receivership  is  merely  ancillary  or  incidental  to 
the  principal  relief  sought,  no  appeal  will  lie  from  an  order 
appointing  a  receiver.^2  So  an  order  appointing  a  receiver 
to  take  possession  of  certain  securities  claimed  by  a  trustee, 
the  title  to  which  is  in  dispute,  is  treated  as  an  interlocutory 
order  resting  in  the  discretion  of  the  court,  and  hence  not  ap- 


51  Barry  v.  Briggs,  22  Mich.,  201. 
Campbell,  C.  J.,  observes,  p.  206 : 
"The  effect  of  this  order  (appoint- 
ing the  receiver)  is  to  divest  the 
entire  legal  estate  of  defendant  in 
property  over  which  he  had  this  ex- 
clusive control,  as  well  as  exclusive 
title,  and  in  which  he  was  equitably 
as  well  as  legally  interested,  and  in 
which  no  one  else  had  any  rights, 
except  to  receive  the  amount  which 
might  belong  to  the  deceased  part- 
ntT's  estate  after  the  accounts  should 
be  closed  and  the  funds  converted. 
The  specific  property  and  its  dis- 
posal belonged  to  defendant.  A  cer- 
tain share  of  the  net  proceeds  would 
belong  to  the  executor.  The  order 
divests  the  whole  body  of  the  prop- 
erty, and  puts  its  management  as 
well  as  ownership  into  other  hands. 
It  does  very  nearly  all  that  could  be 
done  under  the  bill  by  a  decree  upon 
the  hearing.  The  striking  of  bal- 
ances and  the  final  distribution,  al- 
though not  universally  are  quite  fre- 
quently subsequent  steps  to  the  prin- 
cipal decree;  and  in  the  present  case, 


the  principal  object  of  the  bill  is  to 
transfer  the  trust  into  new  hands, 
for  execution.  All  the  other  objects 
are  subordinate  to  this  main  pur- 
pose. An  adjudication  which  pro- 
duces such  important  effects,  and 
which  actually  transfers  the  entire 
estate  from  the  defendant,  is  to  all 
intents  and  purposes  a  decree  as  far 
as  it  goes.  ...  It  would  be  a 
very  singular  thing  if  a  court  could, 
by  anticipating  the  proper  date  of  a 
decree  which  would  be  appealable, 
produce  all  the  consequences  of  a 
decree,  and  yet  deprive  a  party  of 
his  right  to  a  review.  The  statutes 
regulating  appeals  have  regard  to 
the  rights  of  parties,  and  not  to 
senseless  formalities.  And  the  prac- 
tice in  this  state,  as  well  as  else- 
where, has  always  been  to  apply 
them  to  that  end.  .  .  .  We  think 
the  order  in  the  case  before  us  is 
appealable,  because  it  divests  de- 
fendant's estate."  Motion  to  dis- 
miss appeal  denied. 

52  Duncan  v.   Campau,  15  Mich., 
415. 


CHAP.  I.]  GENERAL  FEATURES.  41 

pealable.^^  And  an  order  refusing  a  receiver  in  an  action  for 
the  foreclosure  of  a  mortgage  is  merely  interlocutory  and  not 
appealable.^*  But  it  is  held  under  the  code  of  procedure  in 
New  York,  that  an  appeal  will  lie  from  an  order  denying  a  mo- 
tion for  a  receiver,  since  the  appellate  court  may  review  all 
orders  which  affect  a  substantial  right,  even  though  they  rest 
in  the  discretion  of  the  court.^^  So  under  the  statutes  of  Min- 
nesota, an  order  refusing  a  receiver  in  accordance  with  the 
report  of  a  referee  is  an  order  refusing  a  provisional  remedy, 
from  which  an  appeal  will  lie.^^  And  in  the  same  state  an  or- 
der appointing  a  receiver  is  an  order  affecting  a  substantial 
right  of  the  defendant  and  is  appealable. ^'^  So  in  Nebraska, 
under  a  statute  authorizing  appeals  from  orders  which  affect 
a  substantial  right,  an  interlocutory  order  appointing  a  re- 
ceiver in  a  judgment  creditor's  suit  is  an  appealable  order.^^ 
And  in  Virginia,  an  appeal  being  allowed  by  statute  in  any  case 
in  chancery  wherein  there  is  a  decree  or  order  requiring  the 
possession  of  property  to  be  changed,  an  appeal  lies  from 
an  interlocutory  order  appointing  a  receiver  to  take  possession 
of  real  property,  since  such  order  changes  the  possession  and 
control  of  the  property. ^^  And  under  a  similar  statute  in 
West  Virginia,  an  appeal  is  allowed  from  an  interlocutory  or- 
der appointing  a  receiver  over  personal  property.^^ 

53  Brown    v.    Vandermeulen,    41  57  Knight  v.  Nash,  22  Minn.,  452. 
Mich.,  418,  49  N.  W.,  920.  58  McCord  v.  Weil,  33  Neb.,  868, 

54  Beecher  v.  M.  &  P.  R.  M.  Co.,  51  N.  W.,  300,  overruling  S.  C,  29 
40  Mich.,  307.  Neb.,  682,  46  N.  W.,  152;  Seeds  Dry 

55Dollard  V.  Taylor,  ZZ  N.  Y.  Plate  Co.  v.  Heyn  Photo-Supply 
Supr.  Ct.  R.,  496.  And  see  as  to  the  Co.,  57  Neb.,  214,  77  N.  W.,  660. 
power  of  the  courts  of  New  York  59  Shannon  v.  Hanks,  88  Va.,  338, 
under  the  code,  pending  an  appeal  13  S.  E.,  437.  And  see  Smith  v. 
from  a  judgment,  to  appoint  a  re-  Butcher,  28  Grat,  144. 
ceiver  in  behalf  of  appellant,  over  60  Ruflfner  v.  Mairs,  33  West  Va., 
property  of  which  the  other  party  655,  11  S.  E.,  5;  Baltimore  Bargain 
would  otherwise  be  entitled  to  pos-  House  v.  St.  Clair,  58  West  Va., 
session  under  the  judgment  of  the  565,  52  S.  E.,  660.  And  see  Rob- 
court,  Fellows  V.  Heermans,  13  Ab.  recht  v.  Robrecht,  46  West  Va.,  738, 
Pr.,  N.  S.,  1.  34  S.  E.,  801. 

56  Grant  v.  Webb.,  21  Minn.,  39. 


42  RECEIVERS.  [chap,    I. 

§  27a.  Decree  appealable  if  right  finally  determined. 

If  the  decree  appointing  a  receiver  determines  the  right  to 
the  property  in  controversy,  so  that  the  party  in  whose  favor  it 
is  rendered  is  entitled  to  its  immediate  execution,  an  appeal 
will  lie,  even  though  something  still  remains  to  be  done  to  carry 
the  decree  fully  into  execution.  Thus,  when  a  bill  is  filed  by 
stockholders  to  set  aside  a  lease  of  the  property  of  a  corpora- 
tion upon  the  ground  of  fraud,  and  for  the  appointment  of  a 
receiver,  and  upon  a  hearing  on  the  merits  a  decree  is  ren- 
dered setting  aside  the  lease,  appointing  a  receiver,  and  direct- 
ing that  the  company  and  its  directors  deliver  to  him  all  cor- 
porate property,  records  and  papers,  and  that  he  continue  the 
business  of  the  company,  the  decree  is  so  far  final  that  an  ap- 
peal will  lie,  even  though  an  accounting  is  still  necessary  to  ad- 
just the  rights  of  the  parties.^^ 

§  21b.  Appeals  under  Court  of  Appeals  Act.  Section 
seven  of  the  act  of  congress  of  March  3,  1891  creating  the 
United  States  Circuit  Courts  of  Appeals  is  limited  to  interlocu- 
tory orders  or  decrees  granting  or  continuing  injunctions  and 
it  makes  no  mention  of  interlocutory  orders  appointing  re- 
ceivers. ^2  Under  this  section  it  is  held  that  upon  an  appeal 
from  an  interlocutory  order  granting  an  injunction  and  ap- 
pointing a  receiver,  the  propriety  of  only  so  much  of  the 
order  as  relates  to  the  injunction  is  open  to  review.^^  This 
section  was  afterwards  amended  so  as  to  authorize  appeals 
from  interlocutory  orders  or  decrees  refusing,  dissolving  or 
refusing  to  dissolve  injunctions.^^  This  amended  section 
makes  no  provision  for  appeals  from  interlocutory  orders  ap- 

61  Winthrop  Iron  Co.  v.  Meeker,  63  Florida  Coast  Co.  v.  Young,  8 
109  U.  S.,  180,  3  Sup.  Ct.  Rep.,  111.  C.  C.  A.,  231,  59  Fed.,  721.  But  see 
See  Grand  De  Tour  Plow  Co.  v.  United  States  Rubber  Co.  v.  Ameri- 
Rude  Bros.  Mfg.  Co.,  60  Kan.,  145,  can  O.  L.  Co.,  27  C.  C.  A.,  118,  82 
55  Pac,  848,  as  to  the  necessity  for  Fed.,  248,  53  U.  S.  App.,  444,  dis- 
a  receiver  being  a  party  to  an  appeal  missing  appeal  from  S.  C,  77  Fed., 
from  a  final  order  taken  by  one  of  671. 

the  parties  to  a  suit.  64  Act  of  February  18,  1895.  c.  96, 

62  Act  of  March  3,  1891,  c.  517,      28  Stat,  666. 
§  7,  26  Stat.,  828. 


CHAP.    I.] 


GENERAL    FEATURES. 


43 


pointing  receivers  and  it  is  held  that  such  an  order  is  not  ren- 
dered appealable  by  the  incorporation  into  it  of  a  direction  to 
the  defendants  to  turn  over  and  deliver  to  a  receiver  the  prop- 
erty in  their  possession.^^  But  where  an  interlocutory  order 
has  been  entered  appointing  a  receiver  and  granting  an  injunc- 
tion, an  appeal  will  lie  from  such  order  under  section  seven  as 
thus  amended,  although  the  injunction  is  a  mere  incident  to  the 
receivership,  where  it  constitutes  a  substantial  part  of  the  de- 
cree of  the  court.^^  Both  of  these  sections  are  now  superseded 
by  the  act  of  June  6,  1900,  which,  among  other  changes  in  the 
prior  law,  permits  appeals  from  interlocutory  orders  appoint- 
ing receivers.^''    This  statute  is  amendatory  of  the  original  act 


65  Highland  Avenue  &  B.  Ry.  Co. 
V.  C.  E.  Co.,  168  U.  S.,  627,  18  Sup. 
Ct.  Rep.,  240,  42  L.  Ed.,  605,  an- 
swering question  certified  by  the 
Court  of  Appeals  of  the  5th  Circuit 
in  S.  C,  28  C.  C.  A.,  683,  84  Fed., 

1018,  which  was  an  appeal  from  S. 
C,  74  Fed.,  920.  This  last  appeal 
was  finally  dismissed,  pursuant  to 
the  above  decision  of  the  Supreme 
Court,  in  33  C.  C.  A.,  684,  92  Fed., 

1019,  52  U.  S.  App.,  762.  And  see 
In  re  Tampa  Suburban  R.  Co.,  168 
U.  S.,  583,  18  Sup.  Ct.  Rep.,  177; 
Texas  Consolidated  C.  &  M.  Assn. 
V.  Storrow,  34  C.  C.  A.,  182,  92 
Fed.,  5. 

66  Lake  National  Bank  v.  Wolfe- 
borough  S.  Bank,  24  C.  C.  A.,  195, 
78  Fed.,  517,  33  U.  S.  App.,  734. 

67  Section  seven  of  the  law  as  it 
now  exists  is  as  follows :  "That 
where,  upon  a  hearing  in  equity  in 
a  district  court  or  in  a  circuit  court, 
or  by  a  judge  thereof  in  vacation, 
an  injunction  shall  be  granted  or 
continued  or  a  receiver  appointed, 
by  an  interlocutory  order  or  decree, 
in  a  cause  in  which  an  appeal  from 
a  final  decree  may  be  taken  under 


the  provisions  of  this  Act  to  the 
circuit  court  of  appeals,  an  appeal 
may  be  taken  from  such  interlocu- 
tory order  or  decree  granting  or 
continuing  such  injunction  or  ap- 
pointing such  receiver  to  the  circuit 
court  of  appeals :  Provided,  That 
the  appeal  must  be  taken  within 
thirty  days  from  the  entry  of  such 
order  or  decree,  and  it  shall  take 
precedence  in  the  appellate  court : 
And  the  proceedings  in  other  re- 
spects in  the  court  below  shall  not 
be  stayed,  unless  otherwise  ordered 
by  that  court,  or  by  the  appellate 
court  or  a  judge  thereof,  during  the 
pendency  of  such  appeal :  Provided 
further,  That  the  court  below  may 
in  its  discretion  require  as  a  con- 
dition of  the  appeal  an  additional 
bond."  Act  of  June  6,  1900,  c.  803, 
31  Stat.,  660;  1  U.  S.  Comp.  Stat. 
1901,  p.  550;  4  Fed.  Stat.  Ann., 
p.  422.  Prior  to  this  statute  an  ap- 
peal would  not  lie  from  an  order 
appointing  a  co-receiver  to  act  with 
one  already  appointed.  Coltrane  v. 
Templeton,  45  C  C.  A.,  328,  106 
Fed.,  370. 


44  RECEIVERS.  [chap.    I. 

and  by  necessary  implication  it  repeals  the  statute  of  1895 
and  now  contains  the  entire  law  as  administered  in  the  United 
States  courts  upon  the  subject  of  such  appeals. ^^ 

§  28.  Reversal  by  certiorari.  Under  the  practice  pre- 
vailing in  New  Jersey,  it  is  held  that,  if  the  court  below  upon 
the  case  presented  had  authority  and  jurisdiction  to  order  the 
appointment  of  a  receiver,  if  in  making  such  order  no  manifest 
error  was  committed,  it  will  not  be  reversed  on  certiorari;  and 
that  to  reverse  the  action  of  the  lower  court  by  certiorari,  it 
must  appear  to  the  appellate  tribunal  that  the  order  was  an 
illegal  one.  And  in  such  case  the  appellate  court  will  not 
weigh  the  evidence  on  which  the  court  below  acted,  and  if  there 
was  enough  in  the  case  to  give  the  court  below  jurisdiction  and 
power  to  act,  that  will  be  deemed  sufficient.^^ 

§  29.  Effect  of  appeal  on  functions  of  receiver;  super- 
sedeas not  a  matter  of  right.  As  regards  the  effect  of  an 
appeal  upon  the  functions  of  a  receiver  appointed  by  the  court 
below,  it  has  been  held  in  Ohio,  that  where  receivers  are  ap- 
pointed in  an  action  to  obtain  the  direction  and  judgment  of 
the  court  as  to  the  construction  of  a  will,  and  as  to  the  duties 
of  executors  in  carrying  it  into  effect,  and  praying  lOr  an 
order  of  sale  of  real  estate  for  the  payment  of  legacies,  and  for 
distribution,  the  receivers  still  remain  in  office  pending  an  ap- 
peal from  the  judgment  of  the  court  below7^  But  in  Florida, 
where  the  laws  of  the  state  authorize  appeals  from  interlocu- 
tory orders,  and  authorize  the  appellate  court  to  issue  a  su- 
persedeas pending  such  an  appeal,  if  a  supersedeas  is  granted  on 
an  appeal  from  an  order  allowing  a  preliminary  injunction  and 
a  receiver,  it  has  the  effect  of  suspending  the  power  of  the 

68  Columbia   Wire   Co.  v.   Boyce,  219,  107  Fed.,  165 ;  Western  Electric 

44   C.    C.    A,    588,    104   Fed.,    172 ;  Co.  v.  Williams-Abbott  Electric  Co., 

Westinghouse    Co.    v.    Christensen  48  C.  C.  A.,  159,  108  Fed.,  951. 

Co.,  44  C.  C.  A.,  92,  104  Fed.,  622;  69Journeay  v.   Brown,  2  Dutch., 

Omaha  &  S.  W.  R.  Co.  v.  Chicago,  111. 

etc.,  Ry.  Co.,  45  C.  C.  A.,  474,  106  70  Swing  v.  Townsend,  24   Ohio 

Fed..  586;  Rowan  v.  Ide,  46  C.   C.  St.,  1.     But  see  Allen  v.  Chadburn, 

A.,   214,    107    Fed.,    161 ;    Heinze   v.  3  Baxter,  225.    And  see,  post,  §  190. 
Butte  &  B.  C  M.  Co.,  46  C.  C.  A., 


CHAP.    I.]  GENERAL    FEATURES.  45 

court  below,  and  hence  the  power  of  its  officer,  the  receiver, 
whose  authority  thus  becomes  nugatory  by  operation  of  law. 
And  while  it  does  not  render  unlawful  any  act  done  by  the 
receiver  before  the  appeal  was  taken,  it  forbids  him  further  to 
act ;  and  it  then  becomes  his  duty  to  restore  the  property  to  the 
person  from  whom  it  was  taken,  since  his  authority  to  take  be- 
ing inoperative,  his  authority  to  hold  is  equally  so,  both  being 
derived  from  the  same  order. "^^  In  California,  it  is  held  that 
upon  an  appeal  from  an  order  adjudging  a  defendant  to  be 
insolvent,  the  functions  of  a  receiver  appointed  in  the  cause 
are  not  suspended ;  and  the  court  will  not,  therefore,  stay  pro- 
ceedings in  an  action  brought  by  the  receiver.'^^  And  it  has 
been  held  by  the  Court  of  Appeals  of  the  District  of  Colum- 
bia that  the  lower  court  is  not,  in  consequence  of  an  appeal 
and  supersedeas,  deprived  of  the  power  of  substituting  one  re- 
ceiver in  place  of  another,  since  a  court  which  appoints  a  re- 
ceiver and  causes  a  fund  to  accumulate  in  his  hands  may  con- 
tinue to  make  all  proper  orders  for  the  conservation  of  the 
fund  notwithstanding  the  appeal. "^^  But  it  is  held  generally 
that  upon  an  appeal  from  an  order  appointing  a  receiver,  a 
supersedeas  will  not  be  granted  by  the  reviewing  court  as  a 
matter  of  right  but  that  the  granting  of  such  application  rests 
in  the  discretion  of  the  court.*^^ 

§  30.  Same  relief  sought  in  different  suits.  When  two 
different  persons  whose  interests  are  conflicting  are  proceeding 
for  the  appointment  of  a  receiver  in  separate  actions,  the  ques- 
tion whether  the  receiver  shall  be  appointed  upon  motion  of 
one  plaintiff  or  the  other  is  regarded  as  of  minor  importance 
when  the  object  of  each  proceeding  is  the  preservation  of  the 
fund  in  controversy,  and  its  ultimate  distribution  among  credit- 
ors. And  when,  in  such  case,  the  appointment  in  one  suit  is 
not  completed  by  reason  of  an  appeal  from  the  order,  the  court 

71  State  V.  Johnson,  13  Fla.,  33.  74  Home  Fire  Ins.  Co.  v.  Dutcher, 

72  /„  re  Real  Estate  Associates,  48  Neb.,  755,  67  N.  W.,  766 ;  State  v. 
58  Cal.,  356.  Stull,  49  Neb.,  739,  69  N.  W.,  101 ; 

73  Hitz  V.  Jenks,  16  App.  D.  C,  Lowe  v.  Riley,  57  Neb.,  252,  77  N. 
530,  546.  W.,  758 


46  RECEIVERS.  [chap.    1. 

may  permit  the  plaintiff  in  the  other  suit  to  proceed  and  obtain 
a  receiver  of  the  fund  for  the  benefit  of  all  concerned,  and 
such  appointment  will  not  be  vacated."^^ 

§  31.  Test  as  to  defendant's  interest;  receiver  over  a 
pension;  secret  code.  As  regards  the  nature  of  defend- 
ant's interest  in  the  property  which  it  is  sought  to  subject  to  a 
receivership,  it  has  been  held  that  if  the  property  is  such  as  to  be 
subject  to  execution  by  creditors  of  defendant,  it  is  competent 
for  a  court  of  equity  to  appoint  a  receiver ;  otherwise  not.  And 
relying  upon  this  distinction,  the  court  refused  to  appoint  a 
receiver  over  a  pension  granted  by  government  to  the  defend- 
ant, who  had  conveyed  his  interest  therein,  with  other  property, 
to  secure  an  annuitant."^^  But  when  a  merchant,  transacting 
a  large  business  throughout  the  country,  invents  and  prepares 
for  the  exclusive  use  of  himself  and  of  his  traveling  salesmen  a 
secret  code  or  system  of  characters  to  denote  the  cost  and  selling 
price  of  his  goods,  he  has  such  a  property  interest  therein  as 
may  be  protected  by  the  appointment  of  a  receiver  to  take  pos- 
session of  a  copy  of  such  code,  of  which  defendant  has  wrong- 
fully obtained  possession  and  which  he  threatens  to  use  to  the 
injury  of  plaintiff."^"^ 

§  32.  Not  granted  when  court  can  not  control  property ; 
license;  rates  and  taxes.  A  receiver  will  not  be  appointed 
over  property  when  it  is  of  such  a  nature  that  it  is  impossible 
for  tJie  court  to  put  him  in  possession,  and  when  the  court  has 
no  control  over  the  officers  or  persons  intrusted  with  the  man- 
agement of  the  property,  as  in  the  case  of  a  permit  or  license  to 
occupy  a  stall  in  a  city  market,  the  control  of  which  is  wholly 
vested  in  certain  municipal  officers,  whose  discretion  in  grant- 

75  Lottimer  v.  Lord,  4  E.  D.  civil  service  pension,  due  to  the 
Smith,  183.  debtor  and  payable  in  monthly  in- 

76  Davis  V.  Duke  of  Marlborough,  stalments.  See  also  Noad  v.  Back- 
1  Swans.,  74;  S.  C,  2  Wils.  Ch.,  130.  house,  2  Y.  &  C.  C.  C,  529,  where  a 
See  S.  C,  2  Swans.,  108.  But  see  receiver  was  granted  over  a  pen- 
Molony  v.  Cruise,  30  L.  R.  Ir.,  99,  sion. 

where  a  receiver  was  allowed  in  be-  77  Simmons     Hardware     Co.     v. 

half  of  a  judgment  creditor  over  a      Waibel,  1  S.  D.,  488. 


CHAP.  I.]  GENERAL  FEATURES.  47 

ing  or  withholding  the  permit  is  beyond  control  by  the  courts.*^^ 
Nor  will  a  court  of  equity  grant  a  receiver  over  certain  rates 
or  taxes,  which  are  to  be  fixed  by  a  future  assessment  and  are  to 
be  collected  at  a  future  period  by  public  officers  designated  for 
that  purpose,  upon  the  application  of  a  creditor  who  has  loaned 
money  for  a  work  of  public  improvement,  to  be  repaid  out 
of  such  rates.  And  it  is  a  sufficient  objection  to  the  relief  in 
such  a  case  that  the  remedy  at  law,  by  mandamus  or  otherwise, 
to  compel  the  officers  to  act,  affords  an  adequate  protection  to 
the  creditor.'^^ 

§  33.  Relief  refused  as  against  innocent  purchasers. 
While  it  is  competent  for  a  court  of  equity,  by  an  interlocutory 
order,  to  take  possession  of  property  by  its  receiver,  pending 
litigation  concerning  the  rights  of  the  parties,  yet  where  the 
rights  of  third  persons  have  intervened,  who  are  not  parties 
to  the  record,  as  in  the  case  of  innocent  purchasers  of  the  prop- 
erty in  contest,  the  court  will  not  exercise  its  extraordinary  ju- 
risdiction by  ordering  the  property  into  the  possession  of  its  re- 
ceiver. The  relief  will  be  refused  in  such  case  upon  the  ground 
that  the  rights  of  purchasers  in  good  faith  are  not  to  be  ad- 
judicated or  determined  in  the  summary  and  collateral  method 
of  an  order  to  surrender  possession  to  a  receiver. ^^ 

§  34.  Peril  to  the  fund ;  infringement  of  patent.  Peril  to 
the  fund  in  litigation  is  a  frequent  ground  for  the  interference 
of  equity  by  a  receiver,  when  the  danger  is  such  as  to  demand 
the  summary  interference  of  the  court  in  order  to  preserve  the 
fund,  which  would  otherwise  be  lost.  Thus,  upon  a  bill  to  re- 
strain the  infringement  of  a  patent  right,  when  an  injunction 
has  been  granted  pendente  lite,  and  it  is  apparent  that  if  plain- 
tiff's rights  are  ultimately  established  he  will  be  entitled  to  a 
large  share  of  the  money  received  by  defendants  from  sales  of 
the  patented  machines,  and  defendants  are  shown  to  be  in  in- 
solvent circumstances,  and  to  have  debts  due  them  to  a  large 
amount  for  machines  sold  since  the  granting  of  the  injunction, 

78  Barry  v.  Kennedy,  11  Ab.  Pr.,  79  Drewry  v.  Barnes,  3  Russ.,  94. 

N.  S.,  421.  80  Levi  v.  Karrick,  13  Iowa,  344. 


48  RECEIVERS.  [chap.    1. 

sufficient  danger  to  the  fund  is  shown  to  warrant  the  court  in 
appointing  a  receiver.^i 

§  35.  Receiver  not  granted  to  compel  payment  of  mon- 
ey; subscriptions  to  a  fund.  As  a  general  rule,  where  the 
object  of  the  action  is  only  to  compel  payment  of  a  sum  of 
money,  the  courts  will  not  appoint  a  receiver  upon  the  filing 
of  the  bill.^2  And  where  no  active  duty  is  required  of  any  one 
to  execute  the  decree  of  the  court  except  the  payment  of  money 
to  the  persons  entitled  therto,  no  case  is  presented  for  the  ap- 
pointment of  a  receiver.83  And  in  an  ordinary  action  for 
money  had  and  received  by  defendant  to  the  use  of  plaintiff, 
it  is  not  proper  to  allow  a  receiver  when  there  is  no  allegation 
or  pretense  that  the  money  is  in  danger  of  being  lost,  or  that 
it  will  be  in  jeopardy  during  the  pendency  of  the  action  unless 
a  receiver  is  appointed.^^  But  when  one  has  received  sub- 
scriptions to  a  given  project,  depositing  the  funds  with  third 
parties,  and  the  project  is  abandoned,  a  subscriber  electing  to 
withdraw  his  subscription  is  entitled,  in  an  action  against  the 
different  parties,  to  have  a  receiver  of  the  fund  in  controversy. 
And  it  is  not  a  sufficient  objection  to  the  relief,  in  such  case, 
that  a  receiver  of  the  fund  has  been  appointed  in  a  previous  ac- 
tion of  the  same  nature ;  but  the  powers  and  functions  of  the 
second  receiver  will  be  made  subordinate  to  those  of  the  first, 
and  when  the  first  becomes  functus  oificio,  the  second  will  be- 
come entitled  to  the  custody  of  the  fund,  or  of  so  much  thereof 
as  remains.85  But  this  doctrine  is  to  be  accepted  with  the 
limitation  that  the  subsequent  receiver  takes  only  what  is  un- 
disposed of  by  the  court  in  the  former  litigation.^S 

§  36.  Management  of  business  by  a  receiver;  prefer- 
ring debts  incurred.     While  it  is  sometimes  necessary  for 

81  Parkhurst      v.      Kinsman,      2  Y.,   133,   affirming   S.   C,  37  N.   Y. 
Blatchf.,  78.  Supr.  Ct.  R.,  223. 

82  Hager  v.  Stevens,  2  Halst.  Ch.,  85  Bailey  v.  O'Mahony,  33  N.  Y. 
374.  Supr.  Ct.  R.,  239. 

83  Young    V.    Hughes,    39    Ore.,  86  Q'Mahoney  v.  Belmont,  62  N. 
586,  65  Pac,  987,  66  Pac.  272.  ¥.,   133,  affirming   S.   C,  37   N.   Y. 

84  O'Mahoney  v.  Belmont,  62  N.  Supr.  Ct.  R.,  223. 


CHAP.    I.]  GENERAL    FEATURES.  49 

the  court,  by  its  receiver,  to  continue  the  management  of  the 
business  over  which  the  receiver  is  appointed,  for  the  purpose 
of  effecting  a  more  satisfactory  adjustment  and  for  better 
protecting  the  interests  of  all  parties,  yet  the  courts  are  gen- 
erally averse  to  assuming  the  management  of  a  business  except 
as  incidental  to  the  object  of  the  suit,  and  for  the  purpose  of 
closing  it  up  and  dividing  the  proceeds.  And  a  receiver  will  not 
be  appointed  to  continue  the  management  of  a  business  which, 
from  its  nature,  can  not  be  conducted  under  the  direction  of  the 
court,  as  in  the  case  of  a  theater.^''  Nor  will  a  receiver  be  au- 
thorized to  begin  a  business  which  has  not  yet  been  undertaken 
by  the  parties,  such  as  the  manufacture  and  sale  of  medicines 
under  letters  patent;  nor  will  the  court  require  the  parties,  in 
such  case,  to  disclose  to  the  receiver  secrets  concerning  the  man- 
ufacture of  such  medicines.^^  Nevertheless  it  may  be  regarded 
as  a  matter  resting  within  the  sound  discretion  of  the  court 
whether  its  receiver  shall  be  permitted  to  carry  on  the  business 
which  has  come  under  his  control.  And  where  it  is  clear  that 
the  conduct  of  a  business  by  a  receiver  under  the  supervision 
of  the  court  will  be  for  the  benefit  of  all  parties  in  interest  and 
will  result  in  preserving  or  enhancing  the  estate  in  his  posses- 
sion, courts  of  equity  frequently  authorize  their  receivers  for  a 
limited  period  and  under  the  strict  supervision  of  the  court  to 
continue  and  carry  on  the  business  which  has  thus  come  into 
their  custody  and  control.  And  the  power  of  the  court  thus 
to  authorize  its  receiver  to  continue  a  business  carries  with  it  as 
a  necessary  incident  the  authority  to  authorize  him  to  borrow 
money  for  the  purchase  of  all  such  supplies  and  materials  as 
may  be  necessary  for  the  proper  maintenance  of  the  business 
and  to  secure  to  the  payment  of  such  obligations  a  preference 
over  the  x:laims  of  other  creditors,  making  them  payable  either 

87  Waters  v.  Taylor,  IS  Ves.,  10.  run    the   business    without    the    au- 

And   see   Terry  v.    Martin,   7   New  thority  of  the  court. 

Mex.,  54,  32  Pac,  157,  where  a  re-  88  Merreli  v.  Pemberton,  62  Ga., 

ceiver  appointed  to  take  possession  29. 
of  a   drug  store  had  proceeded  to 
Receivers — 4. 


50 


RECEIVERS. 


[chap.  1. 


out  of  the  net  income  in  the  hands  of  the  receiver  or  out  of 
the  corpus  of  the  estate  if  the  income  proves  insufficient.^^ 
And  where,  by  agreement  between  the  creditors  and  others  in- 
terested in  a  receivership,  the  receiver  has  been  authorized  to 
carry  on  the  business  of  an  insolvent  concern,  obHgations  in- 
curred by  the  receiver  during  the  management  of  the  business 
in  the  purchase  of  necessary  materials  are  entitled  to  preference 
over  the  claims  of  the  creditors. ^^  And  upon  the  same  prin- 
ciples as  those  governing  in  the  case  of  receivers'  certificates 
and  of  preferred  debts  of  railway  companies,  it  is  held  that 
where  a  receiver  is  appointed  to  take  possession  of  a  hotel  and 
is  directed  by  the  order  of  appointment  to  run  it  as  a  going 
business,  he  is  entitled,  in  so  doing,  to  purchase  all  necessary 
supplies,  and  the  indebtedness  thereby  incurred  becomes  a  prior 
charge  upon  the  property  in  his  possession,  to  be  paid  out  of 
the  income,  or  in  case  that  is  not  sufficient,  out  of  the  pro- 


89  Cake  V.  Mohun,  164  U.  S.,  311, 
17  Sup.  Ct.  Rep.,  100,  affirming  Cake 
V.  Woodbury,  3  App.  D.  C,  60,  and 
distinguished  in  International  Trust 
Co.  V.  United  Coal  Co.,  27  Colo., 
246,  60  Pac,  621;  Heffron  v.  Rice, 
149  111.,  216,  36  N.  E.,  562,  41  Am. 
St.  Rep.,  271 ;  Knickerbocker  v.  Mc- 
Kindley  C.  &  M.  Co.,  172  111.,  535, 
50  N.  K,  330,  64  Am.  St.  Rep.,  54; 
Thornton  v.  Highland  A.  &  B.  R. 
Co.,  94  Ala.,  353,  10  So.,  442; 
Highland  Avenue  &  B.  R.  Co. 
V.  Thornton,  105  Ala.,  225,  16 
So.,  699;  Rochat  v.  Gee,  137 
Cal.,  497,  70  Pac,  478;  Blythe  v. 
Gibbons,  141  Ind.,  332,  35  N.  E., 
557.  In  Makeel  v.  Hotchkiss,  190 
111.,  311,  60  N.  E.,  524,  83  Am.  St. 
Rep.,  131,  the  court  recognize  the 
rule  that  a  court  of  equity  may  in 
some  instances  but  with  great  cau- 
tion permit  a  business  to  be  carried 
on  by  its  receiver  and  make  the  ex- 


penses thereof  a  prior  charge  upon 
the  property.  As  to  the  right  of  a 
receiver  to  be  indemnified  for 
money  borrowed  by  him  in  excess 
of  the  amount  authorized  by  the 
court  in  carrying  on  a  business,  see 
In  re  British  Power  T.  &  L.  Co., 
(1906)  1  Ch.,  497.  As  to  the  right 
of  the  owner  of  the  premises  in 
which  a  business  is  carried  on  by  a 
receiver  to  recover  rent  therefor, 
see  Lane  v.  Washington  Hotel  Co., 
190  Pa.  St.,  230,  42  Atl.  697 ;  Stokes 
V.  Hoffman  House,  167  N.  Y.,  554, 
60  N.  E.,  667,  53  L.  R.  A.,  870.  And 
see  Davis  v.  Foster,  29  Wash.,  363, 
69  Pac,  1102;  Vila  v.  Grand  Island 
E.  L.,  I.  &  C.  S.  Co.,  68  Neb.,  222, 
94  N.  W.,  136,  97  N.  W.,  613.  As 
to  the  right  of  a  receiver  to  hire 
employees  in  the  management  of  a 
business,  see,  post,  §  175. 

90  Diamond  Match  Co.  v.  Taylor, 
83  Md.,  394,  34  Atl.,  1015. 


CHAP.    I.]  GENERAL    FEATURES.  51 

ceeds  of  the  sale.^^  But  where  a  receiver  has  carried  on  a 
business  without  any  authority  from  the  court  and  his  manage- 
ment has  resulted  in  a  loss,  such  loss  must  be  borne  by  the  re- 
ceiver.92  ^j^^j  where  a  receiver  is  appointed  at  the  instance 
and  for  the  benefit  of  lien-holders  who  ask  that  he  be  author- 
ized to  continue  a  business,  all  charges  and  expenses  properly 
incurred  by  the  receiver  in  so  conducting  the  business  are  en- 
titled to  priority  over  the  liens  of  the  plaintiffs  and  are  held 
to  be  a  first  charge  upon  the  net  earnings  or  upon  the 
corpus  of  the  estate  in  the  hands  of  the  receiver.93  But  in  no 
event  should  obligations  incurred  by  a  receiver  in  carrying 
on  a  business  be  given  a  preference  over  prior  mortgage  liens 
where  the  court  never  authorized  the  receiver  to  contract  debts 
or  incur  liabilities  to  which  a  preference  should  be  given ;  nor 
should  the  court  itself,  in  the  case  of  a  purely  private  business 
and  against  the  objections  of  the  holders  of  prior  mortgage 
liens,  authorize  the  creation  of  debts  and  the  incurring  of  obli- 
gations payable  out  of  the  corpus  of  the  estate  in  preference  to 
such  prior  liens.^^ 

§  37.  Effect  of  acquiescence  in  appointment.  Where 
parties  to  the  action  are  before  the  court  upon  the  appointment 
of  a  receiver,  and  have  a  right  to  object  to  the  order  of  the 
court,  or  to  appeal  therefrom,  but  submit  to  the  order  without 
objection  and  without  subsequently  appealing,  their  submis- 
sion will  be  deemed  an  acquiescence  in  the  order,  so  far  as  to 
render  it  the  law  of  the  case  with  respect  to  the  right  to  a 
receiver.    Such  persons  can  not,  therefore,  call  in  question  the 

91  Knickerbocker  v.  McKindley  poration  v.  Portland  Hospital,  40 
C  &  M.  Co.,  172  111.,  535,  50  N.  E.,  Ore.,  523,  64  Pac,  644,  67  Pac,  194, 
330,  64  Am.  St.  Rep.,  54.  56  L.   R.  A.,  627.     In  this  case  it 

92  Villere  v.  New  Orleans  P.  M.  was  held  that  the  mere  fact  that  a 
Co.,  122  La.,  717,  48  So.,  162.  receiver     was     authorized     by     the 

93  Peoples  National  Bank  v.  Vir-  court  to  operate  and  conduct  a  hos- 
ginia  Textile  Co.,  104  Va.,  34,  51  S.  pital  did  not,  ipso  facto,  give  a  pref- 
E.,  155.  And  see  Hulings  v.  Jones,  erence  over  prior  mortgage  liens  to 
63  West  Va.,  696,  60  S.  E.,  874.  obligations    which   he   might   incur. 

94  United  States  Investment  Cor-  And  see,  post,  §  312&. 


52  RECEIVERS.  [chap.    I. 

propriety  of  the  appointment  upon  a  final  application  for  a 
disposal  of  the  funds  in  the  receiver's  hands. ^^ 

§  38.  Receiver  held  to  strict  accountability.  From  the 
nature  of  a  receiver's  duties,  and  his  attitude  and  relation 
toward  the  court  as  its  representative  or  officer,  he  is  held  to  a 
strict  accountability  for  the  faithful  performance  of  the  trust 
reposed  in  him.  Especially  is  this  the  case  when  his  position 
and  duties  with  reference  to  the  property  or  trust  confided  to 
him  as  receiver  are  in  any  degree  inconsistent  with  other  in- 
terests which  he  has  in  the  same  property;  and  in  such  case 
the  court  will  scrutinize  his  conduct  with  extreme  care,  and  will 
hold  him  to  a  strict  performance  of  his  duties.^^ 

§  39.  Statute  authorizing  appointment  by  governor. 
It  has  been  held  that  the  appointment  of  a  receiver  is  not 
necessarily  a  judicial  act  in  all  cases,  in  the  sense  that  it  must 
be  made  only  by  the  courts.  And  the  right  of  the  legislature 
of  a  state  to  enact  a  law,  authorizing  the  governor  of  the  state 
to  appoint  a  receiver  of  an  insolvent  banking  corporation,  is 
not  a  violation  of  the  constitutional  provision  limiting  each  de- 
partment of  the  government  to  its  own  particular  sphere;  the 
appointment  of  a  receiver  under  such  law  being  in  no  manner 
a  decree  or  judgment  affecting  title  to  property,  and  not  being 
a  final  determination  of  any  rights,  either  legal  or  equitable.^'^ 

§  39a.  Appointment  can  not  be  questioned  collaterally. 
The  general  principle  applicable  to  all  judicial  proceedings, 
that  the  propriety  of  an  order  or  decree  made  in  a  cause  in 
which  the  court  has  jurisdiction  can  not  be  challenged  collater- 
ally, applies  with  equal  force  to  an  order  appointing  a  receiver 
made  by  a  court  of  competent  jurisdiction.  And  when  a  court 
having  jurisdiction  of  the  parties  and  of  the  subject-matter 
appoints  a  receiver  over  the  property  or  fund  in  controversy, 
the  validity  of  such  appointment  and  the  propriety  of  the  order 

95  Post  V.  Dorr,  4  Edw.  Ch.,  412;  96  Bolles  v.   Duff,  54  Barb.,  215; 

Pagett  V.  Brooks,  140  Ala.,  257,  37  S.  C,  27  How.  Pr.,  162. 

So.,  263 ;   Zieverink  v.   Kemper,  50  97  Carey  v.  Giles,  9  Ga.,  253. 
Ohio  St.,  208,  34  N.  E.,  250. 


CHAP.    I.] 


GENERAL    FEATURES. 


53 


can  not  be  successfully  challenged  in  a  collateral  suit  or  proceed- 
ing.98  Thus,  in  an  action  brought  by  a  receiver  for  the  re- 
covery of  property  claimed  by  him  by  virtue  of  his  receiver- 
ship, the  defendant  will  not  be  permitted  to  question  the  pro- 
priety of  his  appointment.99  So  when  a  receiver  is  appointed 
over  a  corporation,  a  creditor,  not  a  party  to  the  suit,  who  in- 
tervenes, claiming  an  equitable  lien  upon  funds  in  the  receiver's 
hands  and  seeking  payment  in  full  of  his  demand,  can  not,  upon 
appeal  from  an  order  dismissing  his  petition,  call  in  question 
the  appointment  of  the  receiver.^ 

§  39b.  The  same;  illustrations.     As  further  illustrating 
the  rule  under  discussion  it  has  been  held  that,  where  a  receiver 


98  Florence  Gas,  E.  L.  &  P.  Co.  v. 
Hanby.  101  Ala.,  15,  13  So.,  343; 
Lowenstein  v.  Finney,  54  Ark,  124, 
15  S.  \V.,  153;  Illinois  Trust  &  Sav- 
ings Bank  v.  Pacific  Ry.  Co.,  115 
Cal.,  285,  47  Pac,  60;  Title  Insur- 
ance &  T.  Co.  v.  Grider,  152  Cal., 
746,  94  Pac,  601;  Commercial  Na- 
tional Bank  v.  Burch,  141  111.,  519, 
31  N.  E.,  420;  Equitable  Trust  Co. 
V.  Wilson,  200  111.,  23,  65  N.  K,  430; 
Town  of  Vandalia  v.  St.  L.,  V.  &  T. 
H.  R.  R.  Co.,  209  111.,  73,  70  N.  E., 
662;  Bodkin  v.  Merit,  102  Ind.,  293, 
1  N.  E.,  625 ;  Pressley  v.  Lamb,  105 
Ind.,  171,4  N.  E.,  682;  First  Nation- 
al Bank  v.  United  States  E.  T.  Co., 
105  Ind.,  227,  4  N.  E.,  846;  Hatfield 
V.  Cummings,  152  Ind.,  280,  50  N. 
E.,  817,  53  N.  E.,  231 ;  Metropolitan 
National  Bank  v.  Commercial  State 
Bank,  104  Iowa,  682,  74  N.  W.,  26 ; 
Greenawalt  v.  Wilson,  52  Kan.,  109, 
34  Pac.  403 ;  State  v.  Judge  of  Civil 
District  Court,  45  La.  An.,  1418,  14 
So.,  308;  Converse  v.  Ayer,  197 
Mass.,  443,  84  N.  E.,  98;  Basting  v. 
Aukeny,  64  Minn.,  133,  66  N.  W., 
266;  Neun  v.  Blackstone  B.  &  L. 
Assn..  149  Mo.,  74,  50  S.  W.  436; 


Andrews  v.  Steele  City  Bank,  57 
Neb.,  173,  77  N.  W.,  342;  Murphy 
V.  Fidelity  M.  F.  Ins.  Co.,  69  Neb., 
489,  95  N.  W.,  1022 ;  Stanley  v.  Na- 
tional Union  Bank,  115  N.  Y.,  122, 
22  N.  E.,  29;  Jones  v.  Blun,  145  N. 
Y.,  333,  39  N.  E.,  954;  Brynjolfson 
V.  Osthus,  12  N.  Dak.,  42,  96  N.  W., 
261 ;  Threadgill  v.  Colcord,  16  Olka., 
447,  85  Pac,  703 ;  Thompson  v.  Hol- 
laday,  15  Ore.,  34,  14  Pac,  725;  First 
National  Bank  v.  Mack,  35  Ore., 
122,  57  Pac,  326;  Eichman  v.  Her- 
sker,  170  Pa.  St.,  402,  33  Atl.,  229; 
Radebaugh  v.  Tacoma  &  P.  R.  Co., 
8  Wash.,  570,  36  Pac,  460;  Elder- 
kin  V.  Peterson,  8  Wash.,  674,  36 
Pac,  1089;  Smith  v.  Hopkins,  10 
Wash.,  77,  38  Pac,  854;  Carroll  v. 
Pacific  National  Bank,  19  Wash., 
639,  54  Pac,  32;  Neeves  v.  Boos,  86 
Wis.,  313,  56  N.  W.,  909;  Davis  v. 
Shearer,  90  Wis.,  250,  62  N.  W., 
1050 ;  Gunby  v.  Armstrong,  66  C.  C. 
A..  627,  133  Fed.,  417. 

90  Greenawalt  v.  Wilson,  52  Kan., 
109,  34  Pac,  403. 

1  Commercial  National  Bank  v. 
Burch,  141  111.,  519,  31  N.  E.  420. 


54  RECEIVERS.  [chap.    I. 

has  been  appointed  over  a  mutual  insurance  company  in  a  pro- 
ceeding in  which  the  company  admitted  its  insolvency  and  con- 
sented to  the  appointment,  it  constitutes  no  defense  to  an  action 
brought  against  a  policy-holder  to  collect  an  assessment  made 
against  him  that  the  company  was  not  in  fact  insolvent  and  that 
the  appointment  was  for  this  reason  improper.^  So  in  an 
action  brought  by  a  receiver  to  recover  upon  a  promissory 
note,  it  is  no  defense  that  the  receiver  is  also  the  clerk  of  the 
court  in  which  the  receivership  proceedings  were  pending  or 
that  as  such  clerk  he  had  approved  his  bond  as  receiver,  since 
these  objections  affect  merely  his  eligibility  and  constitute  a 
collateral  attack  upon  the  validity  of  his  appointment.^  So 
the  propriety  or  validity  of  the  appointment  of  a  receiver  can 
not  be  questioned  in  an  action  brought  by  him  to  collect  an 
assessment  upon  premium  notes  given  by  members  of  a  mu- 
tual fire  insurance  company."*  And  upon  a  writ  of  error  to 
review  an  order  authorizing  the  issuing  of  receiver's  certifi- 
cates, the  propriety  of  the  original  order  of  appointment  is  not 
subject  to  collateral  attack  where  the  court  had  jurisdiction 
of  the  subject-matter  and  of  the  parties.^  And  where  a  re- 
ceiver has  been  appointed  by  one  court,  the  regularity  of  his 
appointment,  as  being  without  the  proper  notice,  can  not  be 
questioned  in  another  action  brought  by  a  later  receiver  over 
the  same  estate  in  a  collateral  suit  instituted  in  another  court 
of  concurrent  jurisdiction  for  the  purpose  of  determining  the 
sta'c-us  of  the  two  receivers.^  So  where  a  receiver  had  been  ap- 
pointed in  a  foreclosure  suit  to  which  the  owner  of  the  equity 
of  redemption  was  properly  made  a  party,  and  had  collected 
the  rents  and  profits  and  had  paid  them  out  under  orders  of  the 
court,  one  who,  pending  the  foreclosure  proceeding,  takes  an 

2Eichman    v.    Hersker,    170    Pa.  5  Town    of    Vandalia    v.    St.    L., 

St.,  402,  33  Atl.,  229.  V.  &  T.  H.  R.  R.  Co.,  209  111.,  7Z, 

3  Metropolitan   National    Bank  v.      70  N.  E.,  662. 

Commercial   State  Bank,  104  Iowa,  6  McKay     v.     Van     Kleeck,     133 

682,  74  N.  W.,  26.  Mich.,  27,  94  N.  W.,  367. 

4  Davis  V.   Shearer,  90  Wis.,  250, 
62  N.  W.,  1050. 


CHAP.    I.]  GENERAL    FEATURES.  55 

assignment  of  the  equity  of  redemption,  can  not  afterward 
maintain  an  independent  bill  in  equity  against  the  former  re- 
ceiver upon  the  ground  that  he  had  made  an  improper  appli- 
cation of  the  rents  and  profits  of  the  mortgaged  premises."^ 
So  in  an  action  brought  by  a  receiver  who  had  been  appointed 
in  a  proceeding  pending  between  partners,  the  action  by  the 
receiver  being  for  the  recovery  of  money  due  the  partnership 
from  third  persons,  it  is  no  objection  that  the  declaration  fails 
to  allege  that  the  particular  persons  were  partners,  since  such 
an  objection  is  a  collateral  attack  upon  the  appointment  of  the 
receiver  and  can  therefore  not  be  maintained.^  So  in  an  ac- 
tion brought  by  the  receiver  of  a  mutual  fire  insurance  com- 
pany to  recover  an  assessment,  it  constitutes  no  defense  that 
a  prior  receiver  had  been  removed  and  the  plaintiff  appointed 
as  his  successor  without  notice  to  the  defendant.^  And  an 
order  directing  a  receiver  to  make  payment  and  distribution 
of  the  funds  in  his  possession,  although  erroneous,  can  not  be 
questioned  in  a  collateral  suit,  the  remedy  of  the  aggrieved  par- 
ty in  such  case  being  by  appeal  from  the  order.^^ 

§  39c.  Otherwise  where  court  is  without  jurisdiction; 
not  a  proceeding  in  rem.  Where,  however,  the  court  making 
the  order  was  without  jurisdiction,  a  different  doctrine  pre- 
vails, and  in  such  case  its  order  may  be  held  void,  even  when 
questioned  in  a  collateral  suit  or  proceedings^  So  when  the 
appoir.  nent  of  a  receiver  over  a  corporation  is  absolutely  void 
for  want  of  jurisdiction  over  the  defendant,  there  being  no 
proper  service  of  process,  a  conveyance  of  property  made  by 

7  Equitable  Trust  Co.  v.  Wilson,  Miss.,  1009,  IS  So.,  33,  23  L.  R.  A., 
200  111.,  23,  65  N.  E.,  430.  531 ;   Smith  v.  Ely  &  Walker  Dry 

8  Title    Insurance    &    T.    Co.    v.  Goods   Co.,   79   Miss.,   266,   30    So., 
Grider,  152  Cal.,  746,  94  Pac,  601.  653 ;  State  v.  Ross,  122  Mo.,  435,  25 

9Nichol    V.    Murphy,    145    Mich.,  S.  W.,  947,  23  L.  R.  A.,  534;  State 

424,  108  N.  W.,  704.  v.  District  Court,  21  Mont.,  155,  53 

10  Piatt  V.  New  York  &  S.  B.  Ry.  Pac,  272,  69  Am.  St.  Rep.,  645 ; 
Co.,  170  N.  Y.,  451,  63  N.  E.,  532.  dictum  in  Town  of  Vandalia  v.  St. 

11  Texas  &  Pacific  R.  Co.  v.  Gay,  L.,  V.  &  T.  H.  R.  R.  Co.,  209  III., 
86  Tex.,  571,  26  S.  W..  599;  Whit-  72,  70  N.  E.,  662. 

ney  v.  Hanover   National   Bank,  71 


56  RECEIVERS.  [chap.    1. 

such  receiver  will  be  ineffectual  to  pass  the  title  to  real  property. 
And  in  such  case  the  validity  of  the  order  appointing  the  re- 
ceiver may  properly  be  called  in  question  in  a  collateral  pro- 
ceeding, as  in  an  action  of  ejectment  for  the  recovery  of  the 
property  so  conveyed.12  So  where  a  receiver  is  appointed  over 
an  insolvent  corporation  upon  an  ex  parte  application  made  by 
its  officers  without  notice  to  any  of  the  parties  in  interest,  such 
appointment  is  void  and  subject  to  attack  in  a  collateral  pro- 
ceeding.12  And  where  the  stockholders  of  an  insolvent  corpo- 
ration had  procured  ex  parte  the  appointment  of  a  receiver 
of  the  corporation  without  notice  to  any  of  the  parties  in  in- 
terest and  without  the  filing  of  a  bill,  it  was  held  that  the  ap- 
pointment was  void  and  subject  to  collateral  attack.^^  So 
where  a  receiver  had  been  appointed  over  a  railway  company  at 
the  instance  of  the  company  itself  but  without  the  filing  of  any 
bill  and  upon  an  ex  parte  application  without  notice  to  any  of 
the  parties  in  interest,  it  was  held  that  the  appointment  was  void 
and  subject  to  attack  in  a  collateral  proceeding.i^  And  under 
a  statute  which  makes  the  notice  of  an  application  for  the 
appointment  of  a  receiver  jurisdictional  and  provides  that  the 

12  St.  Louis  &  S.  C.  &  M.  Co.  V.  the  relief  was  the  alleged  insolvency 
Sandoval  C.  &  M.  Co.,  Ill  111.,  32.  of  the  institution,  since  the  appoint- 

13  Whitney  v.  Hanover  National  ment  in  such  case  was  erroneous  at 
Bank,  71  Miss.,  1009,  15  So..  33,  23  most  but  not  void.  It  is  a  matter 
L.  R.  A.    531.  of  some  difficulty  to  reconcile  this 

14  Smith  V.  Ely  &  Walker  Dry  case  with  those  above  cited.  The 
Goods  Co.,  79  Miss.,  266,  30  So.,  court  point  out  the  distinction  that 
653.  in  State  v.  Ross,  supra,  Mr.  Justice 

15  State  V.  Ross,  122  Mo.,  435,  25  Brace  seems  to  treat  the  writ  of 
S.  W.,  947,  23  L.  R.  A.,  534.  But  prohibition,  upon  which  the  question 
in  First  National  Bank  v.  Mack,  35  arose,  as  equivalent,  under  the  prac- 
Ore.,  122,  57  Pac,  326,  it  was  held,  tice  of  Missouri,  to  an  appeal  or 
in  an  action  brought  by  the  receiver  writ  of  error  and  therefore  as  a  di- 
of  an  insolvent  bank  to  have  a  judg-  rect  and  not  a  collateral  proceeding, 
ment  against  the  bank  declared  not  There  is  the  further  distinction  that 
to  be  a  lien  upon  the  assets  of  the  in  this  case  the  action  was  instituted 
bank,  that  it  was  no  defense  that  the  by  the  stockholders  of  the  corpora- 
receiver  was  appointed  in  an  action  tion,  while  in  State  v.  Ross,  supra, 
instituted  by  a  stockholder  of  the  it  was  begun  by  the  corporation  it- 
bank  in  which  the  only  ground  for  self.    And  see,  post,  §  344a. 


CHAP.    I.]  GENERAL    FEATURES.  57 

appointment  without  notice  is  void,  it  is  held  that  an  appoint- 
ment made  prior  to  the  time  named  in  such  notice  is  void  and 
therefore  subject  to  collateral  attack.^^  And  an  order  appoint- 
ing a  receiver  over  property  which  is  in  no  way  involved  in 
the  litigation  is  absolutely  void  and  subject  to  collateral  at- 
tack.i'^  The  appointment  of  a  receiver  is  not,  however,  a  pro- 
ceeding in  rem  in  the  sense  that  it  is  binding  upon  all  the 
world,  and  persons  who  are  not  parties  to  the  action  are  not 
concluded  thereby.^^ 

§  39d.  Damages  for  wrongful  appointment ;  measure  of 
damages.  The  plaintiff  in  a  proceeding  who  procures  the 
appointment  of  a  receiver  over  a  going,  solvent  concern  be- 
comes liable  to  the  defendant  for  damages  resulting  from  such 
appointment  where  it  appears  that  the  appointment  was  un- 
warranted and  the  order  of  the  court  is  afterward  reversed 
upon  appeal.  And  the  action  is  one  which  survives  and  after 
the  death  of  the  plaintiff  in  the  receivership  proceeding,  the 
action  may  be  maintained  against  the  personal  representative 
of  the  deceasedA^  And  in  an  action  upon  a  bond  to  recover 
damages  for  the  wrongful  appointment  of  a  receiver,  the  ap- 
proval of  the  receiver's  accounts  and  an  order  for  the  disburse- 
ment of  the  funds  in  his  hands  do  not  amount  to  an  adjudica- 
tion of  the  right  of  the  plaintiff  to  recover  upon  the  bond. 
And  in  such  case  the  rental  value  of  the  premises  sequestered 
during  the  receivership  and  the  value  of  the  services  of  coun- 
sel in  procuring  the  removal  of  the  receiver  are  to  be  con- 
sidered as  proper  elements  of  damage.20 

16  Gibson  v.  Sexson,  82  Neb.,  475,  20  josHn  v.  Williams,  76  Neb., 
_  N.  W.,  — .  594,  107  N.  W.,  837,  112  N.  W.,  343. 

17  Bowman  v.  Hazen,  69  Kan.,  See,  further,  as  to  the  measure  of 
682,  77  Pac,  589.  damages    in   an   action    against   the 

iSDann     Manufacturing    Co.    v.  plaintiff  and  the  sureties   upon  his 

Parkhurst,  125  Ind.,  317,  25  N.  E.,  bond  for  wrongfully  procuring  the 

347.  appointment  of  a  receiver,  Haverly 

19  Thornton-Thomas      Mercantile  v.   Elliott,  39  Neb.,  201,  57  N.  W., 

Co.,  V.  Bretherton,  32  Mont.,  80,  80  1010. 
Pac.  10. 


58  RECEIVERS.  [chap.    I. 

§  39^.  Death  of  receiver ;  where  successor  not  appointed 
at  instance  of  defendant.  A  defendant  has  no  right,  merely 
because  of  the  death  of  a  receiver  appointed  upon  the  appHca- 
tion  of  the  plaintiff,  to  procure  the  appointment  of  a  successor 
to  the  deceased  receiver;  and  it  is  accordingly  held  erroneous 
to  appoint  such  a  successor  upon  motion  of  the  defendant  and 
over  the  objection  of  the  plaintiff  w^ithout  some  showing  of 
right  other  than  the  mere  fact  of  the  death  of  the  former  re- 


ceiver 


21 


21  De  Leonis  v.  Walsh,  148  Cal.,     254,  82  Pac,  1047. 


CHAPTER  II. 
OF  THE  COURTS  EXERCISING  THE  JURISDICTION. 

I.  What  Courts  May  Appoint  Receivers   §    40 

II.  Relative  Powers  of  State  and  Federal  Courts  50 

I.  What  Courts  May  Appoint  Receivers. 

§  40.     English  and  Irish  Courts  of  Chancery. 

41.  Courts  granting  the  relief  in  this  country;  original  jurisdiction; 

courts  of  last  resort. 

42.  Jurisdiction  not  exercised  by  probate  courts. 

43.  Power  limited  to  particular  court  must  be  followed  strictly. 

44.  Receivers  over  property  in  foreign  state  or  country. 

45.  Receiver  in  aid  of  decree  of  foreign  court. 

46.  Receivers  pending  litigation  concerning  probate  or  administra- 

tion. 

47.  Authority  of  receiver  co-extensive  only  with  that  of  court;  no 

extraterritorial  powers,  except  by  state  comity. 
47o.  Prior  receivership  in  one  state  excludes  control  over  receiver  by 
courts  of  another  state. 

48.  Court    first   appointing   acquires   control;    receiver   not    subject   to 

order  of  other  court;  test  as  to  priority. 

49.  New  York  code  of  procedure;  court  first  moving  has  exclusive 

control;  rule  not  applicable  where  parties  are  not  the  same. 
49a.  Receivers  in  United  States  courts  in  suits  concerning  allotments 
among  Indians  on  reservations. 

§  40.  English  and  Irish  Courts  of  Chancery.  The  juris- 
diction exercised  in  the  appointment  of  receivers  has  always 
been  treated  as  a  purely  equitable  one,  and  the  remedy  has  been 
generally  regarded,  next  to  that  by  injunction,  as  the  most 
efficient  and  salutary  of  the  extraordinary  remedies  known  to 
courts  of  equity.  Finding  its  origin  in  the  English  Court  of 
Chancery,  it  was,  until  the  recent  abolition  of  that  court  as  a 
distinct  tribunal,  always  regarded  as  one  of  its  most  efficient 
remedies,  although  granted  with  caution  and  only  upon  a  satis- 
factory showing  of  the  necessity  for  the  immediate  interposi- 

59 


60  RECEIVERS.  [CHAP.    II. 

tion  of  the  court.  It  has  also  been  a  favorite  remedy  of  the 
Irish  Court  of  Chancery,  whose  decisions  afford  an  exceeding- 
ly instructive  presentation  of  the  principles  underlying  the 
jurisdiction,  and  of  the  conditions  necessary  to  justify  its  ex- 
ercise. 

§  41.  Courts  granting  the  relief  in  this  country;  original 
jurisdictional;  courts  of  last  resort.  In  those  states  of  this 
country  which  have  preserved  a  distinct  chancery  system,  the 
relief  has  always  been  granted  by  the  chancery  courts,  which 
have  adopted  and  followed  the  general  principles  governing 
the  remedy  under  the  English  system,  enlarging  and  shaping 
the  jurisdiction  to  adapt  it  to  the  different  conditions  in -this 
country.!  In  the  states  which  have  blended  the  systems  of 
equity  and  law,  or  which  have  adopted  codes  of  procedure,  re- 
lief by  receivers  is  usually  granted  by  the  various  courts  of  gen- 
eral jurisdiction  throughout  the  states.  By  whatever  name 
these  courts  are  known,  the  jurisdiction  has  preserved  its  dis- 
tinctive equitable  character,  and  it  is  still  exercised  upon  the 
same  general  principles  of  equity  by  which  it  was  governed 
before  the  adoption  of  the  various  codes  of  procedure.  It  is 
also  strictly  an  original  in  distinction  from  an  appellate  power, 
and  it  is  generally  exercised  by  courts  of  original  jurisdiction 
only.  In  Tennessee,  however,  it  would  seem  that  the  supreme 
court  of  the  state  may,  pending  an  appeal  thereto  from  an  in- 
ferior court,  appoint  a  receiver  to  take  charge  of  the  subject- 
matter  of  litigation,  in  a  case  otherwise  appropriate  for  the 
relief.2  But  while  that  court  has  power  to  appoint  a  receiver 
when  necessary  to  the  proper  administration  of  its  appellate  ju- 
risdiction, yet  to  warrant  the  exercise  of  the  power  the  proper- 
ty in  controversy  must  be  first  brought  under  the  jurisdiction 

1  See  Miller  Brothers  v.  Perkins,  2  West  v.  Weaver,  3  Heisk.,  589, 

154   Mo.,   629,   55    S.   W.,   874.     In  As  to  the  right  of  the  supreme  court 

Rabb  V.   Albright,  93  Iowa,  50,  61  of  Nebraska  to  appoint  a   receiver 

N.  W.,  402,  it  was  held  under  the  pending  an  appeal,  see  Fitzgerald  v. 

statute    of    Iowa    that    a    receiver  Fitzgerald   &    M.    C.    Co.,  44   Neb., 

might  be  appointed  in  an  action  at  463,    62    N.    W.,    899;    Eastman    v. 

law.  Cain,  45  Neb.,  48,  63   N.  W.,   123. 


CHAP.   II.]  COURTS.  61 

of  that  court  by  virtue  of  an  appeal,  or  of  some  order  or  de- 
cree of  the  court,  and  the  person  against  whom  the  receiver  is 
sought  must  be  subject  to  its  jurisdiction.^  And  the  Supreme 
Court  of  the  United  States  has  refused  in  a  particular  case  to 
appoint  a  receiver  over  the  property  of  a  railway,  pending  an 
appeal  from  a  decree  of  foreclosure,  but  without  deciding 
whether  a  case  might  not  arise  in  which  the  power  might  be 
exercised  pending  an  appeal.^  And  the  same  course  was  fol- 
lowed by  the  Supreme  Court  of  Arkansas  pending  an  appeal 
from  a  final  decree  dismissing  a  bill  to  foreclose  a  mortgage.^ 
In  Virginia,  a  judge  of  the  Supreme  Court  of  Appeals  has  no 
original  jurisdiction  to  appoint  a  receiver  and  to  direct  a  de- 
fendant to  surrender  property  to  such  receiver,  such  relief 
having  been  refused  by  the  court  below. ^  But  the  Supreme 
Court  of  Kansas  has  appointed  a  receiver  to  take  possession 
of  the  property  of  a  non-resident  corporation  against  which 
an  original  proceeding  by  quo  warranto  was  pending  to  oust 
it  from  doing  business  within  the  state.''^ 

§  42.  Jurisdiction  not  exercised  by  probate  courts.  The 
appointment  of  receivers  being  a  power  pertaining  to  courts 
which  are  vested  with  chancery  jurisdiction,  a  court  of  pro- 
bate powers  only  can  not  appoint  a  receiver  in  aid  of  the  col- 
lection of  the  estate  of  a  deceased  person. ^  And  since  a  pro- 
bate court  has  no  power  to  appoint  a  receiver,  an  action  by  a 
receiver  thus  appointed  can  not  be  maintained.^  Where,  how- 
ever, a  probate  or  county  court,  under  the  code  of  procedure 
of  the  state,  is  empowered  to  hear  and  determine  civil  causes, 

3  Kerr  v.   White,   7  Baxter,   394.  Nebraska,    under    the    constitution 
And  see  Allen  v.  Harris,  4  Lea,  190.  and  laws  of  that  state,  to  appoint  a 

4  Pacific  Railroad  v.  Ketchum,  95  receiver    over    an    insolvent    bank. 
U.  S.,  1.  see    State    v.    Exchange    Bank,    34 

5  Coleman  v.  Fisher,  66  Ark.,  43,  Neb.,  198,  51  N.  W.,  765. 

48  S.  W.,  807.  7  State     v.     Anheuser-Busch     B. 

6  Fredenheim    v.    Rohr,    87    Va.,      Assn.,  76  Kan.,  184,  90  Pac,  777. 
764,  13  S.  E.,  193,  266.  See  Virginia,  8  Scott  v.  Searles,  13  Miss.,  25. 

T.  &  C.  Steel  &  Iron  Co.  v.  Wilder,  9  Garrett  v.  London  &  L.  F.  Ins. 

88  Va.,  942,  14  S.  E.,  806.     As  to      Co.,  15  Okla.,  222,  81  Pac,  421. 
the  power  of  the  supreme  court  of 


62  RECEIVERS.  [chap.   II. 

and  such  court  has  rendered  judgment  against  a  debtor  in  a 
case  properly  falling  within  its  jurisdiction,  it  may  appoint  a 
receiver  upon  proceedings  supplemental  to  execution  in  the 
nature  of  a  creditor's  bill  to  enforce  the  judgment.^^ 

§  43.  Power  limited  to  particular  court  must  be  followed 
strictly.  Where,  under  the  laws  of  a  state,  the  power  of 
appointing  receivers  is  confined  to  the  chancellor  alone,  and 
the  register  of  court  is  specially  prohibited  from  making  the 
appointment,  an  order  of  court  referring  the  appointment  to 
the  register  is  not  simply  error  in  a  case  within  his  jurisdic- 
tion, but  is  the  exercise  of  a  power  clearly  beyond  his  control, 
and  is  therefore  utterly  void.  And  it  is  proper  for  the  supreme 
court  of  the  state  to  correct  such  unauthorized  action  on  the 
part  of  the  chancellor  by  the  writ  of  prohibition. ^^  So  where 
a  statute  authorizes  the  appointment  of  a  receiver  and  the  ap- 
proval of  his  bond  by  the  court,  but  not  by  the  judge  or  clerk  in 
vacation,  the  appointment  must  be  made  by  the  judge  in  term 
time,  and  not  in  vacation;  and  an  appointment  by  the  judge 
in  vacation  and  the  approval  of  the  bond  by  the  clerk  will  be 
held  invalid. ^2 

§  44.  Receivers  over  property  in  foreign  state  or  coun- 
try. It  would  seem  to  be  unnecessary  that  the  property 
constitut'ng  the  subject-matter  of  litigation  should  be  within 
the  jurisdiction  of  the  court,  provided  the  parties  in  interest 
are  subject  to  its  control,  and  there  are  frequent  instances 
where  the  English  Court  of  Chancery  has  appointed  receivers 
over  estates  or  property  situated  in  foreign  countries.^^     And 

10  Second  Ward  Bank  z;.  Upmann,  (1900)  1  Ch.,  602.  And  see  Mer- 
12  Wis.,  499.  cantile  I.  &  G.  T.  Co.  v.  River  Plate 

11  £x  parte  Smith,  23  Ala.,  94.  T.  L.  &  A.  Co.,   (1892)  2  Ch.,  303, 

12  Newman  v.  Hammond,  46  Ind.,  where  the  jurisdiction  to  grant  the 
119.  relief  as  to  property  situated  in  a 

13  See  Davis  v.  Barrett,  13  L.  J.  foreign  country  is  upheld,  although 
N.  S.  Ch.,  304;  Langford  v.  Lang-  the  court  refused  its  exercise  be- 
ford,  5  L.  J.,  N.  S.  Ch.,  60;  Shep-  cause  upon  the  facts  of  the  case  a 
pard  V.  Oxenford,  1  Kay  &  J.,  491 ;  receiver  would  have  been  useless. 
V.    Lindsey,    15    Ves.,  And  see,  post,  §  170. 

91 ;  In  re  Maudslay,  Sons  &  Field. 


CHAP.    II.]  COURTS.  63 

in  this  country  it  has  been  held  proper  to  appoint  a  receiver 
over  property  beyond  the  jurisdiction  of  the  court  where  all 
the  parties  in  interest  were  within  the  jurisdiction. ^^  In  such 
cases  it  would  seem  to  be  the  better  practice  that  the  receiver 
himself  should  be  within  the  jurisdiction  of  the  court,  and  that 
he  should  be  allowed  to  appoint  his  own  agent  in  the  foreign 
country  for  the  management  of  the  property  there.^^  It  is  to 
be  observed,  however,  that  while  the  power  of  courts  of  equity 
to  extend  their  extraordinary  aid  over  property  in  a  foreign 
country  is  thus  clearly  recognized,  it  will  not  be  exercised  when 
the  parties  in  interest  in  the  property,  or  representing  it,  are 
not  before  the  court  or  subject  to  its  control.^^  And  a  receiver 
will  not  be  appointed  as  against  a  purchaser  of  the  interest 
of  one  partner,  residing  and  conducting  the  business  in  an- 
other state. ^"^  But  the  fact  that  the  property  over  which  a  re- 
ceiver is  sought  is  located  partly  in  one  state  and  partly  in  an- 
other, as  in  the  case  of  a  railway  corporation  whose  line  ex- 
tends through  two  different  states,  the  company  being  incor- 
porated in  both,  will  not  prevent  the  courts  of  one  of  the  states 
from  appointing  a  receiver  to  take  charge  of  the  railway,  in  a 
case  otherwise  appropriate  for  the  relief.^^  So  in  an  action 
to  wind  up  a  partnership  and  for  a  receiver  of  the  partnership 
property,  it  is  no  objection  to  the  appointment  of  the  receiver 
that  a  portion  of  the  partnership  property  is  in  another  state. ^^ 
And  as  to  personal  property  within  its  jurisdiction,  the  court 
may  appoint  a  receiver  to  take  possession  of  and  to  preserve 
the  property  pendente  lite,  notwithstanding  the  defendant  re- 
sides beyond  its  jurisdiction  and  in  another  state.^O 

14  Eureka  Mining,  S.  &  P.  Co.  v.  Alderson,  32  C.  C.  A.,  542,  90  Fed., 

Lewiston  N.  Co.,  12  Idaho,  472,  86  142,  61  U.  S.  App.,  636. 

Pac,  49 ;  Bayne  v.  Brewer  Pottery  17  Harvey  v.  Varney,   104  Mass., 

Co.,  82  Fed.,  391.     But   see  Miller  436. 

Brothers  v.   Perkins,   154  Mo.,  629,  18  State   v.   Northern   Central    R. 

55  S.  W.,  874.  Co.,  18  Md.,  193. 

15 —  t/.  Lindsey,  15  Ves.,  19  Torbert    v.    Jeffrey,    161    Mo., 

91.  645,  61  S.  W..  823. 

16  Shaw  V.  Shore,  5  L.  J.,  N.  S.  20  Hellebiish   v.    Blake,    119   Ind., 

Ch.,  79;  Baltimore  B.  &  L.  Assn.  v.  349,  21  N.  E.,  976. 


64  RECEIVERS.  [chap.   II. 

§  45.  Receiver  in  aid  of  decree  of  foreign  court.     It  is 

held  to  be  competent  for  a  court  of  chancery  in  one  country 
to  appoint  a  receiver  and  grant  an  injunction  in  aid  of  the 
enforcement  of  a  decree  in  chancery  in  a  foreign  country.  The 
power,  however,  will  not  be  exercised  in  such  a  case  when  it  is 
doubtful,  upon  the  record,  whether  plaintiffs  will  ultimately 
be  entitled  to  a  decree  in  the  second  action. 21 

§  45.  Receivers  pending  litigation  concerning  probate 
or  administration.      Under   the    practice   of   the    English 
Court  of  Chancery,  receivers  were  frequently  appointed  pend- 
ing a  litigation  in  the  ecclesiastical  court  over  the  probate  of  a 
will,  or  the  right  to  administer  an  estate.    The  relief  was  grant- 
ed in  this  class  of  cases,  not  because  of  the  contest  in  another 
court,  but  because  there  was  no  person  to  receive  the  assets, 
and  it  was  therefore  the  duty  of  a  court  of  equity  to  lend 
its  aid  for  the  preservation  of  the  assets  pending  the  litiga- 
tion. 22     The  court,  however,  was  averse  to  interfering  by  a 
receiver  with  the  person  in  possession  under  the  will,  when 
the  property  was  of  small  value. 23    And  in  a  contest  between 
two  different  executors,  claiming  under  two  different  wills  of 
the   deceased,    a   receiver   would   not  be   extended   over   the 
rents  and  profits  of  real  estate  held  by  a  defendant  claiming 
under  a  title  adverse  to  both  wills.24    And  since  the  power  was 
exercised  only  for  the  preservation  of  the  property,  a  receiver 
would  not  be  appointed  when  no  danger  was  shown,  and  no 
reason  why  the  plaintiff  could  not  have  administration  pen- 
dente lite  to  secure  and  preserve  the  property.25    Where,  how- 

21  Houlditch  V.  Lord  Donegal,  8  Cr..  97 ;  Marr  v.  Littlewood,  2  Myl. 

Bligh.,  N.   S.,  301.     As  to  the  cir-  &  Cr.,  454.     See,  also,  Atkinson  v. 

cumstances    which   will    justify   the  Henshaw,  2  Ves.  &  Bea.,  85;   Ball 

appointment   of  a   receiver  to   pro-  z/.  Oliver,  id.,  96 ;  Parkin  z;.  Seddons, 

tect  the  assets  of  a  corporation  as  L.  R.,  16  Eq.,  34. 

ancillary  to  a  receivership  institut-  23  Whitworth  v.  Whyddon,  2  Mac. 

ed  over  the  corporation  in  another  &  G.,  52. 

state,  see  Williams  v.  Hintermeister,  24  Jones  v.  Goodrich,  10  Sim.,  327. 

26    Fed.,    889;    Parsons   v.    Charter  25  Richards    v.    Chave,    12    Ves., 

Oak  Life  Ins.  Co.,  31  Fed.,  305.  462;    Knight   v.   Duplessis,    1    Ves., 

22Watkins    v.    Brent,    1    Myl.    &  324. 


CHAP.  II.]  COURTS.  65 

ever,  the  bill  showed  a  gross  case  of  fraud  on  the  part  of  de- 
fendants contesting  a  will  in  the  ecclesiastical  court,  and  that 
the  whole  object  of  the  litigation  in  that  tribunal  was  to  delay 
probate  of  the  will,  equity  would  take  jurisdiction  and  appoint 
a  receiver  over  the  estate,  notwithstanding  the  power  of  the 
ecclesiastical  court  to  appoint  an  administrator  pendente  lite.^^ 
But  an  act  of  parliament  having  authorized  the  ecclesiastical 
court,  pending  a  litigation  as  to  the  probate  of  a  will,  when 
there  was  some  obstacle  or  bar  in  the  way  of  administration, 
to  appoint  an  administrator  pendente  lite,  with  full  powers  in 
the  management  of  the  property,  except  as  to  distributing  the 
residue,  and  such  administrator  having  been  appointed  by  that 
court,  equity  would  refuse  to  appoint  a  receiver,  since  the  only 
effect  of  the  appointment  would  be  to  produce  an  unseemly  con- 
flict between  the  two  courts.^'^  If,  however,  the  ecclesiastical 
court  had  not  yet  exercised  its  power  by  appointing  an  ad- 
ministrator pendente  lite,  it  was  held  that  equity  might  inter- 
fere as  before  the  statute,  in  a  proper  case,  and  might  appoint 
a  receiver  of  the  personal  estate,  when  probate  of  the  will  had 
been  delayed. ^8 

§  47.  Authority  of  receiver  co-extensive  only  with  that 
of  court ;  no  extraterritorial  powers,  except  by  state  com- 
ity. Questions  of  much  nicety  have  sometimes  arisen  in 
this  country  as  to  the  extent  to  which  the  courts  of  one  state 
will  recognize  the  functions  and  powers  of  a  receiver  appointed 
in  another  state,  and  as  to  the  right  of  such  receiver  to  act 
beyond  the  territorial  jurisdiction  of  the  court  appointing  him. 
The  better  doctrine  upon  this  subject  undoubtedly  is  that  the 
legal  authority  of  a  receiver  is  co-extensive  only  with  the  juris- 
diction of  the  court  appointing  him,  and  that  as  a  matter  of 
strict  right  the  courts  of  one  state  are  not  bound  to  recognize 
a  receiver  appointed  in  a  foreign  state.    The  rule  is  founded  on 

26  Atkinson  v.  Henshaw,  2  Ves.  &      329.      See,   also,   Hitchen   v.    Birks, 
Bea.,  85.     See,  also.  Ball  v.  Oliver,      L.  R.,  10  Eq.,  471. 

id.,  96.  28  Parkin  v.   Seddons,   L.   R.,   16 

27  Veret  v.  Duprez,  L.  R.,  6  Eq.,      Eq.,  34. 

Receivers — 5. 


66 


RECEIVERS. 


[chap.  II. 


the  recognized  principle  that  the  laws  of  one  state  have  no 
force,  proprio  vigore,  beyond  the  territorial  limits  of  such 
state,  although,  upon  considerations  of  courtesy  or  comity,  they 
may  be  permitted  to  operate  in  another  state  for  the  promotion 
of  justice,  when  neither  the  latter  state  nor  its  citizens  will 
suffer  any  inconvenience  from  the  application  of  the  foreign 
law.  The  question,  then,  becomes  one  of  comity  between  the 
different  states,  and  it  is  upon  such  considerations  alone  that 
the  courts  of  one  state  may  recognize  and  enforce  the  acts  of 
a  receiver  appointed  in  another  state,  when  no  detriment  is 
thereby  caused  to  the  citizens  of  the  state  in  which  the  func- 
tions of  the  foreign  receiver  are  asserted. 29  Thus,  a  receiver 
of  an  insolvent  corporation  appointed  under  the  laws  of  New 
Jersey,  with  power  to  take  possession  of  all  the  effects  of  the 
corporation,  and  to  convey  or  assign  all  its  property,  real  and 
personal,  may  assign  an  indebtedness  due  to  the  corporation 
from  a  citizen  of  New  York ;  and  the  courts  of  the  latter  state 
may  recognize  such  assignment  as  giving  to  the  purchaser  an 
equitable  right  of  action,  which  they  will  enforce  as  against  the 
debtor,  the  rights  of  citizens  of  New  York  not  intervening.^^ 


29Hoyt  V.  Thompson,  5  N.  Y., 
320,  reversing  S.  C,  3  Sandf.,  416; 
Willitts  V.  Waite,  25  N.  Y.,  577; 
Taylor  v.  Columbian  Insurance  Co., 
55  Me.,  290;  Irwin  v.  Granite  S.  P. 
Assn.,  56  N.  J.  Eq.,  244,  38  Atl., 
680;  The  Willamette  Valley,  (also 
sub.  nom.  Clark  v.  Chandler),  13  C. 
C.  A.,  635,  66  Fed.,  565,  29  U.  S. 
App.,  447,  affirming  S.  C,  62  Fed., 
293,  63  Fed.,  130;  Sands  v.  Greeley 
&  Co.,  31  C.  C.  A.,  424,  88  Fed.,  130, 
59  U.  S.  App.,  610.  And  see  Hoyt 
v.  Thompson's  Executor,  19  N.  Y., 
207;  Fawcett  v.  Supreme  Sitting,  64 
Conn.,  170,  29  Atl.,  614,  24  L.  R.  A., 
815.  And  see,  post,  §  239.  Where 
an  action  is  brought  by  stockholders 
against  a  corporation,  receivers  ap- 
pointed   in    foreign    states    are    not 


necessary  parties  to  such  action. 
Fitzgerald  v.  Fitzgerald  &  M.  C. 
Co.,  41  Neb.,  374,  59  N.  W.,  838. 

30  Hoyt  V.  Thompson,  5  N.  Y., 
320,  reversing  S.  C,  3  Sandf.,  416. 
"It  is  a  conceded  principle,"  says 
Ruggles,  C.  J.,  "that  the  laws  of  a 
state  have  no  force,  propria  vigore, 
beyond  its  territorial  limits.  But 
the  laws  of  one  state  are  frequently 
permitted,  by  the  courtesy  of  an- 
other, to  operate  in  the  latter  for 
the  promotion  of  justice,  where 
neither  that  state  nor  its  citizens 
will  suffer  any  inconvenience  from 
the  application  of  the  foreign  law. 
This  courtesy  or  comity  is  estab- 
lished not  only  from  motives  of  re- 
spect for  the  laws  and  institutions 
of  foreign  countries,  but  from  con- 


CHAP.  II.] 


COURTS. 


67 


Where,  however,  citizens  of  a  state,  who  are  creditors  of  a 
non-resident  debtor,  have  instituted  proceedings  in  attachment 
ag-ainst  the  debtor,  and  have  acquired  Hens  upon  his  property 
in  the  state  of  their  residence,  receivers  of  the  debtor,  appoint- 
ed in  the  foreign  state,  will  not  be  allowed  to  deprive  such 
creditors  of  their  rights,  and  the  courts  will  protect  the  lien 
acquired  by  their  own  citizens,  in  preference  to  the  claim  or 
right  asserted  by  the  foreign  receivers.^i  So  it  is  held  that  a 
foreign  receiver  of  a  non-resident  corporation  can  not  maintain 
a  bill  in  equity  to  set  aside  a  deed  of  general  assignment  for 
the  benefit  of  creditors  where  such  action  will  be  against  the 


siderations    of    mutual    utility    and 
advantage." 

SiWillitts  V.  Waite,  25  N.  Y., 
577 ;  Taylor  v.  Columbia  Insurance 
Co.,  14  Allen,  353 ;  Hunt  v.  Colum- 
bian Insurance  Co.,  55  Me.,  290; 
Choctaw  C.  &  M.  Co.  v.  Williams- 
Echols  D.  G.  Co.,  75  Ark.,  365,  87 
S.  W..  632 ;  Solis  v.  Blank,  199  Pa. 
.St.,  600,  49  Atl.,  302;  Frowert  v. 
Blank,  205  Pa.  St.,  299,  54  Atl., 
1000;  Stockbridge  v.  Beckwith,  6 
Del.  Ch.,  72,  33  Atl.,  620;  Sands  v. 
Greeley  &  Co.,  31  C.  C.  A.,  424.  88 
Fed.,  130,  59  U.  S.  App.,  610; 
Zacher  v.  Fidelity  T.  &  S.  Co.,  45 
C.  C.  A.,  480,  106  Fed.,  593;  Bald- 
win V.  Hosmer,  101  Mich.,  119, 
59  N.  W.,  432,  25  L.  R.  A., 
739;  Failey  v.  Fee,  83  Md.,  83, 
34  Atl.,  839,  32  L.  R.  A.,  311,  55  Am. 
St.  Rep.,  326 ;  Ward  v.  Pacific  M.  L. 
I.  Co.,  135  Cal.,  235,  67  Pac,  124; 
Grogan  v.  Egbert,  44  West  Va.,  75, 
28  S.  E.,  714,  67  Am.  St.  Rep.,  763. 
And  see  Thum  v.  Pyke,  8  Idaho,  11, 
66  Pac,  157;  Linville  v.  Hadden,  88 
Md.,  594,  41  At!.,  1097,  43  L.  R.  A., 
222;  Patterson  v.  Lynde,  112  111., 
196.  And  see,  post,  §  306&.  The 
observations  of  Mr.  Justice  Barrow, 
in    Hunt    v.    Columbian    Insurance 


Co.,  55  Me.,  290,  supra,  very  clearly 
illustrate  the  distinction  noticed,  as 
well  as  the  principles  on  which  it  is 
founded.  He  says,  p.  297 :  "The 
receivers,  who  assert  this  claim 
here,  are  merely  the  servants  of  the 
court  in  New  York,  having  legal  au- 
thority coextensive  only  with  the 
jurisdiction  of  the  court  by  whom 
they  were  appointed.  Upon  princi- 
ples of  comity,  often  recognized  and 
always  acted  on,  except  when  they 
come  in  conflict  with  paramount 
rights  of  suitors  in  our  courts,  they 
might  be  admitted  here  to  protect 
the  interests  and  enforce  the  claims 
of  the  corporation,  of  whose  affairs 
they  are  the  legal  guardians  there. 
But  equity  does  not  require  us  to 
permit  the  exercise  of  such  privi- 
leges to  the  detriment  of  our  own 
citizens,  who  are  pursuing  appro- 
priate legal  remedies  in  this  court." 
Under  the  statute  of  Massachusetts 
providing  that  attachments  shall  be 
dissolved  by  the  appointment  of  a 
receiver  to  take  possession  of  the  at- 
tached property,  it  is  held  that  the 
statute  applies  to  the  appointment 
of  the  same  person  as  ancillary  re- 
ceiver in   that   state   who   had   been 


68  RECEIVERS.  [chap.  II. 

interest  of  local  creditors."^  So  in  an  action  of  interpleader 
brought  in  California  by  a  sheriff  having  attached  funds  in  his 
possession  against  a  creditor  of  the  state  and  against  a  receiver 
appointed  in  Indiana  who  claimed  the  right  to  the  possession 
of  the  attached  property,  it  was  held  that  the  fund  should  be 
decreed  to  the  domestic  creditor.^s  Nor  can  the  Indiana  re- 
ceiver in  such  case  procure  the  appointment  in  California  of 
a  local  ancillary  receiver  in  order  to  obtain  possession  of  the 
fund  as  against  the  domestic  attaching  creditors.34  And  the 
doctrine  as  above  laid  down  has  been  applied  in  a  case  where 
the  appointment  of  the  receiver  had  been  followed  by  an  as- 
signment to  him  by  the  debtor  of  all  the  assets,  where  it  ap- 
peared that  the  assignment  was  not  intended  to  be  an  inde- 
pendent voluntary  conveyance  but  was  made  in  invitum  and 
was  executed  merely  in  aid  of  the  receivership.^S  So  it  is 
proper  for  the  courts  of  one  state  to  appoint  a  receiver  over 
the  assets  of  a  non-resident  corporation  over  which  a  receiver 
has  been  appointed  in  the  state  of  its  organization,  where 
such  appointment  will  result  in  the  protection  of  the  interests 
of  local  attaching  creditors.36  But  where  creditors  of  an  in- 
solvent debtor  have  voluntarily  submitted  themselves  to  the 
jurisdiction  of  a  foreign  court  by  which  a  receiver  has  been 
appointed  and  have  proved  their  claims  in  that  proceeding  and 
have  received  dividends  upon  them,  they  will  not  be  heard  to 
object  to  a  recovery  by  such  foreign  receiver  of  assets  located 
in  the  state  of  their  domicile.^'^  And  the  rule  as  above  an- 
nounced applies  only  where  the  receiver  is  compelled  to  resort 

appointed  in  a  foreign  state     Sec-  33  Lackmann  v.  Supreme  Council, 

ond  National  Bank  v.  Lappe  T.  Co.,  142  Cal.,  22,  75  Pac,  583. 

198  Mass.,  159,  —  N.  E.,  — .     But  34  Clark  v.  Supreme  Council,  146 

the  statute  does  not  apply  to  a  re-  Cal.,  598,  80  Pac,  931. 

ceiver  appointed  by  a  federal  court  35  Zacher  v.  Fidelity  T.  &  S.  V. 

in    Massachusetts.     Borden   v.    En-  Co.,  109  Ky.,  441,  59  S.  W.,  493. 

terprise  T.  Co.,  198  Mass.,  590,  —  36  Security     S.     &    L.     Assn.    v. 

N.  E.,  — .  Moore,  151  Ind.,  174,  50  N.  E.,  869. 

32  Borton    v.    Brines-Chase    Co.,  37  Wilson  v.  Keels,  54  S.  C,  545, 

175  Pa.  St.,  209,  34  Atl.,  597.  32  S.  E.,  702,  71  Am.  St.  Rep.,  816. 


CHAP.  II.]  COURTS.  69 

to  the  aid  of  the  foreign  court  to  enable  him  to  secure  pos- 
session of  assets;  and  where  the  property  in  a  foreign  state 
has  actually  been  reduced  to  his  possession,  he  may  stand  upon 
his  possessory  title  and  defend  his  possession  against  all  who 
can  not  prove  a  better  title.^^ 

§  47a.  Prior  receivership  in  one  state  excludes  control 
over  receiver  by  courts  of  another  state.  The  court  origi- 
nally appointing  a  receiver  in  one  state  retains  exclusive  juris- 
diction and  control  over  the  property  pertaining  to  the  receiver- 
ship in  that  state,  and  this  control  necessarily  excludes  the  sub- 
sequent action  of  the  courts  of  another  state.  The  court  whose 
jurisdiction  is  thus  originally  invoked  is  not  bound  or  conclud- 
ed by  the  judgment  of  a  court  of  another  state  against  the 
receiver,  who  has  been  appointed  ancillary  receiver  in  the  latter 
state,  even  though  the  receiver  was  a  party  to  the  cause  in 
which  such  judgment  was  rendered.  Such  a  judgment,  there- 
fore, is  not  an  adjudication  which  binds  the  assets  in  the  hands 
of  the  receiver  in  the  state  in  which  he  was  first  appointed.^^ 
And  an  ancillary  receiver  appointed  in  a  foreign  state  over  the 
property  of  a  railway  company  can  not  be  held  liable  for  dam- 
ages for  personal  injuries  suffered  in  the  state  of  the  original 
appointment  and  resulting  from  the  operation  of  the  road  in 
that  state  by  the  original  receiver. '^^ 

§  48.  Court  first  appointing  acquires  control;  receiver 
not  subject  to  order  of  other  court;  test  as  to  priority.  As 
between  different  courts  appointing  the  same  person  receiver 
in  different  actions,  it  is  held  that  the  court  first  appointing  him 
acquires  exclusive  control  over  the  fund  and  the  receiver  hold- 
ing it,  and  it  will  not  permit  such  control  to  be  interfered  with 
by  the  subsequent  appointment  of  the  same  person  in  another 
cause,  but  will  in  the  exercise  of  its  powers  proceed  to  disburse 

38  Sands  v.  Greeley  &  Co.,  31  C.  firming  S.  C,  43  N.  J.  Eq.,  211,  10 
C.  A.,  424,  88  Fed.,  130,  59  U.  S.  Atl.,  385;  Shinney  v.  North  Amer- 
App.,  610.  ican  S.,  L.  &  B.  Co.,  97  Fed.,  9. 

39  Reynolds  v.  Stockton,  140  U.  40  Union  Trust  Co.  v.  Atchison, 
S.,  254,  11   Sup.   Ct.  Rep.,  773,  af-  T.  &  S.  F.  R.  Co.,  87  Fed.,  530. 


70  RECEIVERS.  [chap.  II. 

the  fund  as  may  be  proper.^i  Indeed,  when  a  court  of  compe- 
tent jurisdiction  has  appointed  a  receiver,  who  is  in  possession 
of  and  administering  the  property  under  its  orders,  another 
court  of  co-ordinate  jurisdiction  will  not  entertain  a  bill  to 
administer  the  same  property,  and  to  take  it  from  the  posses- 
sion of  the  former  receiver,  and  to  appoint  its  own  receiver.^2 
In  such  a  case,  the  parties  aggrieved  should  seek  relief  in  the 
court  which  is  already  in  possession  of  the  property  through 
its  receiver.4^  So  the  prior  jurisdiction  of  a  court  of  equity 
powers  over  the  subject-matter  of  the  appointment  of  a  receiv- 
er, and  the  pendency  of  a  motion  for  an  injunction  and  a  re- 
ceiver in  such  court,  exclude  the  interference  of  that  court  in 
a  subsequent  suit  for  the  same  relief.  And  the  appointment 
of  a  receiver  in  the  suit  thus  subsequently  begun  will  be  held 
inoperative  as  against  the  appointment  made  in  the  former 
cause.^^  So  if  the  court  first  appointing  a  receiver  has  juris- 
diction, its  receiver  will  not  be  dispossessed  of  the  property 
at  the  suit  of  a  receiver  subsequently  appointed  by  a  court  of 
co-ordinate  jurisdiction ;  and  this  is  true,  regardless  of  whether 
the  original  appointment  was  or  was  not  erroneous.^^  And 
the  test  as  to  priority  is  not  to  be  found  in  the  first  actual,  man- 
ual possession  of  the  res,  but  the  court  which  first  asserts  ex- 
clusive control  by  reason  of  having  taken  cognizance  of  the 
subject-matter  of  the  litigation  is  entitled  to  proceed  wath  the 
administration  of  the  estate.^^  Thus,  where  a  bill  had  been 
filed  and  served  and  an  order  had  been  served  upon  the  de- 

41  O'Mahoney  v.  Belmont,  37  N.  v.  Van  Kleeck,  133  Mich.,  27,  94  N. 
Y.  Supr.  Ct.  R.,  380;  Fernald  v.  W.,  367,  See  Morgan  z^.  Gibian,  115 
Spokane  &  B.  C  T.  Co.,  31  Wash.,      Ga.,  145,  41  S.  E.,  495. 

219,  71  Pac,  731.  44  Young  v.  Rollins,  85  N.  C.,  485. 

42  Worth  V.  Piedmont  Bank,  121  45  Bonner  v.  Hearne,  75  Tex., 
N.  C.,  343,  28  S.  K,  488.  242,  12  S.  W.,  38. 

43  Young  V.  M.  &  E.  R.  Co.,  2  46  Northwestern  Iron  Co.  v.  L. 
Woods,  606 ;  State  v.  Reynolds,  209  &  R.  I.  Co.,  92  Wis.,  487,  66  N.  W., 
Mo.,  161,  114  S.  W.,  1097;  Missouri  515;  Palmer  v.  State,  212  U.  S.,  118, 
Pac.  R.  Co.  V.  Love,  61  Kan.,  433,  29  Sup.  Ct.  Rep.,  230,  modifying  and 
59  Pac,  1072;  Gates  v.  McGee,  15  affirming  S.  C,  85  C.  C.  A.,  603,  158 
S.  Dak.,  247,  88  N.  W.,  115;  McKay  Fed.,  705.    hnd  stt,  post,  %  SO. 


CHAP.  II.]  COURTS.  •  71 

fendants  requiring-  them  to  show  cause  why  a  receiver  should 
not  be  appointed,  this  was  held  to  amount  to  an  equitable  levy 
although  no  receiver  had  been  appointed  and  there  was  no 
manual  seizure  of  the  property,  and  the  subsequent  appoint- 
ment of  a  receiver  by  another  court  was  unauthorized  and  ir- 
regular and  should  have  been  set  aside  upon  the  proper  show- 
ing. But  in  such  case  the  order  appointing  the  receiver  in  the 
latter  proceeding  is  not  to  be  regarded  as  a  nullity  and  the 
receiver  himself  is  deemed  a  de  facto  officer  and  all  his  lawful 
acts  and  contracts  should  be  considered  as  binding  in  the  fur- 
ther administration  of  the  estate  and  he  is  entitled  to  reason- 
able compensation  for  his  services.'*'^  And  a  federal  court 
will  not  entertain  a  bill  brought  against  receivers  previously 
appointed  by  the  federal  court  of  another  circuit  the  object 
of  which  is  to  compel  them  to  adopt  a  particular  course  for 
the  recovery  of  property  and  assets,  and  the  fact  that  the  court 
appointing  the  receiver  has  granted  leave  for  the  institution  of 
such  a  proceeding  will  not  be  sufficient  to  confer  jurisdiction 
upon  the  court. ^^  And  a  receiver  being  an  officer  of  court, 
and  being  bound  to  account  to  the  court  appointing  him  for 
all  funds  which  he  receives  in  his  official  capacity,  he  can  not 
be  compelled  by  an  order  of  another  court  to  pay  over  money 
in  his  hands  as  receiver  in  satisfaction  of  an  execution  issued 
upon  a  judgment  of  such  other  court,  since  such  a  procedure 
would  necessarily  have  the  effect  of  producing  a  conflict  of 
jurisdiction,  and  would  prevent  the  receiver  from  compliance 
with  the  obligations  of  his  bond  given  to  the  court  appoint- 
ing him.49 

§  49.  New  York  code  of  procedure;  court  first  moving 
has  exclusive  control ;  rule  not  applicable  where  parties  are 
not  the  same.  Under  the  New  York  code  of  procedure,  the 
appointment  of  a  receiver,  like  the  granting  of  an  injunction,  is 

47  Northwestern  Iron  Co.  v.  L.  &  49  Nelson     v.     Connor,     6     Rob. 
R.  I.  Co.,  92  Wis.,  487,  66  N.  W.,      (La.),  339. 

515. 

48  French  v.  Union  Pac.  R.  Co., 
92  Fed.,  26. 


72  RECEIVERS.  [chap.  II 

considered  as  one  of  the  provisional  remedies  of  the  courts, 
the  two  remedies  being  regarded  as  of  equal  weight  and  im- 
portance. And  since  the  courts  of  that  state,  under  the  code, 
are  regarded  as  having  acquired  jurisdiction  of  a  cause,  and 
as  having  control  of  all  the  subsequent  proceedings,  from  the 
time  of  service  of  process,  or  from  the  allowance  of  a  pro- 
visional remedy,  the  granting  of  an  injunction  by  a  court  of 
competent  jurisdiction  is  a  bar  to  appointing  a  receiver  in  a 
subsequent  proceeding  between  the  same  parties  in  another 
court;  and  the  court  first  moving  having  acquired  control  by 
the  granting  of  an  injunction,  the  second  court  will  decline 
to  interfere  by  a  receiver,  or  to  take  jurisdiction  of  the  cause.^^ 
But  the  rule  has  no  application  where  the  parties  in  the  two 
courts  are  not  the  same.^^ 

§  49a.  Receivers  in  United  States  courts  in  suits  con- 
cerning allotments  among  Indians  on  reservations.  Under 
the  act  of  congress^^  conferring  upon  the  circuit  courts  of  the 
United  States  authority  to  try  actions  arising  within  their 
jurisdictions  and  involving  the  right  of  any  person  not  wholly 
or  in  part  of  Indian  blood  or  descent  to  any  allotment  of  land 
under  any  law  or  treaty,  it  is  held  that  the  circuit  court  has 
full  power  to  determine  all  disputes  which  may  arise  con- 
cerning the  allotment  among  the  Indians  upon  reservations 
and  may,  in  the  proper  case,  appoint  a  receiver  as  an  incident 
to  that  power. 52 

50  McCarthy  v.  Peake,  18  How.  .  .  .  and  the  judgment  or  decree 
Pr.,  138;  S.  C,  9  Ab.  Pr.,  164.  of  any  such  court  in  favor  of  any 

51  Carter  v.  Dime  Savings  Bank,  claimant  to  an  allotment  of  land 
61  Neb.,  587,  86  N.  W.,  29.  shall    have    the    same    effect,    when 

52  The  Statute  in  question  pro-  properly  certified  to  the  Secretary 
vides  that  the  circuit  courts  of  the  of  the  Interior,  as  if  such  allotment 
United  States  shall  have :  "Jufis-  had  been  allowed  and  approved  by 
diction  to  try  and  determine  any  him."  Act  of  February  6,  1901, 
action,  suit,  or  proceeding  arising  c.  217,  31  Stat.,  760;  3  Fed.  Stat. 
within  their  respective  jurisdictions  Ann.,  503,  amending  act  of  August 
involving  the  right  of  any  person,  15,  1894,  c.  290,  28  Stat.,  286,  305. 
not  wholly  or  in  part  of  Indian  53  Smith  v.  United  States,  142 
blood  or  descent,  to  any  allotment  Fed.,  225. 

of   land    under   any   law    or   treaty 


CHAP.  II.]  COURTS.  73 


II.  Relative  Powers  of  State  and  Federal  Courts. 

§  50.     Court  first  acquiring  control  will  retain  it;  not  defeated  by  sub- 
sequent dissolution  of  corporation. 

51.  Proceedings  in  bankruptcy;  state  courts  assert  exclusive  juris- 

diction, if  first  acquired. 

52.  Jurisdiction  of  state  courts,  if  first  acquired,  recognized  by  Unit- 

ed States  courts. 

53.  Contrary  doctrine  asserted  by  United  States  courts. 

54.  The  general  doctrine  applied  to  cases  of  railway  mortgages. 

55.  Bill  for  account  not  entertained  by  United  States  court  against 

receiver  of  state  court. 

56.  When  bill    for   receiver  by   one  partner  in   state  court   an   act  of 

bankruptc}^ 

57.  Receiver  in  behalf  of  assignee  in  bankruptcy  of  a  copartnership. 

58.  Conflict  between  state  and  federal  court  ground  for  a  receiver. 

59.  Receiver  of  railway  appointed  by  United  States  court  not  sub- 

ject to  control  of  state  court. 

60.  The   same;   Wisconsin   doctrine. 

50a.  Federal  jurisdiction  in  action  by  receiver  of  United  States  court 

is  independent  of  citizenship  and  amount. 
60&.  Action  against  receiver  of  United  States  court  is  removable  regard- 
less of  citizenship  and  amount. 

61.  State  court  will  not  grant  writ  of  assistance  against  receiver  of 

United  States  court. 

62.  Right  of  action  of  receiver  of  United  States  court  no  greater 

than  of  state  court. 
62a.  Power  of  United  States  Supreme  Court  to  review  final  decision 
of  state  court. 

§  50.  Court  first  acquiring  control  will  retain  it;  not  de- 
feated by  subsequent  dissolution  of  corporation.  Ques- 
tions of  considerable  delicacy  and  importance  have  frequently 
arisen  under  our  peculiar  judicial  system,  touching  the  rela- 
tive powers  of  the  state  and  federal  courts  in  the  appointment 
of  receivers  over  the  same  subject-matter  in  litigation  in  both 
tribunals.  These  questions  have  usually  been  determined  upon 
principles  of  comity,  and  it  is  now  the  established  doctrine  of 
both  the  state  and  federal  courts,  that  that  court,  whether  state 
or  federal,  which  first  acquires  jurisdiction  of  the  subject-mat- 
ter, or  of  the  res,  and  which  is  first  put  in  motion,  will  retain 
its  control  to  the  end  of  the  controversy,  and  the  possession 


74 


RECEIVERS. 


[chap.  II. 


of  its  receiver  will  not  be  disturbed  by  the  subsequent  appoint- 
ment of  a  receiver  by  the  other  court.^*  Nor  is  it  necessary, 
in  the  application  of  the  general  doctrine  here  stated,  that  the 
court  asserting  its  exclusive  control  by  reason  of  having  been 
first  to  take  cognizance  of  the  subject-matter  should  be  the 


54  Keep  V.  Michigan  Lake  Shore 
R.  Co.,  U.  S.  Circuit  Court,  West- 
ern District  of  Michigan,  6  Chicago 
Legal  News,  101;  Bill  v.  New  Al- 
bany, etc.,  R.  Co.,  2  Biss.,  390; 
Union  Trust  Co.  v.  The  Rockford, 
Rock  Island  &  St.  Louis  R.  Co.,  6 
Biss.,  197;  S.  C,  7  Chicago  Legal 
News,  33;  Gaylord  v.  Fort  Wayne, 
M.  &  C.  R.  Co.,  6  Biss.,  286;  Sedg- 
wick V.  Menck,  6  Blatchf.,  156;  S. 
C,  1  Bank.  Reg.,  Second  Edition, 
675;  Alden  v.  Boston,  Hartford  & 
Erie  R.  Co.,  5  Bank.  Reg.,  230; 
Storm  V.  Waddell,  2  Sandf.  Ch., 
494;  Watkins  v.  Pinkney,  3  Edw. 
Ch.,  533;  Spinning  v.  Ohio  Life  In- 
surance &  Trust  Co.,  2  Disney,  336; 
May  V.  Printup,  59  Ga.,  129;  Adams 
V.  Trust  Co.,  15  C.  C.  A.,  1,  66  Fed., 
617;  Garner  v.  Southern  M.  B.  & 
L.  Assn.,  28  C.  C.  A.,  381,  84  Fed., 
3,  52  U.  S.  App.,  344;  Appleton 
Waterworks  Co.  v.  Central  T.  Co., 
35  C.  C.  A.,  302,  93  Fed.,  286; 
Hutchinson  v.  Green,  6  Fed.,  833 ; 
Lewis  V.  American  N.  S.  Co., 
119  Fed.,  391;  Cochran  v.  Pitts- 
burg, S.  &  N.  R.  Co.,  158  Fed., 
549;  Robinson  v.  Mutual  R.  L. 
I.  Co.,  162  Fed.,  794.  And  see 
Beecher  v.  Bininger,  7  Blatchf.,  170; 
In  re  Clark  and  Bininger,  4  Bene- 
dict, 88;  Eisenmann  v.  Thill,  1  Cin- 
cinnati Sup.  Ct.  R.,  188;  Conkling 
V.  Butler,  4  Biss.,  22;  Bruce  v.  M. 
&  K.  R.  R.,  19  Fed.,  342;  Judd  v. 
Bankers  &  Merchants  Telegraph 
Co.,  31  Fed.,  182.  But  see  Mer- 
chants &  Planters  National  Bank  v. 


Trustees,  63  Ga.,  549.  And  in  South 
Carolina  R.  Co.  v.  People's  Saving 
Institution,  64  Ga.,  18,  it  is  held  that 
the  pendency  of  a  bill  in  a  federal 
court  in  another  state  to  foreclose 
a  railway  mortgage  and  for  a  re- 
ceiver will  not  interfere  with  the 
operation  of  the  attachment  laws, 
when  the  attachments  are  levied  be- 
fore a  receiver  is  appointed  in  the 
former  suit.  In  Lake  National  Bank 
V.  Wolfeborough  S.  Bank,  24  C.  C. 
A.,  195,  78  Fed.,  517,  33  U.  S.  App., 
734,  it  was  held  that  the  jurisdiction 
of  the  federal  court  was  not  ousted 
by  the  pendency  of  a  prior  suit  be- 
tween the  same  parties  in  a  state 
court,  where  the  plaintiff  in  that  ac- 
tion had  discontinued  his  suit  and 
the  defendant  had  filed  a  motion  to 
dismiss  and  the  receiver  had  never 
had  possession  of  the  res.  As  to 
the  relative  jurisdiction  of  a  state 
court  which  has  entered  judgment 
in  a  mechanics'  lien  proceeding  and 
a  federal  court  which  has  subse- 
quently appointed  a  receiver  who 
has  taken  possession  of  the  property 
in  question,  see  Rogers  &  Baldwin 
Hardware  Co.  v.  Cleveland  B.  Co., 
132  Mo.,  442,  34  S.  W.,  57,  31  L.  R. 
A.,  335,  53  Am.  St.  Rep.,  494.  In 
Guaranty  Trust  Co.  v.  Galveston  C. 
R.  Co.,  46  C.  C.  A.,  305,  107  Fed., 
311,  it  was  held  that  the  provision 
of  the  statute  of  Texas  authorizing 
the  appointment  of  receivers,  defin- 
ing their  powers  and  duties  and 
regulating  their  proceedings  is  not 
applicable    to    receiverships    in    the 


:hap.  II.] 


COURTS. 


75 


first  to  take  actual  possession  of  the  property  by  its  receiver.^S 
And  where,  subsequent  to  the  fihng  of  a  bill  for  a  receiver  in 
a  creditor's  suit  in  a  federal  court,  but  before  the  appointment 
in  that  court,  a  bill  is  filed  and  a  receiver  is  appointed  in  a  state 
court,  the  federal  tribunal  will  refuse  to  recognize  the  receiver 
of  the  state  court,  or  to  rescind  its  own  appointment,  even 
though  the  bill  as  originally  filed  in  the  federal  court  was  im- 
perfect, and  was  amended  subsequent  to  the  appointment  of  the 
receiver  by  the  state  court.56    And  a  federal  court,  having  ac- 


federal  courts.  In  Rogers  v.  Chip- 
pewa Circuit  Judge,  135  Mich.,  79, 
97  N.  W.,  154,  it  was  held  that  a 
state  court  should  not  grant  an  in- 
junction to  restrain  a  receiver  of  a 
telephone  company  who  had  been 
appointed  by  a  federal  court  from 
enforcing  a  higher  rate  for  service 
than  plaintiff  claimed  he  was  enti- 
tled to  charge,  since  his  remedy  in 
such  a  case  was  by  application  to 
the  court  which  was  administering 
the  estate. 

55  Union  Trust  Co.  v.  The  Rock- 
ford,  Rock  Island  &  St.  Louis  R. 
Co.,  6  Biss.,  197;  S.  C,  7  Chicago 
Legal  News,  33;  Gaylord  v.  Fort 
Wayne,  M.  &  C.  R.  Co.,  6  Biss., 
286;  Adams  v.  Trust  Co.,  15  C.  C. 
A.,  1,  66  Fed.,  617;  Lewis  v.  Amer- 
ican N.  S.  Co.,  119  Fed.,  391.  And 
see  Liggett  v.  Glenn,  2  C.  C.  A., 
286.  51  Fed.,  381,  4  U.  S.  App.,  438. 
And  see,  ante,  §  48.  But  see,  contra, 
Wilmer  v.  Atlanta  &  R.  A.  L.  R. 
Co.,  2  Woods,  409 ;  East  Tennessee, 
V.  &  G.  R.  Co.  V.  Atlanta  &  F.  R. 
Co.,  49  Fed.,  608,  where  it  is  held 
that  the  court  which  first  appoints 
the  receiver  and  obtains  possession 
of  the  property  will  retain  jurisdic- 
tion, notwithstanding  the  prior  in- 
stitution of  a  suit  and  prior  service 
of  process  or  the  granting  of  an  in- 


junction in  the  other  forum;  a  dis- 
tinction being  drawn  between  prior 
service  of  process,  whicn  gives  ju- 
risdiction over  the  person  only,  and 
prior  seizure  of  the  property  by  the 
appointment  of  a  receiver,  which 
gives  jurisdiction  over  the  res. 

56  Gaylord  v.  Fort  Wayne,  M. 
&  C.  R.  Co.,  6  Biss.,  286.  "The 
principle  upon  this  subject,"  says 
Drummond,  J.,  p.  290,  "is  prop- 
erly stated  in  the  opinion  of  the 
circuit  court  of  the  northern  dis- 
trict of  Illinois,  in  the  case  of  the 
Rockford,  Rock  Island  &  St. 
Louis  Railroad  Company,  report- 
ed in  the  7th  Chicago  Legal 
New-s,  33:  that  the  court  which 
first  takes  cognizance  of  the  con- 
troversy is  entitled  to  retain  ju- 
risdiction to  the  end  of  the  litiga- 
tion, and  incidentally  to  take  the 
possession  or  control  of  the  res, 
the  subject-matter  of  the  con- 
troversy, to  the  exclusion  of  all 
interference  from  other  courts  of 
concurrent  jurisdiction;  and  that 
the  proper  application  of  this 
principle  does  not  require  that  the 
court  which  first  takes  jurisdic- 
tion of  the  controversy  shall  also 
first  take  the  actual  possession  of 
the  thing  in  controversy.  Then 
the  question  is  as  to  the  applica- 


7^ 


RECEIVERS. 


[chap.  II. 


quired  jurisdiction  of  the  parties  and  of  the  subject-matter 
in  an  action  for  the  foreclosure  of  a  trust-deed  and  having  de- 
creed a  sale  of  the  mortgaged  premises,  will  not  surrender  its 
jurisdiction  in  favor  of  a  receiver  subsequently  appointed  by 
a  state  court,  although  no  receiver  has  been  appointed  by  the 
federal  court. ^7     And  where  a  federal  court  has  appointed  a 


tion  of  this  rule  or  principle  to 
the  present  case.  It  is  insisted 
that  because  the  bill  was  amend- 
ed, and,  between  the  date  of  the 
filing  of  the  bill  and  the  amend- 
ment, another  creditor  instituted 
a  suit  in  the  state  court,  and  had 
a  receiver  appointed  who  took 
possession,  therefore  this  court 
lost  jurisdiction  of  the  res,  and 
could  not  permit  the  imperfect  al- 
legations to  be  amended,  and 
thereby  affect  the  assumed  right 
of  the  state  court  over  the  res. 
The  only  question  that  arises  in 
this  aspect  of  the  case  is  whether 
the  federal  court  had  jurisdic- 
tion; if  it  had,  then  the  principle 
applies  that  no  other  court  of 
concurrent  jurisdiction  could  in- 
terfere with  the  res,  which  was 
the  subject-mater  of  the  con- 
troversy. It  is  to  be  presumed 
that  each  court  would  equally  pro- 
tect the  rights  of  the  creditors 
of  the  defendant.  But  which  court 
has  first  obtained  jurisdiction  and 
has  the  right  to  call  upon  credit- 
ors to  come  before  it  for  the  pro- 
tection of  their  rights?  In  de- 
ciding this  question  we  have  to 
lay  down  a  rule  which  would 
apply  to  both  courts,  state  and 
federal;  by  which  we  would  be 
bound  if  the  state  court  first  ob- 
tained jurisdiction  of  the  res,  and 
by  which  the  state  courts  should 
also   be  bound   when   the  federal 


court  has  first  obtained  jurisdic- 
tion; and  we  are  not  prepared  to 
hold  that,  because  the  allegations 
in  the  bill  are  imperfectly  stated, 
or  because  an  amendment  is  made 
to  the  bill,  that  thereby  the  court 
loses  jurisdiction  of  the  subject- 
matter.  All  amendments  ger- 
mane to  the  bill  and  allowed  by 
the  court  relate  back  to  the  time 
when  the  bill  was  filed,  and  are 
considered  as  incorporated  in,  and 
a  part  of,  the  original  bill.  And 
it  can  not  affect  the  question  that 
the  amendment  asks  that  the  re- 
ceiver shall  do  something  else,  as 
by  adopting  a  change  in  the  man- 
ner in  administering  the  assets. 
We  think  that  there  is  no  other 
safe  rule  to  adopt  in  our  mixed 
system  of  state  and  federal  juris- 
prudence, than  to  hold  that  the 
court  which  first  obtains  jurisdic- 
tion of  the  controversy,  and 
thereby  of  the  res,  is  entitled  to 
retain  it  until  the  litigation  is  set- 
tled. .  .  .  Of  course,  in  all 
that  has  been  said  it  is  assumed, 
what  was  the  fact  in  this  case, 
that  the  bill  was  not  only  filed 
first  in  this  court,  but  that  the 
process  was  issued  and  duly 
served  upon  the  parties,  and  that 
they  were  in  court  subject  to  its 
jurisdiction  before  any  proceed- 
ing was  instituted  in  the  state 
court." 
57  Holland    Trust    Co.    v.    Inter- 


CHAP.  II.]  COURTS.  77 

receiver  of  a  corporation,  its  prior  jurisdiction  will  not  be  de- 
feated by  a  decree  dissolving  the  corporation  entered  in  a  re- 
ceivership proceeding  subsequently  instituted  for  that  purpose 
in  a  state  court,  since  the  receivership  proceedings  involve  the 
property  of  the  corporation  and  not  the  corporation  itself. ^^ 

§  51.  Proceedings  in  bankruptcy;  state  courts  assert 
exclusive  jurisdiction,  if  first  acquired.  The  doctrine  un- 
der consideration  has  been  frequently  applied  in  cases  where 
proceedings  in  bankruptcy  have  been  instituted  against  a  de- 
fendant debtor  in  the  United  States  courts,  subsequent  to  the 
appointment  of  a  receiver  over  the  debtor's  effects  in  a  state 
tribunal,  and  in  such  cases  the  state  courts  have  uniformly  in- 
sisted on  maintaining  their  jurisdiction  and  disposing  of  the 
assets.^^  Thus,  where  a  receiver  was  appointed  upon  a  judg- 
ment creditor's  bill  in  a  state  court,  and  the  appointment  was 
completed  and  the  debtor's  property  vested  in  the  receiver,  but 
the  debtor  filed  his  petition  in  bankruptcy  subsequent  to  the 
filing  of  the  creditor's  bill,  and  was  adjudicated  a  bankrupt 
subsequent  to  the  appointment  of  the  receiver,  it  was  held  that 
the  assignee  in  bankruptcy  took  only  such  interests  as  the 
debtor  had  when  the  assignee  was  appointed,  and  therefore  took 
the  debtor's  property  subject  to  the  lien  acquired  by  the  credi- 
tor's suit;  and  the  receiver  was  therefore  directed  to  pay  the 
funds  realized  from  the  property  to  the  plaintiff  in  the  credi- 
tor's suit,  rather  than  to  the  assignee  in  bankruptcy.^^  So 
where  a  receiver  had  been  appointed  in  a  creditor's  suit,  and 
after  the  filing  of  the  creditor's  bill  the  defendant  debtors  filed 
their  petition  in  bankruptcy  in  the  federal  court,  it  was  held 
that  the  jurisdiction  acquired  by  the  latter  court  by  the  mere 

national  B.  &  T.  Co.,  29  C.  C.  A.,  50  Wash.,  642,  91  Pac,  774.     See, 

460,  85  Fed.,  865,  52  U.  S.  App.,  also,    Eisenmann    v.    Thill,    1    Cin- 

599.  cinnati  Sup.  Ct.  R.,  188;  Spinning 

58  Robinson  v.    Mutual   R.   L.    I.  v.  Ohio  Life  Insurance  and  Trust 
Co.,  162  Fed.,  794.  Co.,  2  Disney,  336. 

59  Storm    V.    Waddell,    2    Sandf.  60  Storm    v.    Waddell,    2    Sandf. 
Ch.,  494;   Watkins  v.   Pinkney,  3  Ch.,  494. 

Edw.  Ch.,  533;  Springer  v.  Ayer, 


78 


RECEIVERS. 


[chap.  II. 


filing  of  the  petition  did  not  oust  the  previously  acquired  control 
of  the  state  court  over  the  debtors'  property,  and  that  it  was 
at  liberty  to  go  on  and  operate  upon  the  defendants  and  their 
property  until  it  became  vested  by  assignment  in  their  assignee 
in  bankruptcy.  And  without  passing  upon  the  right  of  the 
judgment  creditor  in  the  state  court  to  ultimately  maintain 
his  lien  upon  the  debtor's  property,  as  against  the  as- 
signee to  be  subsequently  appointed  in  bankruptcy,  it  was 
held  that  defendants  should  transfer  their  property  to  the  re- 
ceiver, notwithstanding  the  filing  of  their  petition  in  bank- 
ruptcy, ^i     And  when  the  state  court  has  been  the  first  to 


61  Watkins  v.  Pinkney,  3  Edvv. 
Ch.,  533.  This  was  a  motion  for 
an  attachment  against  defendants 
in  a  creditor's  bill,  for  refusing 
to  execute  an  assignment  of  their 
property  to  a  receiver,  the 
grounds  of  refusal  being  that, 
since  the  filing  of  the  creditor's 
bill,  the  defendants  had  filed  their 
petition  in  bankruptcy.  McCoun, 
Vice-Chancellor,  says,  p.  534: 
"The  question  is,  whether  the 
court  of  chancery,  under  such 
circumstances,  will  proceed  to 
compel  a  transfer  and  delivery  of 
property  of  the  bankrupt  to  a 
receiver,  for  the  benefit  of  a  par- 
ticular judgment  creditor.  1 
thought  proper,  as  it  was  some- 
what a  novel  question,  to  confer 
on  the  subject  with  the  learned 
judge  of  the  United  States  dis- 
trict court,  in  order  to  ascertain 
his  views  and  to  avoid  anything 
like  collision  with  the  United 
States  courts  in  the  exercise  of 
their  jurisdiction  under  the  bank- 
rupt law.  The  act  of  congress 
becomes  the  paramount  law,  to 
which  this  court  is  bound  to  give 
effect,  even  where  it  comes  in 
contact    with    the    statute    of    the 


state.  The  ground  taken  by  the 
defendant  is,  that  the  moment  a 
party  presents  his  petition  in 
bankruptcy  to  a  court  of  the 
United  States,  that  moment  he 
ousts  the  jurisdiction  of  the  state 
courts  over  him  and  his  property, 
and  gives  to  the  United  States 
courts  sole  and  entire  jurisdic- 
tion to  pass  what  property  he 
has  at  the  time  of  presenting 
his  petition,  to  the  assignee  to 
be  appointed  under  the  act.  But 
I  find  that  the  judges  of  the 
United  States  courts  are  not  dis- 
posed to  give  such  an  effect  to  the 
bankrupt  law,  because  it  is  in 
the  power  of  the  bankrupt  to 
withdraw  his  petition;  and  if  he 
could,  by  merely  presenting  his 
petition,  defeat  the  state  court,  he 
could  at  any  time  afterwards 
withdraw  it,  and  thus  defeat  the 
operation  also  of  the  bankrupt 
law.  The  jurisdiction  which  the 
district  court  acquires  on  the 
presentation  of  a  bankrupt's  peti- 
tion is  not,  therefore,  such  as  to 
defeat  proceedings  which  may 
have  been  commenced  against 
him  in  this  court  by  creditor's 
bill  and  which  are  pending  at  the 


CHAP.  II.] 


COURTS. 


79 


accjuire  control  over  the  subject-matter,  and  has  appointed  its 
receiver,  who  has  taken  charge  of  the  property  in  controversy, 
a  receiver  subsequently  appointed  by  the  United  States  court 
may  be  punished  for  contempt  if  he  interferes  with  the  receiver 


time  he  presents  his  petition. 
This  court  is  to  go  on  and 
operate  upon  the  defendant  and 
his  property  until  such  time  as 
he  shall  make  his  assignment; 
and  thus  vest  it  in  the  assignee  in 
bankruptcy  under  the  decree  of 
the  United  States  court.  This 
proceeding  is,  nevertheless,  sub- 
ject to  all  questions  that  may 
arise  under  the  bankrupt  law, 
between  the  receiver  appointed 
by  this  court  or  the  creditors 
prosecuting  here,  and  the  as- 
signee in  bankruptcy.  It  does 
not  follow,  from  anything  ex- 
pressed in  the  act  of  congress, 
that  the  proceedings  in  bank- 
ruptcy are  to  interfere  with  the 
proceedings  in  rem  against  a 
debtor  in  the  state  courts.  They 
may,  therefore,  go  on  without 
being  considered  as  coming  in 
collision  with  the  United  States 
courts  under  the  bankrupt  law. 
But  after  the  debtor's  property 
has  been  passed  by  decree  to  the 
assignee  in  bankruptcy,  this  as- 
signee can  bring  an  action  against 
the  party  who  has  got  possession 
of  the  property  of  the  debtor 
under  the  proceedings  here,  and 
the  question  will  come  up  in 
such  action,  or  by  petition,  either 
to  the  United  States  court  or  to 
this  court,  and  it  will  then  be  de- 
termined whether  the  bankrupt 
law  is  to  distribute,  or  the  par- 
ticular creditor  is  to  have  the 
benefit  of  it.  In  the  English 
courts,  actions  are  very  frequent- 


ly brought  by  assignees  of  bank- 
rupts' estates  to  recover  property 
which  has  got  into  the  hands  of 
a  creditor  or  other  person  to 
whom  the  debtor  had  no  right  to 
make  an  assignment.  The  ques- 
tion now  before  this  court  is 
merely  one  in  relation  to  the 
manner  of  proceeding,  and 
whether  this  court  is  to  withhold 
its  jurisdiction  and  say,  'we  have 
no  jurisdiction  in  the  case;  the 
debtor  has  presented  his  petition 
to  a  court  of  the  United  States, 
and  we  have  no  further  jurisdic- 
tion in  the  matter.'  It  remains, 
however,  yet  to  be  determined 
whether  the  jurisdiction  which 
the  court  of  chancery  had  is 
taken  away.  And,  until  it  is  de- 
termined, the  court  of  chancery 
will  go  on  with  this  proceeding, 
but  without  prejudice  to  the 
rights  of  the  assignee  in  bank- 
ruptcy to  be  hereafter  appointed. 
Whether  the  creditor  can  main- 
tain his  right  to  what  may  pass 
to  the  receiver  in  this  cause  must 
be  a  subject  for  future  considera- 
tion; but  as  a  matter  of  practice 
here,  we  must  go  on  without  ref- 
erence to  the  defendant's  pro- 
ceeding in  the  district  court  of 
the  United  States.  I  must,  there- 
fore, order  that  the  defendant  ap- 
pear before  the  master  and  do 
what  is  required  of  him,  and 
make  a  transfer  of  such  property 
as  he  has  and  as  the  master  may 
direct,  otherwise  the  attachment 
must  issue."     It   was   held,   how- 


80  RECEIVERS.  [chap.  II. 

previously  appointed  by  the  state  court.^^  gg  when  a  receiver 
is  appointed  in  a  state  court,  and  after  such  order,  but  before 
the  fihng  of  the  receiver's  bond,  the  property  in  controversy, 
consisting  of  boats,  is  hbeled  under  process  from  a  United 
States  district  court,  upon  filing  his  bond  the  receiver's  title  re- 
lates back  to  the  date  of  his  appointment.  And  the  court  may, 
in  such  case,  enjoin  the  creditors  from  proceeding  with  their 
action  in  the  United  States  court.^^ 

§  52.  Jurisdiction  of  state  courts,  if  first  acquired,  rec- 
ognized by  United  States  courts.  The  federal  courts  have 
generally  recognized  the  doctrine  under  discussion,  and  have 
almost  uniformly  conceded  the  jurisdiction  of  the  state  tribu- 
nals when  the  latter  have  first  acquired  control  over  the  sub- 
ject-matter and  the  parties,  or  when  the  receiver  of  the  state 
court  has  first  acquired  possession  of  the  assets,  even  when 
the  conflict  of  jurisdiction  has  been  presented  to  the  United 
States  court  in  the  course  of  proceedings  in  bankruptcy  there. 
Thus,  when  a  state  court  has  acquired  prior  jurisdiction  over 
the  affairs  of  an  insolvent  corporation,  and  has  appointed  a  re- 
ceiver, w^ho  is  in  possession  and  control  of  the  property,  a 
federal  court  will  not  thereafter  entertain  a  bill  for  a  receiver 
over  the  corporation.^*  And  the  undoubted  weight  of  author- 
ity in  the  federal  courts  supports  the  proposition  that  when 
the  state  courts  have  properly  acquired  control  over  the  sub- 
ject-matter in  controversy,  and  have  appointed  receivers  who 
are  in  possession  of  the  property  or  fund  at  the  time  of  insti- 
tuting proceedings  in  bankruptcy,  the  United  States  courts 
will  not  interfere  with  the  jurisdiction  already  acquired  by  the 
state  courts,  but  will  respect  the  title  of  their  receivers  and 

ever,  that  if  the  debtor  had  been  62  Spinning  v.   Ohio   Life   Insur- 

declared  a  bankrupt,  and  had  de-  ance  &  Trust  Co.,  2  Disney,  336. 

livered    his    property    to    his    as-  63  Jn  re  Schuyler's  S.  T.  B.  Co., 

signee,    this    would    excuse    him  136  N.  Y.,  169. 

from    making    an    assignment    to  64  Judd    v.    Bankers    &    Merch- 

the   receiver,   since   the   bankrupt  ants  Telegraph  Co.,  31  Fed.,  182. 
court  would,  in  this   event,  have 
put  it  out  of  his  power  to  make 
such  assignment. 


CHAP.  II.]  COURTS.  81 

their  right  to  manage  and  control  the  property,  at  least  until  it 
is  impeached  for  some  cause  for  which  it  is  impeachable  under 
the  bankrupt  act.  The  jurisdiction  of  the  state  court  having 
properly  attached,  and  its  right  to  appoint  receivers  not  being 
questioned,  the  property  of  defendants  is  regarded  as  being 
lawfully  in  possession  of  that  court  by  its  receivers,  and  the 
federal  court  has  no  such  superior  jurisdiction  or  supervisory 
power  over  the  state  tribunal  as  will  warrant  it  in  taking  the 
property  out  of  the  receivers'  possession,  or  interfering  with  its 
management.65  fhe  bankrupt  court  will  not,  therefore,  upon 
the  petition  of  the  assignee  in  bankruptcy,  direct  its  marshal  to 
take  the  assets  out  of  the  hands  of  the  receivers,  and  it  may  en- 
join the  bankrupts  from  interfering  with  the  property  in  the 
possession  of  the  receivers.^^  go  when  a  receiver  is  appointed 
by  a  state  court  over  mortgaged  premises,  in  an  action  for  the 
foreclosure  of  a  mortgage,  he  will  not  be  dispossessed  by  an 
assignee  in  bankruptcy  subsequently  appointed  over  the  mort- 
gagor's estate  in  a  federal  court.67  And  when  a  state  court, 
through  its  receiver,  is  in  possession  of  the  property  of  a  judg- 
ment debtor,  who  is  afterwards  adjudged  a  bankrupt  by  a 
federal  court,  the  latter  court  will  not  sanction  the  forcible 
seizure  of  the  property  in  the  receiver's  possession  and  its  de- 
livery to  the  assignee,  but  will  leave  the  assignee  to  assert  his 
title  by  proceedings  in  accordance  with  the  bankrupt  act.^^ 
So  it  is  held  that  an  assignee  in  bankruptcy  is  not  entitled  to  a 

65  Sedgwick  v.  Menck,  6  Blatchf.,  67  Davis  v.  The  Railroad  Com- 
156;  S.  C,  1  Bank.  Reg.,  Second  pany,  1  Woods,  661. 
Edition,  675;  Beecher  t;.  Bininger,  68 /«  re  Hulst,  7  Benedict,  17. 
7  Blatchf.,  170;  Alden  v.  Boston,  But  in  such  case,  in  an  examina- 
Hartford  &  Erie  R.  Co.,  5  Bank.  tion  before  the  register  in  bank- 
Reg.  230;  In  re  Clark  &  Bininger,  ruptcy,  concerning  the  affairs  of 
4  Benedict,  88;  Davis  v.  The  Rail-  the  bankrupt,  the  receiver  may  be 
road  Company,  1  Woods,  661.  But  examined  as  a  witness,  and  may 
see,  contra,  In  re  Merchants  In-  be  compelled  to  produce  the 
surance  Co.,  3  Biss.,  162;  Piatt  v.  books  of  the  bankrupt  for  exami- 
Archer,  9  Blatchf.,  559.  nation.     In  re  Hulst,  7  Benedict, 

66 /,t    re    Clark    &    Bininger,    4  40. 
Benedict,  88. 

Receivers — 6. 


82  RECEIVERS.  [chap.  II. 

receiver  in  the  first  instance,  upon  a  bill  filed  by  him,  to  take 
possession  of  the  bankrupt's  property  held  by  receivers  appoint- 
ed in  a  state  court  before  the  proceedings  in  bankruptcy.  And 
the  fact  that  defendants  in  such  suit,  as  receivers  of  the  state 
court,  assert  a  prior  jurisdiction  acquired  by  that  tribunal,  and 
claim  thereupon  the  pov^er  of  the  state  court  to  administer  it, 
constitutes  no  ground  for  the  interference  of  the  United  States 
court  by  appointing  a  receiver  in  limine,  especially  when  it  is 
not  shown  that  the  property  is  in  peril  of  waste  or  loss  in  cus- 
tody of  the  state  court,  or  that  the  receivers  are  violating  their 
duty,  or  that  they  are  irresponsible  or  threaten  the  removal  of 
the  property.  ^9  /^i^(^  a^^  action  can  not  be  maintained  in  the 
United  States  courts,  in  behalf  of  an  assignee  in  bankruptcy,  to 
compel  a  receiver  appointed  by  a  state  court  in  a  creditor's  suit, 
before  the  proceedings  in  bankruptcy,  to  deliver  up  the  property 
of  the  debtor  to  the  assignee. '''^  It  would  seem,  however,  to  be 
otherwise  when  the  proceedings  in  the  state  court  are  entirely 
unauthorized  and  void,  and  in  such  case  the  decree  of  the  state 
court  appointing  a  receiver  is  held  to  constitute  no  defense  to 
an  action  by  the  assignee  against  the  receiver  concerning  the 
property. '^1 

§  53.  Contrary  doctrine  asserted  by  United  States 
courts.  While,  as  is  thus  shown,  the  federal  courts  sitting 
in  bankruptcy  have  generally  recognized  the  jurisdiction  of  the 
state  tribunals,  and  the  possession  of  their  receivers,  when  ac- 
quired previously  to  the  bankruptcy  proceedings,  there  have 
been  cases  holding  a  contrary  doctrine,  and  insisting  upon  the 
exclusive  control  of  the  federal  court,  even  though  the  state 
court  had  first  acquired  jurisdiction,  and  though  its  receiver 
was  first  in  possession.  Thus,  it  has  been  held  that  the  ap- 
pointment of  a  receiver  over  an  insolvent  corporation  by  a 
state  court,  under  proceedings  instituted  by  the  attorney-gen- 

69  Beecher       v.        Bininger,        7  T'O  Sedgwick  v.  Menck,  6  Blatchf., 

Blatchf.,  170.     See  contra,  Piatt  v.  156;  S.  C,  1   Bank.  Reg.,  Second 

Archer,  9  Blatchf.,  559,  where  the  Edition,  675. 

assignee    was    himself    appointed  "J"!  Buchanan  v.   Smith,   16  Wall, 

a  receiver  in  such  a  case.  309;  S.  C,  7  Bank.  Reg.,  513. 


CHAP.  II.]  COURTS.  83 

eral  of  the  state  for  the  dissolution  of  the  corporate  body  in 
conformity  with  the  laws  of  the  state,  was  a  "taking  on  legal 
process,"  within  the  meaning  of  the  thirty-ninth  section  of  the 
national  bankrupt  act  of  1867;  and  that  such  a  case  did  not 
present  a  question  of  concurrent  jurisdiction  between  the  state 
and  federal  tribunals,  since  the  exclusive  jurisdiction  of  the 
United  States  court  attaches  whenever  insolvency  intervenes, 
so  as  to  render  the  debtor  a  proper  subject  for  the  operation  of 
the  bankrupt  act.  And  while,  in  such  case,  the  federal  court 
may  recognize  the  proceedings  in  the  state  court,  so  far  as  the 
jurisdiction  there  is  attempted  to  be  exercised  for  the  dissolu- 
tion of  the  corporation,  it  is  held  that  it  will  not  allow  the  re- 
ceiver of  the  state  court  to  retain  control  of  the  assets  of  the 
corporation,  since  the  federal  tribunal  exercises  exclusive  juris- 
diction in  cases  of  bankruptcy. ''^  Sq  where  a  creditor  of  an 
insolvent  insurance  company  had  instituted  proceedings  to 
obtain  a  receiver  in  a  state  court,  and  to  set  aside  an  assignment 
by  the  company  of  all  its  property  to  a  trustee,  and  before  the 
state  court  had  taken  any  action  in  the  matter  a  bill  was  filed 
in  the  federal  court  by  non-resident  creditors  for  the  same  relief, 
that  court  took  jurisdiction  and  appointed  a  receiver,  notwith- 
standing the  pendency  of  the  action  in  the  state  court.'^^  The 
doctrine  of  the  cases  here  cited,  however,  is  plainly  repugnant 
to  the  weight  of  authority,  as  shown  in  the  preceding  section. 

§  54.  The  general  doctrine  applied  to  cases  of  railway 
mortgages.  As  illustrating  the  general  doctrine  under 
discussion,  when  a  trustee  in  a  deed  of  trust  securing  the  bond- 
holders of  a  railway  company  files  his  bill  for  a  foreclosure  in 
the  federal  court,  and  pending  this  proceeding,  and  without 
leave  of  this  court,  he  brings  an  action  to  foreclose  the  same 

72  In     re     Merchants     Insurance  of    a    corporation,     the    receiver 

Co.,  3  Biss.,  162.    And  see  Piatt  v.  previously  appointed  by  a  federal 

Archer,  9  Blatchf.,  559.     In  City  court  was  neither  a  necessary  nor 

Water  Co.  v.  State,  88  Tex.,  600,  a  proper  party. 
.32  S.  W.,  1033,  it  was  held  that  in  T3  Buck   v.    Piedmont   &   Arling- 

an    action    brought    by    the    state  ton  Life  Ins.  Co.,  4  Fed.,  849;  S. 

for  the  forfeiture  of  the   charter  C,  4  Hughes,  415. 


84  RECEIVERS.  [chap.  II. 

trust  deed  in  a  state  court,  where  he  obtains  a  receiver  and  a 
decree  of  foreclosure,  and  sells  the  property,  the  United  States 
court  nevertheless  retains  its  jurisdiction.  It  may,  therefore, 
upon  a  proper  show^ing  of  the  necessity  for  such  relief,  appoint 
a  receiver  upon  the  application  of  a  bondholder,  the  interfer- 
ence of  the  state  court  being  regarded  as  unauthorized,  and  as 
not  affecting  the  previously  acquired  jurisdiction  of  the  fed- 
eral court. "^-^  Nor  will  the  state  courts  entertain  an  action  for 
the  foreclosure  of  a  mortgage,  or  to  avoid  and  set  aside  a 
previous  foreclosure  by  the  mortgagee,  when  the  mortgaged 
premises  are  in  the  possession  of  a  receiver  duly  appointed  by 
a  United  States  court  having  jurisdiction  for  that  purpose, 
since  this  would  necessarily  disturb  the  possession  of  the  re- 
ceiver, which  is  the  possession  of  the  court  appointing  him. 
In  such  a  case  relief  should  be  sought  in  the  federal  court,  which 
is  the  more  appropriate  forum  for  determining  the  rights  of  the 
parties,  it  having  already  taken  possession  of  the  property  by 
its  receiver,  and  being  empowered  to  protect  the  interests  of  all 
parties  in  the  distribution  of  the  mortgage  fund.'^^ 

§  55.  Bill  for  account  not  entertained  by  United  States 
court  against  receiver  of  state  court.  When  a  state  court 
has  acquiredtjurisdiction  of  an  action  against  a  railway  com- 
pany for  the  forfeiture  of  its  franchise  and  for  a  receiver,  and 
has  appointed  a  receiver  and  declared  the  franchise  forfeited 
and  the  corporation  dissolved,  a  federal  court  will  not  entertain 
a  bill  against  the  receiver  and  the  railway  company  for  an 
accounting,  but  will  leave  the  person  aggrieved  to  pursue  his 

74  Bill  V.  New  Albany,  etc.,  R.  that  the  possession  of  a  railway 
Co.,  2  Biss.,  390.  See,  also,  Union  by  a  receiver  appointed  in  a  state 
Trust  Co.  V.  The  Rockford,  Rock  court  would  not  bar  proceedings 
Island  &  St.  Louis  R.  Co.,  6  Biss.,  for  the  foreclosure  of  a  mortgage 
197;  S.  C,  7  Chicago  Legal  News,  upon  the  property  of  the  railway 
33.  in   a   federal   court,   and   that   the 

75  Milwaukee  &  St.  Paul  R.  Co.  latter  court  might  proceed  with 
V.  Milwaukee  &  Minnesota  R.  Co.,  the  foreclosure,  but  without 
20  Wis.,  165.  But  in  Mercantile  interfering  with  the  receiver,  or 
Trust  Co.  V.  Lamoille  Valley  R.  with  his  possession  of  the  prop- 
Co.,  16  Blatchf.,  324,  it  was  held  erty. 


CHAP.  II.]  COURTS.  85 

remedy  by  applying  to  the  state  court,  which  alone  has  control 
over  the  receiver.'^^ 

§  56.  When  bill  for  receiver  by  one  partner  in  state 
court  an  act  of  bankruptcy.  Where  a  business  firm  is  in  a 
condition  of  actual  insolvency,  and  one  partner  files  a  bill  in  a 
state  court  for  a  dissolution  of  the  firm,  and  for  an  accounting 
and  a  receiver,  his  proceeding  is  regarded  as  an  act  of  bank- 
ruptcy within  the  meaning  of  the  bankrupt  law,  the  appoint- 
ment of  the  receiver  being  a  taking  of  the  debtor's  property  on 
legal  process,  and  its  effect  being  to  delay  and  defeat  the  opera- 
tion of  the  bankrupt  act."^"^ 

§  57.  Receiver  in  behalf  of  assignee  in  bankruptcy  of  a 
copartnership.  Upon  a  bill  by  the  assignee  in  bankruptcy 
of  a  copartnership  to  set  aside  an  assignment  for  the  benefit  of 
creditors,  made  by  the  firm  when  in  a  condition  of  insolvency, 
and  to  restrain  the  assignees  from  doing  anything  under  such 
assignment,  it  is  proper  that  a  receiver  be  appointed  by  the 
bankrupt  court  to  take  charge  of  the  property,  and  hold  it  for 
the  benefit  of  all  creditors  who  may  have  an  interest  therein."^^ 

§  58.  Conflict  between  state  and  federal  court  ground 
for  a  receiver.  A  conflict  of  jurisdiction  between  a  state 
and  federal  court  concerning  property  in  controversy,  there 
being  actions  pending  in  each  tribunal  by  conflicting  claimants 
to  the  property,  and  there  being  imminent  danger  of  collision 
between  the  executive  officers  of  the  different  courts  in  the  en- 
forcement of  the  process  of  their  courts,  has  been  held  suffi- 
cient ground  to  warrant  the  federal  court  in  granting  an  in- 
junction and  appointing  a  receiver  over  the  property,  when 
there  was  a  probability  of  a  bitter  and  long  continued  litiga- 
tion at  law,  and  the  property  was  of  a  perishable  nature  and  lia- 
ble to  be  rendered  entirely  valueless,  unless  taken  possession  of 
by  a  receiver  and  sold.'^^ 

76  Conkling  V.  Butler,  4  Biss.,  78  Sedgwick  v.  Place,  3  Bene- 
22.                                                              diet,  360. 

77  In  re  Bininger,  7  Blatchf.,  79  Crane  v.  McCoy,  1  Bond,  422. 
262. 


86  RECEIVERS.  [chap.  II. 

§  59.  Receiver  of  railway  appointed  by  United  States 
court  not  subject  to  control  of  state  court.  When  a  re- 
ceiver of  a  railway  company  is  appointed  by  a  United  States 
court,  and  he  is  charged  with  the  duty  of  operating  the  road, 
and  is  accountable  to  the  court  for  the  proceeds,  such  proceeds 
are  beyond  control  of  the  state  courts,  the  receiver's  possession 
being  the  possession  of  the  court  appointing  him.  The  state 
courts,  therefore,  have  no  authority  to  enforce  as  against  such 
receiver  the  payment  of  a  judgment  recovered  against  the 
railway  for  damages  resulting  from  the  killing  of  cattle,  even 
under  a  statute  of  the  state  providing  a  process  for  the  en- 
forcement of  judgments  against  railways  out  of  funds  in  the 
hands  of  their  receivers  or  agents.  The  judgment  creditor,  in 
such  case,  should  apply  to  the  federal  court,  either  for  leave 
to  sue  the  receiver,  or  for  an  order  on  him  to  pay  the  judg- 
ment.^<^  And  when  a  bill  has  been  filed  in  the  federal  court  for 
a  receiver  over  the  property  of  a  railway  company  and  after- 
wards an  injunction  is  granted  by  a  state  court  enjoining  the 
company  and  all  persons  acting  for  it  from  operating  the  line 
over  certain  property,  such  injunction  is  inoperative,  and  a 
receiver,  although  not  appointed  until  after  the  granting  of  the 
injunction,  can  not  be  held  guilty  of  contempt  for  continuing  to 
operate  the  road  in  violation  of  the  writ.^^ 

§  60.  The  same;  Wisconsin  doctrine.  It  has  been  held 
in  Wisconsin,  that  a  state  court  might  entertain  an  action 
against  a  receiver  of  a  railway  appointed  by  a  federal  court, 
and  might  proceed  to  judgment  therein,  without  leave  of  the 
latter  court  to  bring  such  action,  provided  there  was  no  actual 
interference  with  the  receiver's  possession.^2  'phis  doctrine  is, 
however,  plainly  repugnant  to  the  well-established  principle, 
hereafter  discussed,  that  no  action  can  be  maintained  against 
a  receiver  without  leave  of  the  court  from  which  he  derives  his 

80  Ohio  &  Mississippi  R.  Co.  v.  82  Kinney  v.  Crocker,  18  Wis., 
Fitch,  20  Ind.,  498.                                 74. 

81  State  V.   Miller,   54  Kan.,  244, 
38  Pac,  269. 


CHAP.  II.]  COURTS.  87 

appointment.^^  And  it  is  not  perceived  that  the  rule  requir- 
ing such  permission  as  a  condition  precedent  to  bringing  an  ac- 
tion against  a  receiver  is  in  any  manner  affected  by  the  fact 
that  he  may  have  been  appointed  by  a  federal  court  and  the  ac- 
tion be  brought  against  him  in  a  state  court,  or  vice  versa. 

§  60a.  Federal  jurisdiction  in  action  by  receiver  of  Unit- 
ed States  court  is  independent  of  citizenship  and  amount. 
Where  a  receiver  has  been  appointed  by  a  federal  court  in  a 
cause  which  properly  comes  within  the  jurisdiction  of  that 
court,  all  actions  brought  by  the  receiver  for  the  collection  and 
preservation  of  assets  or  for  the  protection  of  the  property  in 
his  custody  and  all  other  actions  which  may  become  necessary 
for  the  proper  administration  of  the  estate  under  his  control 
are  to  be  regarded  as  ancillary  to  the  main  cause,  and  are  there- 
fore not  dependent  upon  diversity  of  citizenship  or  the  amount 
involved,  and  accordingly  such  suits  may  be  instituted  and 
maintained  in  the  federal  courts  regardless  of  the  citizenship 
of  the  parties  or  the  amount  in  controversy.^* 

§  606.  Action  against  receiver  of  United  States  court 
is  removable  regardless  of  citizenship  and  amount.  The 
rule  announced  in  the  preceding  section  is  equally  applicable 
where  the  action  is  brought  against  the  receiver.  Where, 
therefore,  a  federal  court  has  appointed  a  receiver  and  through 
him  has  assumed  the  exclusive  control  and  management  of  the 
property  which  has  come  into  his  possession,  any  action  or 
proceeding  brought  against  the  receiver  which  in  any  way 
tends  to  control  his  official  conduct  in  the  management  of  the 
property  or  which  affects  his  administration  of  the  estate  in 
his  custody  is  held  to  be  ancillary  to  the  principal  action  and  as 
such  is  removable  to  the  federal  court  from  the  state  court  if 
instituted  there,  and  the  right  of  removal  exists  regardless  of 

83  See  §  254,  post,  and  authori-  687,  36  L.  R.  A.,  228;  Hampton 
ties  there  cited.  Roads    R.    &    E.    Co.    v.    Newport 

84  White  V.  Ewing,  159  U.  S.,  News  etc.,  Co.,  131  Fed.,  534; 
36,  15  Sup.  Ct.  Rep.  1018;  Keihl  Cole  v.  Philadelphia  &  E.  R.  Co., 
V.  City  of  South  Bend.  22  C.  C.  A.,  140  Fed.,  944;  Brown  v.  Allebach, 
618,  76  Fed.,  921,  44  U.  S.  App.,  156  Fed.,  697. 


88  RECEIVERS.  [chap.  II. 

the  citizenship  of  the  parties  or  the  amount  in  controversy. ^5 
Thus,  an  action  for  a  writ  of  mandamus  brought  by  the  attor- 
ney-general in  a  state  court  against  a  receiver  appointed  by  a 
federal  court  to  compel  compliance  with  a  statute  of  the  state 
is  removable.^^  So  an  action  brought  in  a  state  court  against 
the  receiver  of  a  railway  company  appointed  by  a  federal  court 
to  recover  damages  for  personal  injuries  in  an  amount  less 
than  two  thousand  dollars  may  be  removed. ^"^  And  where  the 
action  is  brought  against  the  receiver  and  against  others  who 
are  citizens  of  the  same  state  as  the  plaintiff  to  establish  a 
joint  liability  of  all  the  defendants,  the  action  is  still  to  be  re- 
garded as  one  arising  under  the  laws  and  constitution  of  the 
United  States  and  is  therefore  removable.^^ 

§  61.  State  court  will  not  grant  writ  of  assistance 
against  receiver  of  United  States  court.  When  a  receiver, 
acting  under  appointment  from  a  United  States  court,  is  in 
actual  possession  of  property,  a  state  court  will  not  grant  a  writ 
of  assistance  to  a  subsequently  appointed  receiver  in  the  state 
tribunal,  to  enable  him  to  get  possession  of  the  property.  The 
right  to  possession,  under  such  circumstances,  will  not  be  de- 
termined upon  a  mere  motion,  since  the  possession  of  the  re- 
ceiver of  the  federal  court  is  regarded  as  that  of  a  stranger,  and 
to  be  determined  only  by  an  action  and  not  upon  motion. ^^ 

§  62.  Right  of  action  of  receiver  of  United  States  court 
no  greater  than  of  state  court.  The  fact  that  a  receiver 
derives  his  appointment  from  a  United  States  court  does  not 

85  State    v.     Northern     Pac.     R.  of  removal  of  a  receiver  of  a  rail- 
Co.,    75    Fed.,    333;    Carpenter    v.  way  company,  see  post,  §  395c. 
N.-:rtb2rr.    Pic.    R.    Co.,    75    Fed.,  86  State  v.  Northern  Tac.  R.  Co., 
850;   Shmney  v.   i-^ori?^  A'tiK^/ican  75  Fed.,  333. 

S.,  L.  &  B.  Co.,  97  Fed.,  9 ;  Land-  87  Carpenter    v.     Northern     Pac. 

ers    V.    Felton,    73    Fed.,    311.      In  R.  Co.,  75  Fed.,  850. 

Gableman  v.  Peoria,  D.  &  E.   R.  88  Landers    v.    Felton,    73    Fed., 

Co.,  82  Fed.,  790,  the  court  qualify  311.      Contra,   Shearing  v.   Trum- 

the   rule  as  above  announced  by  bull,  75  Fed.,  33. 

limiting    it    to    cases    where    the  89  Gelpeke      v.       Milwaukee       & 

amount    in    controversy    exceeds  Horicon    R.    Co.,    11    Wis.,    454, 

the  jurisdictional  amount  of  two  opinion     of     Dixon,     C.     J.,    and 

thousand  dollars.    As  to  the  right  Paine,  J. 


CHAP.  II.]  COURTS.  89 

confer  upon  him  any  greater  power  or  privileges  in  respect  to 
bringing  actions  in  the  state  courts  than  if  he  were  appointed 
by  those  courts,  and  the  question  of  comity  between  the  two 
tribunals  will  not  be  considered  in  such  case.^*^ 

§  62a.  Power  of  United  States  Supreme  Court  to  re- 
view final  decision  of  state  court.  The  Supreme  Court  of 
the  United  States  is  empowered  to  review  the  final  judgment 
of  the  highest  court  of  a  state  in  all  cases  wherein  any  title, 
right,  privilege  or  immunity  is  claimed  under  any  authority 
exercised  under  the  United  States,  the  decision  in  which  court 
is  against  the  title,  right,  privilege  or  immunity  so  claimed. ^^ 
Under  this  power,  when  a  receiver  of  a  railway,  appointed  by 
and  operating  the  road  under  the  order  of  a  United  States  cir- 
cuit court,  claims  immunity  from  a  suit  against  him  in  a  state 
court  without  previous  leave  of  the  court  by  which  he  is  ap- 
pointed, and  when  the  decision  of  the  highest  court  of  the 
state  is  adverse  to  such  claim,  the  receiver  is  entitled  to  a  review 
of  such  ruling  upon  writ  of  error  from  the  Supreme  Court  of 
the  United  States.  But,  in  such  case,  the  question  whether  the 
receiver  is  liable  for  the  acts  of  his  predecessor  in  office  is  not 
a  question  of  federal  law,  but  one  of  general  jurisprudence.^^ 

90  Battle  V.  Davis,  66  N.  C,  252.  92  McNulta     v.     Lochridge,     141 

91  R.  S.  U.  S.,  §  709.  U.  S.,  327,  12  Sup.  Ct.  Rep.,  11. 


CHAPTER  III. 

OF  THE  SELECTION  AND  ELIGIBILITY  OF  THE  RECEIVER. 

§  63.     Reference  to  master  in  chancery  to  select;      English  and  New 
York  practice. 

64.  Interference  with  master's  selection. 

65.  Discretion   of   court   in  selection   of   receiver   rarely  interfered 

with;  may  consult  with  counsel. 

66.  When  appellate  court  may  interfere. 

67.  Relationship  to  the  parties  as  affecting  eligibility. 

68.  Person    in    defendant's    interest;    solicitor    eligible;    familiarity 

with  the  property. 

69.  Eligibility  as  affected  by   distant    residence;    residence    in      state 

unnecessary. 

70.  Person  not  eligible  whose  duty  it  is  to  watch  receiver;  solicitor; 

master  in  chancery;  barrister;  peer;  party  to  the  cause;  mem- 
ber of  reorganization  committee;  creditor. 

71.  Clerk  of  court  not  a  receiver  ex  officio;  clerk  and  master. 

72.  Officer  of  corporation  usually  ineligible  as  its  receiver;  when 

eligible;  shareholder;  creditor. 

73.  One  corporation  may  be  receiver  of  another. 

74.  Trustee  not  usually  eligible;  when  eligible. 

75.  Next  friend  of  infants  ineligible. 

76.  Mortgagee  eligible  as  receiver  of  mortgaged  premises. 

77.  Receiver  ox  debtor  ineligible  as  his  assignee  in  bankruptcy. 

78.  Administrator  of  deceased  partner  eligible  as  receiver  of  firm 

assets. 

79.  Particular  person  nominated  in  bill;  consent  of  parties. 

80.  Effect   of   interest   as   stockholder  and  director  of  a  plaintiff  cor- 

poration. 

81.  Mortgagee  of  foreign  estates  eligible. 

81a.  Objection  to  eligibility  must  be  made  in  apt  time;  how  waived. 

§  63.  Reference  to  master  in  chancery  to  select;  Eng- 
lish and  New  York  practice.  A  receiver  being  an  impar- 
tial person  as  between  the  parties,  and  being  the  officer  and  rep- 
resentative of  the  court  in  the  management  and  control  of  the 
property  or  fund  in  controversy,  considerable  importance  at- 
taches to  the  question  of  his  selection  as  v^ell  as  to  his  qualifica- 

90 


CHAP.  Ill,]  SELECTION  AND  ELIGIBILITY.  91 

tions  and  competency  for  the  management  of  the  trust  commit- 
ted to  his  charge.  The  usual  course  of  practice  in  the  EngHsh 
Court  of  Chancery,  with  reference  to  the  selection  of  a  re- 
ceiver, was  to  refer  the  matter  to  a  master  in  chancery  to  make 
the  selection.  The  parties  in  interest  in  the  cause  were  then  at 
liberty  to  appear  before  the  master  and  to  nominate  suitable 
persons  for  the  office,  whose  qualifications  and  competency  were 
passed  upon  by  the  master,  who  made  the  appointment  and  re- 
ported his  selection  to  the  court.^  A  similar  practice  also 
prevailed  under  the  New  York  chancery  system  prior  to  the 
adoption  of  the  code  of  procedure  in  that  state.2 

§  64.  Interference  with  master's  selection.  When  the 
case  has  been  referred  to  a  master  in  chancery  to  make  the 
appointment,  and  he  has  made  his  report  approving  and  recom- 
mending the  appointment  of  a  particular  person,  his  report  and 
approval  should  stand  until  the  person  so  recommended  is 
impeached  as  an  improper  person.^  And  the  courts  are  ex- 
ceedingly averse  to  interfering  with  the  discretion  exercised 
by  the  master  in  making  his  selection ;  and  when,  after  due  in- 
vestigation, he  has  made  the  appointment  and  reported  to  the 
court,  it  will  not  interfere  with  the  selection,  or  entertain  excep- 
tions to  the  appointment,  unless  some  good  and  substantial 
objection  can  be  shown.^  The  reason  for  the  reluctance  thus 
manifested  in  interfering  with  the  appointment  of  the  master 

1  For  illustrations  of  this  prac-  Dawkin,  3  Bro.  C.  C,  508.  And 
tice  in  the  English  Chancery,  see  see  McGilliard  v.  Donaldsonville 
Thomas  v.  Dawkin,  1  Ves.  Jun.,  F.  &  M.  Works,  104  La.,  544,  29 
452;  S.  C,  3  Bro.  C.  C,  508;  Gar-  So.,  254,  81  Am.  St.  Rep.,  145. 
land  V.  Garland,  2  Ves.  Jun.,  137;  •*  Tharpe  v.  Tharpe,  12  Ves., 
Anonymous,  3  Ves.,  515;  Wilkins  317;  In  re  Eagle  Iron  Works,  8 
V.  Williams,  id.,  588;  Tharpe  v.  Paige,  385;  Thomas  v.  Dawkin, 
Tharpe,  12  Ves.,  317;  Wynne  v.  1  Ves.  Jun.,  452.  And  see  Gar- 
Lord  Newborough,  15  Ves.,  283;  land  v.  Garland,  2  Ves.  Jun.,  137; 
Creuze  v.  Bishop  of  London,  2  Anonymous,  3  Ves.,  515;  Wilkins 
Bro.  C.  C,  253.  v.  Williams,  id.,  588.     In  Tharpe 

2  See   /«   re   Eagle   Iron   Works,  v.     Tharpe,     12     Ves.,     317,     the 
8  Paige,  385.  master  had   appointed  a  receiver 

3  Creuze    v.    Bishop    of    London,  of  the   estate  of  an  infant,   upon 
2    Bro.     C.     C,    253;     Thomas    v.  the  recommendation  of  the  only 


92 


RECEIVERS. 


[chap.  III. 


is  found  in  the  necessity  which  exists  on  the  part  of  the  courts 
of  intrusting  a  considerable  degree  of  discretion  to  the  judg- 
ment of  officers,  such  as  masters  in  chancery,  whom  they  have 
appointed  for  the  examination  of  complicated  matters  of  de- 
tail.^ The  court  will  not,  therefore,  disturb  an  appointment 
made  by  the  master  merely  because  it  may  be  of  opinion  that  a 
better  selection  could  have  been  made.  And  to  induce  the 
court  to  interfere,  it  must  either  be  shown  that  the  person  ap- 
pointed by  the  master  is  legally  disqualified,  or  that  his  situation 
is  such  as  to  render  it  probable  that  the  interests  of  the  parties 
to  the  litigation  will  not  be  properly  managed  if  intrusted  to 
his  hands.^  If,  therefore,  both  of  the  persons  proposed  to  the 
master  for  the  receivership  are,  as  to  character  and  qualifica- 
tions, of  equal  standing,  the  court  will  not  interfere  with  the 
appointment.'^  And  while  the  party  complaining  of  the  mas- 
ter's selection  will  not  be  precluded  from  making  a  special  case 
to  be  presented  impeaching  the  master's  judgment,  yet  upon 


trustee  named  in  the  testator's 
will,  who  had  acted  in  the 
management  of  the  estate.  Upon 
exceptions  to  the  master's  report 
as  to  the  appointment,  Lord  Er- 
skine  observed,  p.  319,  as  follows: 
"The  cases  cited  are  built  upon 
principles  that  are  not  peculiar 
to  this  court.  All  courts  place  a 
degree  of  discretion  in  officers 
appointed  for  the  management  of 
concerns  full  of  detail  and  compli- 
cated circumstances;  and  those 
who  impeach  the  judgment  of 
those  officers  upon  such  points 
must  show  a  reason  for  the  ex- 
ception. Lord  Anvanley,  there- 
fore, in  Bowersbank  v.  Colasseau, 
3  Ves.,  164,  states  truly  that  the 
judgment  of  the  master  is  to  be 
disturbed  only  upon  special 
grounds,  a  strong  case  to  show 
that  the  person  appointed  ought 
not  to  be  receiver,  and  the  court 


will  not  enter  comparisons.  No 
objection  appears  to  the  person 
appointed  in  this  instance.  He  is 
a  land  surveyor,  acquainted  with 
business  likely  to  qualify  him  for 
such  an  office;  a  fit  person,  there- 
fore, in  that  respect.  He  was 
recommended  to  the  master  by 
the  trustee,  in  whom  the  testator 
reposed  this  peculiar  trust;  not 
selected  by  the  master  at  his  own 
discretion  or  pointed  out  to  him 
by  accident.  His  residence  at  the 
distance  of  fourteen  miles  only 
is  no  objection.  The  person  pro- 
posed is,  therefore,  altogether  un- 
exceptionable." And  the  excep- 
tions were  overruled. 

5  Tharpe     v.     Tharpe,     12     Ves., 
317. 

6  In    re    Eagle    Iron    Works,    8 
Paige,  385. 

7  Thomas     v.     Dawkin,     1     Ves., 
Jun.,  452;  S.  C,  3  Bro.  C.  C.  508. 


CHAP.  III.]  SELECTION  AND  ELIGIBILITY.  93 

the  naked  allegation  that  the  person  rejected  by  the  master  was 
more  competent  than  another,  the  court  will  not  investigate  the 
particular  reason  why  he  preferred  the  one  to  the  other.^  If, 
however,  the  court  is  of  opinion  that  the  master  has  not  given 
proper  attention  to  the  circumstances  of  the  case  in  making  the 
appointment,  it  is  proper  to  require  him  to  revise  his  report.^ 
§  65.  Discretion  of  court  in  selection  of  receiver  rarely 
interfered  with;  may  consult  with  counsel.  The  consider- 
ations stated  in  the  preceding  section  as  applicable  to  the  ap- 
pointment when  made  by  a  master  in  chancery  upon  a  refer- 
ence are,  of  course,  equally  applicable  when  the  appointment 
is  made  by  the  court  itself  without  a  reference.  And  in  all 
such  cases  the  selection  and  appointment  of  a  particular  person 
for  the  receivership,  out  of  several  candidates  proposed,  is  re- 
garded as  a  matter  of  judicial  discretion,  to  be  determined  by 
the  court  according  to  the  circumstances  of  the  case.^*^  The 
exercise  of  this,  like  all  other  matters  of  judicial  discretion,  will 
rarely  be  interfered  with  by  an  appellate  tribunal. ^^  And  it 
may  be  asserted  as  a  general  rule,  that,  to  induce  an  appellate 
court  to  interfere  with  the  decision  of  an  inferior  tribunal  in 
the  selection  of  a  receiver,  it  is  necessary  to  show  some  "over- 
whelming objection"  in  point  of  propriety,  or  some  fatal  ob- 
jection upon  principle,  to  the  person  named.12     And  the  fact 

8  Anonymous,  3  Ves.,  515.  Pr.,  208.     As  to  the  inadvisability 

9  Wynne  .v.  Lord  Newbor-  of  appointing  more  than  one  re- 
ough,  15  Ves.,  283.  ceiver,    see   Battery   Park   Bank   v. 

10  Perry  v.  Oriental  Hotels  Co.,  Western  C.  Bank,  126  N.  C,  531, 
L.  R.,  5  Ch.  App.,  420;  Cookes  v.  36  S.  E.,  39.  For  considerations 
Cookes,  2  De  G.,  J.  &  S.,  526;  affecting  eligibility  as  constitut- 
Williamson  v.  Wilson,  1  Bland,  ing  ground  for  removal,  see  post, 
418;  Jones  v.  Purcell,  20  App.  D.  §  821. 

C,  209;  Patterson  v.  Northern  H  Cookes  v.  Cookes,  2  De  G.,  J. 
Trust  Co.,  230  111.,  334,  82  N.  E.,  &  S.,  526;  Perry  v.  Oriental  Ho- 
837;  Coltrane  v.  Templeton,  45  tels  Co.,  L.  R.,  5  Ch.  App.,  420. 
C.  C.  A.,  328,  106  Fed.,  370.  See,  12  Cookes  v.  Cookes,  2  De  G.,  J. 
as  to  personal  considerations  &  S.,  526;  McGilliard  v.  Donald- 
governing  the  court  in  the  choice  sonville  F.  &  M.  Works,  104  La., 
of  a  receiver,  Smith  v.  New  York  544,  29  So.,  254,  81  Am.  St.  Rep., 
Consolidated    Stage    Co.,    28    How.  145;    In    re    Eckhardt    Mfg.    Co., 


94 


RECEIVERS. 


[chap.  III. 


that  there  are  great  disputes  and  differences  between  the  parties 
in  interest,  one  of  whom  has  been  appointed  receiver,  does  not 
of  itself  constitute  suflicient  ground  for  reversing  the  appoint- 
ment made  by  the  court  below.^^  And  while  the  selection  must 
ultimately  rest  with  the  court,  there  is  no  objection  to  the 
court's  consulting  with  counsel  or  with  the  parties  interested  as 
to  the  fitness  of  the  person  to  be  appointed. ^^ 

§  66.  When  appellate  court  may  interfere.  When, 
however,  the  objection  urged  to  the  fitness  or  competency  of 
the  person  selected  by  the  inferior  court  is  presented  as  a  ques- 


114  La.,  119,  38  So.,  78;  Gypsum 
P.  &  S.  Co.  V.  Adsit,  105  Mich., 
497,  63  N.  VV.,  518;  Shannon  v. 
Hanks,  88  Va.,  338,  13  S.  E.,  437. 
Cookes  V.  Cookes,  2  De  G.,  J.  & 
S.,  526,  was  a  motion  before  the 
Court  of  Appeal  in  Chancery,  to 
discharge  an  order  of  the  Vice- 
Chancellor,  appointing  one  of  the 
defendants  in  an  action  to  carry 
into  execution  the  trusts  of  a  will, 
receiver  of  the  rents  of  the  real 
estate  in  controversy,  without 
salary.  Lord  Justice  Knight 
Bruce  observes,  p.  528:  "Upon  a 
mere  question  of  the  exercise  of 
discretion  in  the  choice  of  one 
out  of  several  candidates,  if  I  may 
use  the  expression,  proposed  be- 
fore the  Vice-Chancellor  for  the 
ofifice  of  receiver,  the  court  will 
find,  according  to  its  old  practice 
and  habits,  the  greatest  difficulty 
in  acting  against  the  exercise  of 
that  discretion.  To  induce  the 
court  to  act  in  such  a  case, 
against  the  decision  of  the  lower 
judge  by  whom  the  selection  has 
been  made,  it  would  be  necessary 
to  find  some,  if  I  may  use  the  ex- 
pression, overwhelming  objection 
in  point  of  propriety  of  choice,  or 
some  objection  fatal  in  principle." 


13  Cookes  V.  Cookes,  2  De  G..  J. 
&  S.,  526.  Upon  this  point.  Lord 
Justice  Turner  observes  as  fol- 
lows, p.  531:  "Two  points  have 
been  urged  in  support  of  this  ap- 
peal as  questions  of  principle. 
First,  it  is  said  that  there  are 
great  disputes  and  differences  in 
this  family,  and  that  it  is  not  for 
the  interest  of  the  estate  that 
this  gentleman  should  be  appoint- 
ed receiver.  But  if  the  existence 
of  differences  and  disputes  is  to 
be  considered  as  a  question  of 
principle  afifecting  the  appoint- 
ment of  a  receiver,  it  is  obvious 
that  there  could  hardly  be  any 
case  in  which  it  would  not  be 
competent  to  the  parties  to  come 
here,  by  way  of  appeal  from  the 
appointment  of  a  receiver;  for  in 
cases  where  receivers  are  ap- 
pointed it  is  almost  always  in 
consequence  of  the  differences 
and  disputes  between  the  parties. 
I  think,  therefore,  that  the  differ- 
ences between  these  parties,  un- 
fortunate as  they  are,  furnish  no 
ground  whatever  for  this  appli- 
cation." 

14  Polk  V.  Johnson,  160  Ind.,  292, 
66  N.  E.,  752,  98  Am.  St.  Rep.,  274. 


CHAP.  III.]  SELECTION  AND  ELIGIBILITY.  95 

tion  of  principle,  and  not  one  of  mere  expediency,  an  appellate 
tribunal  will  sometimes  interfere  with  the  appointment  of  the 
inferior  court.  Thus,  when  it  is  obvious  that  the  person  pro- 
posed by  defendants  for  the  receivership,  and  rejected,  is  a 
proper  and  unobjectionable  person  for  the  management  of  the 
estate,  and  that  the  appointment  of  another  person  would  result 
in  injury  to  the  estate  by  causing  very  great  additional  expense, 
the  appointment  of  such  other  person  may  be  revoked,  and  the 
person  proposed  by  defendants  may  be  appointed. ^^ 

§  67.  Relationship  to  the  parties  as  affecting  eligibility. 
As  regards  the  question  of  relationship  of  the  person  appointed 
to  either  of  the  parties  in  interest  in  the  litigation,  while  the 
fact  of  such  relationship  is  not,  per  se,  an  absolute  disqualifica- 
tion for  the  receivership,  yet  it  must  be  allowed  to  have  its  prop- 
er weight  in  connection  with  other  circumstances.  And  in  a 
case  where  the  person  appointed  was  the  brother  of  one  of  the 
parties  to  the  action  and  the  son  of  one  claiming  to  be  a  large 
creditor,  and  was  admitted  by  the  plaintiff  to  have  taken  an  ac- 
tive part  in  the  controversy  as  his  friend  and  agent,  he  was 
regarded  as  too  much  enlisted  in  the  cause  to  permit  him  to  be 
as  unbiased  and  impartial  as  a  receiver  should  be,  and  was 
therefore  removed. ^^  But  it  is  not  regarded  as  an  abuse  of  ju- 
dicial discretion  to  appoint  as  receivers  the  attorneys  of  the  re- 
spective parties  to  the  cause,  and  the  action  of  the  court  in 
making  such  appointment  will  not  be  interfered  with  upon  ap- 
peal.^"^  And  a  defendant  himself  has  been  appointed  when  he 
was  already  in  possession  of  the  estate  in  controversy,  and  was 
otherwise  a  fit  and  competent  person  for  its  management,  no 
cause  being  shown  against  his  appointment.^^ 

15  Perry  v.  Oriental  Hotels  Co.,  and  close  up  the  business  in  ques- 
L.  R.,  5  Ch.  App.,  420.  tion,  see  Hanover  Fire  Insurance 

16  Williamson  v.  Wilson,  1  Co.  v.  Germania  Fire  Insurance 
Bland,   418.      As    to    the    circum-  Co.,  33  Hun,  539. 

stances  which  will  justify  the  ap-  1'^  Shannon    v.     Hanks,    88    Va., 

pointment  of  one  of  the  parties  to  338,  13  S.  E.,  437;  Fisher  v.  Trust 

a  business  transaction,  when  the  Co.,  138  N.  C,  90,  50  S.  E.,  592. 

parties     themselves     had     agreed  18  Robinson    v.   Taylor,   42   Fed., 

that  such  person  should  manage  803. 


96  RECEIVERS.  [chap.  III. 

§  68.  Person  in  defendant's  interest;  solicitor  eligible; 
familiarity  with  the  property.  It  is  regarded  as  exceed- 
ingly objectionable  to  appoint  as  receiver  a  person  who  is  in 
the  interest  of  the  defendant,  against  whom  the  appointment 
is  made.19  And  it  is  improper  to  appoint  as  receiver  one  of  the 
plaintiffs  at  whose  instance  the  relief  is  sought. 20  But  a 
solicitor  not  concerned  in  the  litigation  is  eligible  to  a  receiver- 
ship, although  if  appointed  he  can  not  act  as  solicitor  in  any  pro- 
ceedings which  it  may  be  necessary  for  him  to  take  as  re- 
ceiver.2i  But  it  is  improper  to  appoint  as  receiver  over  a  par- 
ticular kind  of  property  a  person  who  is  entirely  unfamiliar 
therewith,  even  though  he  gives  an  undertaking  to  attend  to 
the  directions  of  another  person  familiar  with  the  management 
of  the  property,  since  it  is  always  preferable  that  the  receiver 
appointed  should  act  upon  his  own  responsibility.22 

§  69.  Eligibility  as  affected  by  distant  residence;  resi- 
dence in  state  unnecessary.  The  fact  of  the  receiver  chos- 
en residing  at  a  great  distance  from  the  estate  or  property  which 
is  to  be  subjected  to  his  management  and  control,  while  not 
regarded  as  an  absolute  disqualification  for  the  office,  is  a  cir- 
cumstance which  should  be  taken  into  consideration  in  making 
the  appointment. 23  But  where  the  person  appointed  receiver  of 
an  estate  was  a  land  surveyor,  and  well  qualified  for  the  man- 
agement of  the  property,  the  fact  of  his  residence  at  a  distance 
of  fourteen  miles  from  the  estate  over  which  he  was  appointed 

19  Lupton  V.  Stephenson,  11  Ir.  ceiver  and  of  the  judge  appoint- 
Eq.,  484.  See,  also,  Finance  Co.  ing  him  by  reason  of  their  inter- 
s'. Charleston,  C.  &  C.  R.  Co.,  45  est  in  the  administration  of  the 
Fed.,    436,    where    it    is    held    that  trust  estate. 

"unless  in  cases  of  imperative  ne-  20  Jordan    v.    Jordan,    121    Ala., 

cessity,    no    person    will    be    ap-  419,  25   So.,  855. 

pointed     receiver     of     a     railway  21  Wilson  v.  Poe,  1  Hog.,  332. 

company  who  is  a  party  to  or  of  22  Lupton   v.    Stephenson,    11    Ir. 

counsel  in  the  cause,  or  who  has  Eq.,  484. 

been   an   ofificer   in,   or   an   official  23  Wynne   v.    Lord    Newborough, 

of     the     insolvent     corporation."  15    Ves.,    283.      See    2    Daniell's 

See   Cunningham  v.  U.  S.   Nation-  Chancery     Practice,     ch.     XXXIX, 

al  Bank,  6  Okla.,  184,  51  Pac,  119,  §  III. 
as  to  the  disqualification  of  a  re- 


CHAP.  III.]  SELECTION  AND  ELIGIBILITY.  97 

was  regarded  as  no  valid  objection.24  And  it  is  not  necessary 
that  the  person  selected  should  be  a  resident  of  the  state  or 
jurisdiction  in  which  the  suit  is  pending.  Thus,  under  the 
laws  of  Missouri,  a  public  officer  of  the  state  being  charged 
with  the  duty  of  instituting  proceedings  to  wind  up  insolvent 
insurance  companies,  and  being  appointed  in  that  state  receiver 
of  such  a  company,  the  same  person  was  appointed  receiver  by 
a  federal  court  in  Tennessee,  in  a  subsequent  suit  instituted  by 
creditors  of  the  company  to  reach  its  assets  in  the  latter  state.25 
So  the  United  States  circuit  court  in  North  Carolina  has  ap- 
pointed as  its  receiver  one  who  was  a  non-resident  of  that 
state,26  So  it  is  held  to  be  not  an  abuse  of  discretion  to  ap- 
point as  receiver  a  non-resident,  where  he  has  an  interest  in  the 
property  and  a  resident  is  appointed  as  co-receiver. 2"^  And  in 
the  case  of  receiverships  in  the  federal  courts,  the  court  of  one 
circuit  will  ordinarily,  in  ancillary  proceedings,  recognize  the 
appointment  of  the  federal  court  of  another  circuit,  and  will 
accordingly  name  the  receiver  appointed  in  the  original  pro- 
ceeding, although  he  may  not  be  a  resident  of  the  state  in  which 
the  court  is  sitting.28  But  where  one  of  several  receivers  is  a 
non-resident,  it  is  proper  that  his  bond  should  contain  a  clause 
providing  that  he  shall  appear  in  the  court  of  his  appointment 
at  any  time  when  required  by  the  court,  either  on  notice  to  him 
within  or  without  the  state  or  on  notice  to  his  counsel. ^9 

§  70.  Person  not  eligible  whose  duty  it  is  to  watch  re- 
ceiver ;  solicitor ;  master  in  chancery ;  .barrister ;  peer ;  par- 
ty to  the  cause;  member  of  reorganization  committee; 
creditor.  It  is  important  to  observe  that  courts  of  equity 
are  exceedingly  jealous  of  appointing  any  person  to  a  receiver- 

24Tharpe    v.    Tharpe,    12    Ves.,  27  Burwell     v.     Farmers     &     M. 

317.  Bank,   119  Ga.,  633,  46  S.   E.,  885. 

25  Taylor  v.   Life  Association  of  28  Bayne  v.   Brewer  Pottery  Co., 
America,  3  Fed.,  465.     See  S.  C,  82   Fed.,  391. 

on  final  hearing,  13  Fed.,  493.  29  Lotte   Bros   v.    American    Silk 

26  Farmers'    Loan    &    Trust    Co.       Co.,  159  Fed.,  499. 
V.  Cape  Fear  &  Y.  V.  R.  Co.,  62 

Fed.,  675. 

Receivers — 7. 


98  RECEIVERS.  [chap.  III. 

ship  whose  duty  it  would  otherwise  be  to  watch  the  proceedings 
of  the  receiver,  or  to  call  him  to  an  account  for  his  manage- 
ment of  the  trust. 2^  Upon  this  ground  a  solicitor  under  a  com- 
mission of  lunacy,  under  the  English  practice,  should  not  be 
appointed  receiver  of  the  estate  of  the  lunatic.^^  And  upon 
similar  ground,  a  solicitor  in  the  cause  is  not  a  proper  person 
for  the  receivership,  since  no  person  ought  to  be  allowed  to  con- 
trol his  own  accounts  in  that  capacity.^2  go  it  is  improper  to 
appoint  as  receiver  the  law  partner  of  the  solicitor  for  com- 
plainant in  the  cause,  since  such  partner  is  presumptively  as 
much  interested  in  the  proceedings  as  complainant's  solicitor 
himself.^^  And  a  person  who  is  connected  with  the  firm  of 
counsel  for  the  plaintiff  at  whose  instance  a  receiver  is  sought, 
is  regarded  as  ineligible.^"*  So  it  has  been  held  that  a  master 
in  chancery  is  not  a  proper  person  to  be  appointed,  since  he  is 
an  officer  of  the  court,  whose  duty  it  is  to  examine  the  receiv- 
er's accounts  and  to  check  his  conduct ;  and  his  appointment  is 
ground  for  reversing  the  decree.^^  A  barrister,  however,  is 
competent  to  act  as  receiver,^^  and  under  the  English  practice 
barristers  are  very  frequently  appointed. ^"^  It  has  been  held, 
however,  that  the  fact  of  the  barrister  selected  being  in  prac- 
tice in  London  at  a  great  distance  from  the  estate,  coupled  with 
the  fact  of  his  being  a  member  of  parliament,  while  not  an  ab- 
solute disqualification,  should  have  been  considered  by  the 
master  in  making  the  appointment.^^     And  in  England,  a  re- 

30  Stone    v.    Wishart,    2    Madd.,  34  State    Trust    Co.    v.    National 
eZ,    1st    American    Edition,    374;       L.  I.  &  M.  Co.,  72  Fed.,  575. 

r,Sykes  v.   Hastings,   11   Ves.,  363;  35  Benneson  v.   Bill,  62  111.,  408; 

\jn  re  Lloyd,  12  Ch.  D.,  447.  Kilgore    v.    Hair,    19    S.    C,    486; 

31  £x    parte    Pincke,    2    Meriv.,  Allen  v.  Cooley,  60  S.  C,  353,  38 
452.  S.  E.,  622. 

32  Garland    v.    Garland,    2    Ves.  36  Garland    v.    Garland,    2    Ves. 
Jun.,  137;  In  re  Lloyd,  12  Ch.  D.,  Jun.,  137. 

447;  Watson  v.  Arundel,  Ir.  Rep.,  37  2     Daniell's     Chancery     Prac- 

9  Eq.,  324.  tice,  ch.  XXXIX,  §  III. 

33  Merchants     &     Manufacturers  38  Wynne   v.   Lord   Newborough, 
National    Bank    v.    Kent    Circuit  15  Ves.,  283. 

Judge,  43  Mich.,  292,  5  N.  W.,  627. 


CHAP.  III.]  SELECTION  AND  ELIGIBILITY.  99 

ceiver  will  not  be  appointed  who  is  not  subject  to  the  ordinary 
process  of  the  courts  by  commitment,  and  against  whom  the 
same  remedies  are  not  available  as  against  a  common  citizen. 
A  peer  of  the  realm  is,  therefore,  not  a  competent  person  to 
be  appointed. 2^  And,  unless  under  special  circumstances,  as 
in  partnership  cases  in  some  instances,  a  party  to  the  cause 
will  not  ordinarily  be  appointed  without  the  consent  of  the 
other  party."^^  But  it  has  been  held  to  constitute  no  objection 
to  the  eligibility  of  a  receiver  that  he  is  a  member  of  a  reor- 
ganization committee,  although  if  a  conflict  in  the  plan  of  the 
reorganization  should  be  foreshadowed,  he  would  promptly  be 
compelled  to  resign.^^  And  a  creditor  of  an  insolvent  is  not  as 
a  matter  of  law  disqualified  by  reason  of  his  interest  to  act  as 
receiver  and  may  properly  be  appointed  where  no  facts  appear 
showing  that  he  is  disqualified. '*2 

§  71.  Clerk  of  court  not  a  receiver  ex  officio;  clerk  and 
master.  While  there  are  some  reported  cases  in  w^hich 
the  courts  have  appointed  their  own  clerks  as  receivers,  yet  a 
clerk  of  a  court  is  not  by  virtue  of  his  office  a  receiver  of  the 
court,  his  functions  being  entirely  distinct  from  those  of  re- 
ceiver.'*^ The  same  distinction  is  recognized  where  the  offices 
of  clerk  and  of  master  in  chancery  are  combined  in  one  and  the 
same  person.  In  such  case  the  court  can  no  more  compel  him 
to  take  upon  himself  the  office  of  receiver  in  a  given  case,  than 
it  can  compel  any  private  citizen  to  assume  such  duties.  And 
when  the  court  has  ordered  that  the  receiver  in  a  cause  deliver 
over  to  the  clerk  and  master  the  funds  of  the  receivership, 
and  that  the  clerk  and  master  be  appointed  receiver,  such  order 
will  not  have  the  effect  of  making  him  the  receiver,  when  noth- 
ing is  done  by  him  in  that  capacity,  and  no  facts  appear  from 

39  Attorney-General     v.     Gee,     2  43  Hammer  v.   Kaufman.  39  111., 

Ves.  &  Bea.,  208.  87;    Waters    v.    Carroll,    9    Yerg., 

40 /n  re  Lloyd,  12  Ch.  D.,  447.  102;   Kerr  v.   Brandon,  84  N.   C, 

41  Fowler    v.    Jarvis-Conklin    M.  128;   Rogers  v.   Odom,  86   N.   C, 
Co.,  63  Fed.,  888.  432. 

42  Barber    v.     International     Co., 
73   Conn.,  587,  48  Atl.,  758. 


100  RECEIVERS.  [chap.  III. 

which  an  inference  of  his  acceptance  may  be  drawn. "^^  And  it 
has  been  held  improper  to  appoint  the  clerk  of  the  court  to 
act  as  receiver.^^ 

§  72.  Officer  of  corporation  usually  ineligible  as  its  re- 
ceiver; when  eligible;  shareholder;  creditor.  In  compul- 
sory proceedings  against  corporate  bodies  for  the  appointment 
of  receivers,  the  selection  of  a  proper  person  for  the  receiver- 
ship is  a  question  of  much  delicacy  and  grave  importance.  In 
this  class  of  cases,  it  is  regarded  as  manifestly  improper  to  ap- 
point an  officer  of  or  person  connected  with  the  management 
of  the  corporation  itself  to  the  post  of  receiver.^^  In  such 
cases  the  courts  act  upon  the  principle  that  if  the  officers  of  the 
corporation  are  unfit  persons  for  the  management  of  its  affairs 
in  their  official  capacity,  they  are  equally  unfit  to  be  intrusted 
with  such  management  in  the  capacity  of  receivers,  and  the  rule 
of  exclusion  may  be  regarded  as  based  upon  sound  principles 
of  public  policy.  When,  therefore,  proceedings  are  instituted 
in  equity  against  an  insolvent  banking  corporation,  under  the 
statutes  of  a  state  authorizing  the  appointment  of  receivers  of 
insolvent  corporations  for  the  winding  up  of  their  affairs,  the 
court  will  not  appoint  an  officer  of  the  bank  the  receiver  in  the 
cause.'*'^  And,  when,  in  proceedings  against  a  corporation  for 
the  appointment  of  a  receiver,  the  person  selected  for  the  trust 
was  the  secretary  and  treasurer  of  the  company,  as  well  as  its 
legal  adviser  and  counselor,  and  was  also  the  largest  single 

44  Waters    v.    Carrol!,    9    Yerg.,  Co.,    157    Fed.,    794.      See,    also, 
102.  Atkins   v.   Wabash.    St.    L.   &   P. 

45  White    V.    Britten,    72    S.    C,  R.  Co.,  29  Fed.,  161.     But  see  In 
175,  51   S.  E.,  547.  re      Fifty-four     First      Mortgage 

46  Attorney-General  v.  Bnnk  of  Bonds,  15  S.  C,  304. 
Columbia,  1  Paige,  511;  Baker  v.  47  Attorney-General  v.  Bank  of 
Administrator  of  Backus,  32  111.,  Columbia,  1  Paige,  511.  And  see 
79;  Freeholders  v.  State  Bank,  28  as  to  considerations  governing 
N.  J.  Eq.,  166;  McCullough  v.  the  court  in  the  appointment  of 
Merchants  Loan  &  Trust  Co.,  29  a  receiver  of  a  large  banking 
N.  J.  Eq.,  217;  Finance  Co.  v.  corporation,  whose  assets  are  of 
Charleston,  C.  &  C.  R.  Co.,  45  great  value.  In  re  Empire  City 
Fed..  436:   Coy  v.  Title  G.  &  T.  Bank,  10  How.  Pr.,  498. 


CHAP.  III.] 


SELECTION  AND  ELIGIBILITY. 


101 


creditor  of  the  corporation,  and  was  the  legal  adviser  of  the 
complainant,  and  drew  the  bill  in  the  cause,  he  was  held  to  be 
totally  disqualified  for  the  position. ^^  So  the  vice-president  of 
an  insolvent  life  insurance  company,  to  whom  it  has  assigned 
all  its  effects  in  trust  for  the  benefit  of  its  creditors,  is  not  re- 
garded as  a  proper  person  to  be  appointed  receiver  over  the 
company  in  an  action  to  set  aside  such  assignment.'*^  If,  how- 
ever, the  laws  of  the  state  providing  for  the  voluntary  dissolu- 
tion of  insolvent  corporations  authorize  the  appointment  of  any 
of  the  officers  or  stockholders  of  the  corporation  as  receivers, 
it  is  proper  to  appoint  the  president  and  the  book-keeper  of  the 
corporation,  when  not  otherwise  disqualified,  and  when  it  is 
not  shown  that  their  conduct  or  management  of  the  business 
has  in  any  manner  tended  to  produce  the  insolvency  of  the 
company.SO  But  the  rule  above  announced  forbidding  the  ap- 
pointment of  an  oflficer  of  a  corporation  as  its  receiver  is  by  no 
means  inflexible  and  in  many  cases  it  has  been  relaxed.    And 


48  Baker  v.  Administrator  of 
Backus,  32  III.,  79.  The  court 
say,  p.  112:  "It  seems  that  the 
secretary  and  treasurer  of  the 
company  was  A.  C.  Coventry,  a 
lawyer  by  profession,  and  its 
counselor  and  adviser.  He  was, 
too,  the  largest  single  creditor  of 
the  company,  having  claims 
against  it  exceeding  $3,000.  He 
was  the  adviser,  also,  of  the  com- 
plainant, Baker,  whom  the  de- 
fendant in  error  represents,  and 
drew  the  bill  in  the  cause.  He 
was,  without  having  disclosed 
these  facts  to  the  court,  appoint- 
ed the  receiver  of  all  the  property 
of  the  company,  and,  without  try- 
ing the  market  with  it  by  an 
oflFering  at  public  sale,  he  private- 
ly sold  it,  one  day  after  he  was 
appointed,  and  had  his  claim 
against  the  company  fully  paid 
out       of       the       proceeds.    .     .    . 


There  was  no  necessity  to  ap- 
point a  receiver,  because  no  fraud 
is  alleged  or  shown,  and  no  suffi- 
cient proof  that  such  a  step  was 
necessary  to  save  the  property 
from  material  injury,  or  rescue  it 
from  impending  destruction.  And 
there  was  a  fatal  objection  to  the 
person  appointed  receiver.  He 
was  not  disinterested;  he  was  the 
legal  adviser  of  the  complainant, 
and  framed  the  bill;  he  was  the 
legal  adviser  of  the  company;  he 
was  the  largest  single  creditor; 
all  these  disqualified  him,  and  he 
should  not  have  been  appointed." 
And  see  hi  re  Eckhardt  Mfg.  Co., 
114  La.,  119,  38  So.,  78. 

'*9  Buck  V.  Piedmont  &  Arling- 
ton Life  Insurance  Co.,  4  Fed., 
849. 

50  Jn  re  Eagle  Iron  Works,  8 
Paige,  385,  affirming  S.  C,  3  Edw. 
Ch.,  385. 


102  RECEIVERS.  [chap.  III. 

when  it  appears  that  an  officer  or  director  of  a  corporation  is 
especially  qualified  by  reason  of  his  knowledge  and  familiarity 
with  the  affairs  of  the  concern  and  that  the  best  interests  of  the 
estate  will  be  promoted  by  his  management,  a  departure  from 
the  rule  has  been  made,  and  an  officer  and  director  has  been 
allowed  to  act  as  receiver  of  the  corporation.^^  And  in  Michi- 
gan it  has  been  held  generally  that  a  creditor,  officer  or  share- 
holder of  a  corporation  is  competent  to  act  as  its  receiver.^^ 
And  in  Louisiana  it  has  been  held  that  a  shareholder  in  a  cor- 
poration may  properly  be  appointed  its  receiver.^^  But  where 
an  officer  of  a  corporation  has  been  appointed  one  of  its  re- 
ceivers and  it  appears  that  he  has  been  speculating  in  the  stock 
of  the  company,  that  fact  constitutes  good  ground  for  his  re- 
moval. ^^  And  the  president  of  a  competing  line  of  railroad  is 
ineligible  to  act  as  receiver  of  an  insolvent  railway  company.^^ 
§  73.  One  corporation  may  be  receiver  of  another. 
Upon  proceedings  in  equity  against  an  insolvent  corporation 
for  the  winding  up  of  its  affairs,  and  the  appointment  of  a 
receiver,  the  person  selected  for  the  trust  need  not  necessarily 
be  an  individual  person,  and  a  corporate  body  may  itself  be  ap- 
pointed receiveir  of  another  corporation  upon  the  insolvency  of 
the  latter.  And  this  is  permissible,  even  though  the  corpora- 
tion selected  for  the  office  has  previously  recovered  a  judg- 
ment in  its  capacity  of  receiver  of  a  former  insolvent  corpora- 
tion, against  the  defendant,  so  that  it  is  to  this  extent  a  credit- 
or of  the  defendant ;  there  being  no  unbending  riile  of  law  that 
one  who  is  a  creditor  of  an  insolvent  institution  is  incompetent 

51  Farmers'    Loan    &    Trust    Co.      Judge,    125    Mich.,   6,    83    N.    W., 
V.   Northern  Pac.   R.   Co.,  61   Fed.,       1004. 

546;  Ralston  v.  Washington  &  C.  53  McGilliard    v.    Donaldsonville 

R.  Ry.  Co.,  65  Fed.,  557.     And  it  F-  &   M.   Works,   104  La.,  544,  29 

is    held    that    service    of    process  So.,  254,  81   Am.   St.   Rep.,   145. 

upon  the  president  of  a  corpora-  54  Olmstead    v.    Distilling    &    C. 

tion   who    is    also   its    receiver   is  F.  Co.,  67  Fed.,  24. 

valid.     Venner  v.   U.  W.   Co.,  40  55  St.   Louis,   K.   &   S.  R.  Co.  v. 

Colo.,  212,  90  Pac,  623,  122  Am.  Wear,  135  Mo.,  230,  36  S.  W.,  357, 

St.  Rep.,  1036.  658,  33  L.  R.  A.,  341. 

52  Moran      v.      Wayne      Circuit 


CHAP.  III.] 


SELECTION  AND  ELIGIBILITY. 


103 


to  act  as  its  receiver.^^  And  a  corporation  is  not  disqualified  to 
act  as  receiver  for  an  insolvent  corporation  because  one  of  the 
directors  of  the  insolvent  concern  is  a  shareholder,  director  and 
the  president  of  the  receiver  corporation. ^'^ 

§  74.  Trustee  not  usually  eligible ;  when  eligible.  As  a 
general  rule,  courts  of  equity  are  averse  to  appointing  as  re- 
ceivers persons  who  occupy  relations  of  trust  toward  the  prop- 
erty or  estate  which  is  the  subject  of  the  receivership.  And 
a  trustee  or  executor,  appointed  by  a  testator  for  the  manage- 
ment of  his  estate,  is  usually  regarded  as  an  improper  person 


56  In  re  Knickerbocker  Bank. 
19  Barb.,  602.  The  Knickerbock- 
er Bank  being  insolvent,  the 
United  States  Trust  Company 
was  appointed  receiver.  This 
company  had  previously,  as  Re- 
ceiver of  the  Knickerbocker  Sav- 
ings Institution,  recovered  a 
judgment  against  the  Knicker- 
bocker Bank.  The  Trust  Com- 
pany, being  the  receiver  of  both 
institutions,  and  thus  represent- 
ing both  debtor  and  creditor,  ap- 
plied to  the  court  for  instructions 
as  to  the  course  it  should  pur- 
sue. The  court,  Mitchell,  J.,  say, 
p.  603:  "If  the  appointment  of 
receiver  was  only  for  the  purpose 
of  suit  on  behalf  of  the  Savings 
Institution,  there  would  be  a 
manifest  impropriety  in  making 
the  Trust  Company,  acting  for 
that  institution,  receiver  also  of 
the  bank.  But  this  was  not  the 
case.  The  receiver  of  the  bank 
was  to  act  for  all  the  creditors  of 
the  bank,  and  was  disinterested, 
except  as  to  the  one  claim  of  the 
Savings  Institution.  The  Trust 
Company  was  especially  created  by 
the  legislature,  in  part  to  aid  suit- 
ors and  the  court  by  assuming 
the    exercise    of    trusts    when    it 


might  be  difficult  to  get  others  to 
execute  them  (as  in  this  case),  on 
account  of  the  largeness  of  the 
amount  of  security  that  would  be 
required,  and  the  difficulty  of  ob- 
taining persons  competent  to 
give  such  security,  and  to  man- 
age such  affairs.  More  skillful 
persons  to  take  charge  of  a  trust 
like  this,  or  more  trustworthy, 
probably  could  not  be  found. 
The  papers  on  the  appeal  show 
no  objection  to  them;  nor  that 
any  others  were  even  named. 
And  as  there  is  no  unbending 
rule  of  law  that  one  who  is  a 
creditor  of  an  insolvent  institu- 
tion shall  not  be  its  receiver,  the 
objection  to  the  receiver  falls 
to  the  ground.  The  Trust  Com- 
pany being  lawfully  appointed  re- 
ceiver, and  deriving  its  appoint- 
ment from  the  court,  or  from  a 
justice  of  the  court,  it  had  aright 
to  apply  to  the  court  for  instruc- 
tions. And  in  no  case  could  it  be 
more  proper  for  the  receiver  to 
make  the  application  than  when 
it  was  the  representative  of  both 
creditor  and  debtor." 

57  Barker  v.  Wayne  Circuit 
Judge,  117  Mich.,  325,  75  N.  W., 
886. 


104  RECEIVERS.  [chap.  III. 

to  be  appointed  receiver  of  the  estate.^^  And  this  is  true  re- 
gardless of  whether  he  is  a  sole  trustee,  or  whether  there  are 
others  joined  with  him  as  co-trustees  under  the  will  of  the  tes- 
tator.59  The  reason  for  this  aversion  to  the  appointment  of 
such  persons  to  receiverships  is  found  in  the  fact  that  the 
court,  in  this  class  of  cases,  expects  the  trustee  to  watch  the 
proceedings  with  an  adverse  eye,  and  to  see  that  the  receiver 
does  his  duty.^*^  The  rule  rejecting  such  persons  is,  however, 
not  inflexible,  and  when  it  is  apparent,  considering  the  trustee's 
knowledge  of  and  familiarity  with  the  estate  in  litigation,  that 
its  best  interests  will  be  promoted  by  his  appointment,  a  de- 
parture from  the  rule  is  allowed.^^  But  it  is  held  in  such  cases 
that  the  trustee  will  be  allowed  to  act  as  receiver  only  upon 
condition  that  he  shall  derive  no  emolument  from  the  office.^^ 
As  illustrative  of  when  such  a  departure  from  the  rule  is  per- 
missible, it  was  held,  where  a  testator  had  appointed  as  trustee 
and  executor  of  his  will  a  person  who  had  for  many  years 
acted  as  receiver  of  certain  of  his  property,  that  he  was  a  fit 
person  to  be  continued  as  receiver  for  the  protection  of  an  in- 
fant tenant  for  life.^^ 

§  75.  Next  friend  of  infants  ineligible.  It  has  been 
shown  in  the  preceding  section  that  the  reason  for  the  refusal 
of  the  courts  to  appoint  as  receivers  persons  occupying  fiduciary 
relations  to  the  subject-matter  of  the  receivership  is  based  upon 
the  necessity  of  their  watching  the  proceedings  of  the  receiver 
adversely,  and  holding  him  to  a  strict  account  in  the  perform- 
ance of  his  duties.  The  same  reasoning  is  applicable  to  the  case 
of  a  bill  filed  by  the  next  friend  of  infants,  against  the  exec- 
utors of  their  estate,  for  an  accounting  and  a  receiver.     And 

58  Sutton  V.  Jones,  15  Ves.,  584;       Newport   v.    Bury,   23    Beav.,   30; 
V.    Jolland,    8    Ves.,    12;       Patterson  v.  Northern  Trust  Co., 


Sykes  v.  Hastings,  11  Ves.,  363.  230  111.,  334,  82  N.  E.,  837. 

59 V.  Jolland,  8  Ves.,  72.  62  Hibbert    v.    Jenkins,    11    Ves., 

60  Sykes    v.    Hastings,    11    Ves.,  363. 

363.  63  Newport    v.    Bury,    23    Beav., 

61  Hibbert    v.    Jenkins,    cited    in  30. 
Sykes  v.  Hastings,  11   Ves.,  363; 


CHAP.  III.]  SELECTION  AND  ELIGIBILITY.  105 

in  such  a  case  the  next  friend  will  not  be  appointed,  since  it  is 
his  duty  to  watch  the  accounts  and  scrutinize  the  conduct  of 
the  receiver,  and  the  two  characters  are  regarded  as  so  incom- 
patible with  each  other  that  the  court  will  not  permit  them  to 
be  combined  in  one  and  the  same  person. ^4 

§  76.  Mortgagee  eligible  as  receiver  of  mortgaged 
premises.  An  apparent  exception  to  the  rule  that  trustees 
are  ineligible  as  receivers  over  the  subject-matter  of  their  trust 
has  been  recognized  in  the  case  of  a  mortgagee  of  real  estate, 
occupying  the  relation  of  a  trustee  of  the  equity  of  redemption. 
And  such  mortgagee  has  been  appointed  receiver  of  the  mort- 
gaged premises,  but  his  position  and  duties  as  receiver  were 
held  to  be  paramount  to  those  as  mortgagee,  and  his  interest 
in  the  latter  capacity  was  held  to  be  subordinate  to  his  duties 


as  receiver 


65 


§  77.  Receiver  of  debtor  ineligible  as  his  assignee  in 
bankruptcy.  The  position  of  a  receiver  of  the  estate  and 
effects  of  a  debtor,  appointed  under  proceedings  in  a  state  court, 
is  regarded  as  incompatible  with  that  of  a  trustee  or  assignee 
of  the  estate  of  the  same  debtor  in  bankruptcy.  And  when  pro- 
ceedings in  bankruptcy  are  subsequently  instituted  against  the 
debtor  in  the  federal  court,  the  latter  tribunal  will  not  permit 
the  receiver  of  the  state  court  to  be  elected  assignee  or  trustee 
of  the  bankrupt's  estate.^^ 

§  78.  Administrator  of  deceased  partner  eligible  as  re- 
ceiver of  firm  assets.  In  partnership  cases,  the  adminis- 
trator of  a  deceased  partner,  if  a  fit  person  in  other  respects, 
may  be  appointed  receiver  of  the  firm  assets,  when  the  surviv- 
ing partners  are  guilty  of  laches  and  waste  in  the  settlement 
of  the  business.  For  while,  primarily,  such  administrator  has 
no  rights  in  the  settlement  and  adjustment  of  the  partnership 
affairs,  yet  if  there  be  unreasonable  delay  in  the  performance 
of  this  duty  by  the  surviving  partners,  it  becomes  the  right 

64  Stone    V.    Wishart,    2    Madd.,  66  /„     re     Stuyvesant     Bank,     5 
63,  1st  American   Edition,  374.             Benedict,  566;  S.  C,  6  Bank.  Reg., 

65  Bolles  V.  Duff,  54  Barb.,  215.  272. 


106  RECEIVERS.  [chap.  III. 

and  duty  of  the  administrator  of  the  deceased  partner  to  file  a 
bill  for  an  accounting  and  a  receiver,  and  he  himself  may  then 
be  appointed  upon  giving  additional  bond  with  proper  secur- 
ity.67 

§  79.  Particular  person  nominated  in  bill;  consent  of 
parties.  When  the  bill  prays  for  the  appointment  of  a  par- 
ticular person  as  receiver,  and  such  person  is  appointed  by  the 
court,  it  does  not  necessarily  follow  that  he  was  appointed  sole- 
ly because  recommended  in  the  bill.  And  in  such  case,  on  ap- 
peal to  a  court  of  last  resort,  it  will  be  presumed  that  the  court 
below  acted  upon  its  own  judgment  in  making  the  selection.^^ 
But  in  the  Irish  Chancery,  it  is  said  to  be  contrary  to  the  prac- 
tice of  the  court  to  appoint  as  receiver  a  particular  person  who 
is  nominated  by  consent  of  the  parties. ^^ 

§  80.  Effect  of  interest  as  stockholder  and  director  of 
a  plaintiff  corporation.  The  interest  of  a  stockholder  and 
director  in  a  banking  corporation,  which  was  the  plaintiff  in 
the  action,  has  been  regarded  as  sufficient  to  disqualify  him  for 
the  post  of  receiver;  although  in  such  case,  where  the  inter- 
est was  not  known  to  the  court  at  the  time  of  appointment, 
and  he  had  entered  upon  his  duties  and  spent  much  time  in 
familiarizing  himself  with  the  property,  and  no  misconduct 
or  impropriety  was  shown,  he  was  allowed  to  continue  in  office 
until  a  new  reference  could  be  had  to  a  master,  to  make  a  new 
appointment."^^ 

§  81.  Mortgagee  of  foreign  estates  eligible.  Notwith- 
standing the  general  doctrine  regarding  receivers  as  impartial 
persons  between  the  parties,  and  not  interested  in  the  result  of 
the  cause,  there  may  be  circumstances  justifying  the  appoint- 
ment of  a  party  in  interest.  And  a  mortgagee  of  estates  located 
in  the  West  Indies  was,  in  one  case,  deemed  a  proper  person 

67  Miller  v.  Jones,  39  111.,  54.  70  Bank  of  Monroe  v.  Schermer- 

68  Johns  V.  Johns,  23  Ga.,  31.  horn,  Clarke  Ch.,  366. 

69  Leach  v.  Tisdal,  4  Ir.  Ch.,  N. 
S.,  209. 


CHAP.  III.]  SELECTION  AND  ELIGIBILITY.  107 

to  be  appointed  in  England  as  receiver  of  the  mortgaged  prop- 
erty, and  without  requiring  him  to  give  the  usual  security."^^ 

§  81a.  Objection  to  eligibility  must  be  made  in  apt 
time;  how  waived.  An  objection  to  the  ehgibihty  of  a  re- 
ceiver must  be  made  in  apt  time  and  unless  this  is  done  it  will 
be  deemed  to  be  waived.  Where,  therefore,  a  decree  appoint- 
ing a  receiver  has  been  affirmed  upon  appeal  or  writ  of  error, 
the  competency  of  the  receiver  to  act  in  that  capacity  can  not 
be  questioned  by  an  appeal  taken  or  a  writ  of  error  sued  out  for 
the  purpose  of  reviewing  subsequent  orders  entered  in  the  re- 
ceivership cause,  especially  where  the  party  complaining  has 
consented  to  the  entry  of  orders  which  recognize  the  capacity 
of  the  receiver  to  act.'^^  And  where  a  plaintiff  who  has  pro- 
cured the  appointment  of  a  receiver  has  failed  at  the  proper 
time  to  raise  any  objection  to  the  qualification  of  the  receiver, 
he  can  not  afterward  question  such  appointment  upon  the 
ground  that  the  receiver  was  disqualified  by  reason  of 
interest.'^^ 

71  Davis  V.  Barrett,  13  L.  J.,  N.  73  Threadgill      v.      Colcord,      16 

S.  Ch.,  304.  Okla.,  447,  85  Pac,  703. 

T^p^by   V.    Title   G.    &   T.    Co., 
166  111.,  336,  46  N.  E.,  1110. 


CHAPTER  IV. 

OF  THE  PRACTICE. 

I.  General  Rules  of  Practice §  82 

II.  Time  of  Appointment   103 

III.  Notice  of  the  Application   Ill 

I.  General  Rules  of  Practice. 

§  82.     Practice  divergent  in  different  states. 

83.  Receiver  appointed  on  bill;  specific  prayer  not  necessary. 
83a.  Court  may  appoint  of  its  own  motion. 

84.  Appointment  made  on  notice  and  affidavits;  and  only  against  a 

party. 

85.  Affidavits;    admissibility   of,   upon   hearing;    affidavits   must   be 

entitled  in  the  cause. 

86.  Imperfections  in  bill  or  record  no  bar  to  appointment. 

87.  Order  should  specify  over  what  property  receiver  is  appointed. 

88.  Facts  need  not  appear  in  pleadings;  affidavits;  copies. 

89.  Affidavits  should  be  distinct  and  precise;  general  allegations  not 

sufficient;  information  and  belief;  verification  may  be  waived. 

90.  Reference  to  master  to   appoint;   exceptions  to  master's    appoint- 

ment. 

91.  Successive  applications  for  receiver. 

92.  When  motion  reheard  after  appointment. 

93.  Practice  on  extending  receivers. 

94.  Appointment  by  consent. 

95.  Effect  of  demurrer  pending;  amendment  to  bill;  opportunity  to 

plead  or  answer  when  demurrer  overruled. 

96.  English  practice  as  to  hearing  in  court  and  in  chambers. 

97.  Regularity  of  original  appointment  not  examined  on  motion  to 

substitute. 

98.  Receiver  may  be  appointed  on  application  for  an  injunction. 

99.  Omission  of  receiver  to  be  sworn  not  fatal;  when  taking  of  oath 

presumed. 

100.  Order  of  appointment  should  not  apply  proceeds  of  sale. 

101.  Appointment  no  bar  to  plaintiff  dismissing  his  bill. 
101.     Order  made  in  the  alternative. 

§  82.  Practice  divergent  in  different  states.     In  a  gen- 
eral treatise  upon  the  law  of  receivers,  it  is  neither  expedient 

108 


CHAP.  I\'.] 


PRACTICE. 


109 


nor  desirable  to  present  in  detail  the  practice  prevailing^  in  the 
different  states  in  administering  this  species  of  relief,  since  this, 
like  most  other  questions  of  practice,  is  largely  regulated  by 
statute  and  usage  in  the  different  states.  Indeed,  it  is  practical- 
ly impossible  to  reduce  to  a  harmonious  system  of  rules  all 
questions  of  practice  relating  to  the  appointment  of  receivers, 
since  the  practice  and  procedure  in  administering  equitable  re- 
lief are  widely  divergent  in  the  various  states.  Some  general 
principles,  however,  which  are  believed  to  be  recognized  by 
most  of  the  courts,  may  be  deduced  from  the  authorities,  and 
their  presentation  will  occupy  the  present  chapter.^ 

§  83.  Receiver  appointed  on  bill;  specific  prayer  not 
necessary.  The  usual  practice,  both  in  England  and 
America,  is  to  appoint  receivers  only  upon  bills  filed  for  that 
purpose,  and  as  a  general  rule  the  courts  will  not  grant  the  re- 
lief merely  upon  petition,  when  no  cause  is  actually  pending 
and  no  bill  filed  to  give  the  court  jurisdiction,  unless  in  very 


1  In  California  it  is  held,  under 
the  statutes  of  the  state,  that  a 
judge  at  chambers  has  power  to 
appoint  a  receiver,  and  upon  an  ex 
parte  application.  Real  Estate  As- 
sociates V.  Superior  Court,  60  Cal., 
223.  In  Virginia,  the  power  to  ap- 
point a  receiver  in  a  judgment  cred- 
itor's suit  is  incidental  to  the  power 
of  granting  an  injunction;  and  since 
a  judge  may  grant  an  injunction  in 
vacation,  he  may  also  appoint  a  re- 
ceiver in  vacation.  Smith  v.  Butcher, 
28  Grat.,  144.  The  appointment  of 
a  receiver  in  vacation  is  not  war- 
ranted by  the  statutes  of  Illinois 
prescribing  the  powers  which  may 
be  exercised  by  circuit  judges  in 
vacation.  Therefore,  an  order  of  a 
state  court  appointing  a  receiver 
over  a  railway  in  vacation  is  a  nul- 
lity, and  the  seizure  of  the  property 
by  a  receiver  subsequently  appointed 


in  a  federal  court  is  no  interference 
with  the  state  court.  Hammock  v. 
Loan  and  Trust  Co.,  105  U.  S.,  11 . 
In  Indiana  it  is  held  that,  under  the 
code  of  procedure,  the  courts  have 
the  same  power  to  appoint  receivers, 
and  for  the  same  purposes,  as  per- 
tained to  courts  of  equity  prior  to 
the  adoption  of  the  code.  Bitting 
V.  Ten  Eyck,  85  Ind.,  357.  And  see 
this  case  as  to  the  practice  and 
procedure  in  appointing  receivers  in 
Indiana.  To  the  same  point  see 
Hursh  V.  Hursh,  99  Ind.,  500.  And 
it  is  improper  for  the  court  to  ap- 
point a  receiver  upon  its  own  mo- 
tion. White  V.  Britton,  72  S.  C, 
175,  51  S.  E.,  547.  As  to  the  second 
appointment  of  a  receiver  after  a 
prior  appointment  of  the  same  per- 
son under  a  void  order,  see  Robin- 
son V.  Dickey,  143  Ind.,  214,  42  N. 
E.,  638. 


110  RECEIVERS.  [chap.  IV. 

Special  cases  of  emergency.^  And  since  a  suit  in  chancery 
is  not  begun  until  the  filing  of  the  bill,  if  a  receiver  is  appointed 
upon  an  c.v  parte  application  before  the  bill  is  filed,  the  appoint- 
ment will  be  revoked  upon  appeal,  without  considering  the  mer- 
its of  the  application.^  And  it  has  been  held  in  England  that 
the  court  has  no  power  to  appoint  a  receiver  upon  the  applica- 
tion of  a  defendant  in  a  cause,  even  though  the  plaintiff,  after 
filing  his  bill  for  a  receiver  against  the  defendant,  refuses  to 
move  for  a  receiver  and  opposes  defendant's  application.*  It 
is  not,  however,  indispensable  that  the  bill  should  contain  a 
specific  prayer  for  a  receiver,  if  the  facts  stated  are  sufficient 
to  justify  the  appointment,  since  the  necessity  for  the  relief 
frequently  occurs  after  the  filing  of  the  bill.^  And  a  receiver 
may  be  appointed  at  the  final  hearing,  even  though  the  bill 
contains  no  prayer  for  such  relief.^ 

§  83a.  Court  may  appoint  of  its  own  motion.  Where 
the  title  to  the  subject-matter  of  the  controversy  is  in  dispute 
and  both  sides  claim  the  right  of  possession,  and  it  is  conceded 
by  all  parties  that  the  property  should  be  operated  pending  the 
determination  of  the  litigation,  it  is  held  that  the  court,  of  its 
own  motion,  may  properly  appoint  a  receiver  to  take  and  hold 
possession  of  the  property  pending  the  litigation.*^ 

^  Ex    parte    Mountfort,    15    Ves.,  500;  Commercial  and  Savings  Bank 

445;  Leddel's  Executor  v.   Starr,  4  v.   Corbett,  5  Sawyer,  172;  McGar- 

C.  E.  Green,  159.  rah  v.  Bank,  117  Ga.,  556,  43  S.  E., 

3  Crowder  t.-.  Moone,  52  Ala.,  220;  987;    Elk   Fork  Oil   &   Gas    Co.   v. 

Gold  Hunter  M.  &  S.  Co.  v.  Holle-  Foster,  39   C.   C.  A.,  615,  99  Fed., 

man,  3  Idaho,  99,  27  Pac,  413.  495.    And  see  Jordan  v.  Jordan,  121 

■i  Robinson   v.   Hadley,    11    Beav.,  Ala.,  419,  25  So.,  855.     But  see  Au- 

614.     But  upon  a  bill  by  a  second  gusta  Ice  Mfg.  Co.  v.  Gray,  60  Ala., 

mortgagee  for  a  foreclosure,  a  de-  344;    Wilson  v.    Maddox,   46   West 

fendant,    who    was    a    prior    mort-  Va.,  641,  33  S.  E.,  775. 
gagee,  has  been  allowed  a  receiver  6  See    observations    of   the    Vice- 

,against   the   mortgagor  also   joined  Chancellor   in   Osborne   v.    Harvey, 

as   defendant.     Henshaw   v.   Wells,  1    Y.   &   C.    C.    C,    116;    Merrill  v. 

9  Humph.,  568.  Elam.  2  Tenn.  Ch..  513.     See,  also, 

5  Henshaw   v.   Wells,   9   Humph.,  Bowman  v.  Bell,  14  Sim.,  392. 
568;  Ladd  v.  Harvey,  21  N.  H.,  514;  7  Elk  Fork  Oil  &  Gas  Co.  v.  Fos- 

Malcolm   v.    Montgomery,   2    Mol.,  ter,  39  C.  C.  A.,  615,  99  Fed.,  495. 


CHAP.  IV.]  PRACTICE.  Ill 

§  84.  Appointment  made  on  notice  and  affidavits;  and 
only  against  a  party.  It  is  irregular  to  appoint  a  receiver 
when  no  motion  for  that  purpose  has  been  made,  and  no  proof 
adduced  showing  a  necessity  for  the  rehef.  And  the  motion 
should  properly  be  founded  on  affidavits  or  papers,  copies  of 
which  should  be  served  with  the  notice  of  the  application ;  ^ 
although  if  the  papers  on  which  the  moving  party  seeks  the  re- 
lief are  already  on  file  in  the  cause,  it  is  sufficient  to  refer  to 
them  in  the  notice.^  But  a  receiver  should  not  be  appointed 
against  a  person  not  before  the  court,  and  not  made  a  party 
to  the  action  in  which  the  appointment  is  sought.^-^ 

§  85.  Affidavits;  admissibility  of,  upon  hearing;  affi- 
davits must  be  entitled  in  the  cause.  Upon  an  application 
for  a  receiver  after  the  coming  in  of  the  answer,  it  is  proper 
for  the  court  to  permit  affidavits  to  be  read  in  behalf  of  plaintiff, 
since  the  object  of  the  court  is  to  be  informed  of  the  true 
circumstances  of  the  case,  in  order  that  it  may  act  advisedly 
upon  the  application.^^  In  the  Irish  Chancery,  upon  a  motion 
for  a  receiver  on  bill  and  answer,  affidavits  may  be  read  in  be- 
half of  plaintiff  in  reply  to  the  answer,  in  explanation  of  a 
doubtful  passage  therein,  which  does  not  disclose  the  whole 
truth  to  the  court,  the  affidavit  disclosing  all  the  facts.^^  And 
where  an  application  for  the  appointment  of  a  receiver  is  made 
before  the  defendant  has  filed  his  answer,  the  latter  may  be 
heard  upon  his  affidavit  by  way  of  defense  to  the  application. ^^ 
But  upon  a  motion  for  an  interlocutory  injunction  and  receiver 
pendente  lite,  it  is  improper  to  receive  affidavits  which  are  not 
entitled  in  the  cause  and  which  were  not  taken  for  the  purpose 
of  being  used  as  evidence.^^ 

8  Hungerford  v.  Gushing,  8  Wis.,  H  Ladd  v.  Harvey,  21  N.  H.,  514. 
320;  Brundage  v.  Home  S.  &  L.  12  Bell  v.  M'Loghlin,  Flan.  &  K., 
Assn.,  11  Wash.,  277,  39  Pac,  666;      272. 

Jacobs  V.  Miller,  10  Hun,  230.  iSWhitehouse  v.  P.  D.,  T.  &  E. 

9  Hungerford  v.  Gushing,  8  Wis.,  Ry.  Go.,  9  Wash.,  558,  38  Pac,  152. 
320.  14  Warren    v.    Monni.sh,    97    Ga., 

10  Gravenstine's  Appeal,  49  Pa.  399,  23  S.  E.,  823  ;  Whitley  v.  Berry, 
St.,  310.  105  Ga.,  251,  31  S.  E.,  171. 


112  RECEIVERS.  [chap.  IV. 

§  86.  Imperfections  in  bill  or  record  no  bar  to  appoint- 
ment. The  fact  that  the  bill  upon  which  an  injunction  and 
a  receiver  are  sought  is  multifarious,  or  that  it  is  liable  to  ob- 
jection because  of  misjoinder  of  parties,  constitutes  no  suf- 
ficient objection  to  a  motion  for  a  receiver.  Nor  is  it  a  suf- 
ficient answer  to  the  application  that  the  record  is  incomplete 
in  particulars,  or  not  in  such  shape  as  may  be  necessary  to  en- 
able the  court  to  administer  complete  justice  between  the 
parties.15 

§  87.  Order  should  specify  over  what  property  receiver 
is  appointed.  The  order  of  appointment  should  distinctly 
state  upon  its  face  over  what  property  or  fund  the  receiver  is 
appointed,  in  order  that  persons  dealing  with  him  may  know 
what  property  is  in  possession  of  the  court  by  its  ofificer.^^  And 
an  order  which  directs  a  receiver  to  take  possession  of  all  the 
property  and  assets  of  an  insolvent  is  sufficiently  broad  to  in- 
clude within  its  scope  the  possession  of  real  estate  belonging 
to  the  insolvent,  although  neither  the  petition  nor  the  motion 
upon  which  the  receiver  was  appointed  describes  or  refers  to 
the  real  estate. ^"^  And  an  order  appointing  a  receiver  of  the 
"incomes  of  the  outstanding  trust  property  in  the  pleadings 
mentioned"  is  not  sufficiently  distinct  and  explicit  within  the 
meaning  of  the  rule.^^  But  where  a  receiver  is  appointed  to 
take  charge  of  all  the  assets  of  a  corporation,  it  is  not  necessary 
that  the  petition  should  allege  of  what  the  assets  consist  or 
that  it  should  describe  them  in  detail,  although  he  will  act  at 
his  peril  if  he  takes  possession  of  anything  not  expressly  men- 
tioned in  the  order  of  his  appointment.^^ 

§  88.  Facts  need  not  appear  in  pleadings;  affidavits; 
copies.     It  is  not  regarded  as  necessary  or  essential  to  the 

15  Evans  v.  Coventry,  5  DeG.,  M.  17  Cheney  v.  Maumee  Cycle  Co., 
&  G.,  911,  reversing  S.  C,  3  Drew.,      64  Ohio  St.,  205,  60  N.  E.,  207. 

75.  18  Crow  V.  Wood,  13  Beav.,  271. 

16  Crow  V.  Wood,  13  Beav.,  271;  19  Hale-Berry  Co.  v.  Diamond 
O'Mahoney  v.  Belmont,  62  N.  Y.,  State  Iron  Co.,  94  Ga.,  61,  22  S.  E., 
133,  affirming  S.  C,  2,1  N.  Y.  Siipr.  217. 

Ct.  R.,  223. 


CHAP.  IV.]  PRACTICE.  113 

appointment  of  a  receiver  that  the  facts  upon  which  the  ap- 
plication is  based  should  be  set  fortli  in  the  pleadings,  but  it 
is  sufficient  if  they  are  presented  to  the  court  by  affidavit  upon 
the  hearing  of  the  motion.  Indeed,  this  would  seem  to  follow 
necessarily  from  the  very  nature  of  the  appointment,  which  is 
usually  treated  as  an  auxiliary  proceeding,  and  not  the  ultimate 
object  of  the  action. 20  But  it  is  not  sufficient  in  the  application 
for  a  receiver  to  allege  merely  the  legal  conclusions  upon  which 
plaintiff  relies,  and  the  facts  must  be  averred  upon  which  such 
conclusions  are  predicated.^!  And  where,  under  the  practice 
of  the  state,  the  appellate  court  or  court  of  final  resort  rehears 
and  decides  cases  upon  the  merits,  upon  an  appeal  from  an 
order  granting  an  injunction  and  appointing  a  receiver,  copies 
of  the  affidavits  and  testimony  upon  which  the  motion  was 
granted  should  accompany  the  record. ^2  And  upon  an  appeal 
from  an  interlocutory  order  appointing  a  receiver,  where  the 
application  has  been  heard  upon  affidavits,  such  affidavits  must 
be  incorporated  into  the  record  if  the  reviewing  court  is  to 
pass  upon  the  merits  of  the  appeal. 23  And  such  affidavits  will 
only  be  considered  by  an  appellate  tribunal,  upon  an  appeal 
from  an  order  appointing  a  receiver,  when  properly  incorpo- 
rated into  the  record,  as  by  a  bill  of  exceptions. 2* 

20  Hottenstein  v.  Conrad,  9  Kan.,  object  of  a  suit.  The  statute  says, 
435.  This  was  an  action  for  the  'a  receiver  may  be  appointed  .  .  . 
settlement  of  partnership  affairs,  in  in  the  action,'  etc.  All  that  the 
which  a  receiver  was  appointed  pleadings  need  disclose  is,  that  the 
upon  notice  and  motion,  supported  action  pending  is  one  of  a  class  in 
by  affidavits.  Brewer,  J.,  says,  which  the  statute  says  a  receiver 
p.  438:  "It  is  objected  that  the  pe-  may  be  appointed." 
tition  contains  no  averment  that  21  Heavilon  v.  Farmers  Bank,  81 
there  was  danger  that  the  property  Ind.,  249;  Union  Boom  Co.  v.  Sam- 
would  be  wasted  or  injured  before  ish  Boom  Co.,  33  Wash.,  144,  74 
the  answer,  or  before  the  trial   of  Pac,  53. 

the   case.      Such   an   averment   was  22  Schlecht's  Appeal,  60  Pa.   St., 

entirely  unnecessary.     The  showing  172. 

of  the  necessity  for  a  receiver  need  23  Chicago    &    Southeastern    Ry. 

not  be  in  the  petition.    The  appoint-  Co.  v.  McBeth,  149  Ind.,  78,  47  N. 

ment  of  a  receiver  is  a  provisional  E.,  678. 

remedy.    It  is  an  auxiliary  proceed-  24  Barnes  v.  Jones,  91  Ind.,  161. 
ing.     It  is  not  the  ultimate  end  or 
Receivers — 8. 


114 


RECEIVERS. 


[chap.  IV. 


§  89.  Affidavits  should  be  distinct  and  precise;  general 
allegations  not  sufficient;  information  and  belief;  verifica- 
tion may  be  waived.  Affidavits  upon  which  the  appHcation 
is  based  should  be  distinct  and  precise  in  their  allegations,  es- 
pecially where  fraud  is  one  of  the  grounds  relied  upon  for  the 
interference  of  the  court.  And  where  a  receiver  is  sought  of 
the  affairs  of  a  corporation,  mere  general  allegations,  in  the 
affidavits  supporting  the  motion,  as  to  the  belief  of  affiants  that 
great  frauds  have  been  committed  against  the  corporation,  will 
not  justify  the  relief,  when  it  is  not  stated  by  whom  the  frauds 
have  been  committed,  or  in  what  they  consist. ^^  And  it  may  be 
stated  generally  that,  upon  an  application  for  a  receiver  pen- 
dente lite,  the  verification  must  be  based  upon  the  knowledge 
of  the  affiant  and  if  it  is  based  upon  information  and  belief 
only,  it  will  be  held  insufficient.^^     Where,  however,  under 


25  Oakley  v.  Patterson  Bank,  1 
Green  Ch.,  173.  Under  the  statute 
of  Alabama  it  is  held  that  the  veri- 
fication of  a  bill  is  sufficient  without 
the  subscription  of  the  affiant  to  the 
affidavit.  Culver  v.  Guyer,  129  Ala., 
602,  29  So.,  779.  Under  the  code  of 
Georgia  requiring  that  "petitions  for 
restraining  order,  injunction,  re- 
ceiver, or  other  extraordinary  equi- 
table relief  should  be  verified  posi- 
tively by  the  petitioner,  or  support- 
ed by  other  satisfactory  proof,"  it  is 
held  that  an  affidavit  made  by  the 
attorney  for  the  petitioner  is  suffi- 
cient if  it  states  positive^'  *h5t  the 
recitals  of  the  petition  are  true  of 
his  own  knowledge.  Boston  Mer- 
cantile Co.  V.  Ould-Carter  Co.,  123 
Ga.,  458,  51  S.  E.,  466. 

26  Burgess  &  Co.  v.  Martin,  111 
Ala.,  656,  20  So.,  506,  followed  by 
Smith-Dimmick  Lumber  Co.  v. 
Teague,  119  Ala.,  385.  24  So..  4; 
Pollard  V.  Southern  Fertilizer  Co., 
122  Ala.,  409,  25  So.,  169;  Schilcer 
V.  Brock,  124  Ala.,  626,  27  So.,  473 ; 


Benepe-Owenhouse  Co.  v.  Schei- 
degger,  32  Mont.,  424,  80  Pac,  1024 ; 
New  South  B.  &  L.  Assn.  v.  Wil- 
lingham,  93  Ga.,  218,  18  S.  E.,  435. 
It  is  to  be  observed  that  in  Pollard 
V.  Southern  Fertilizer  Co.,  supra, 
Schilcer  v.  Brock,  supra,  and  Ben- 
epe-Owenhouse Co.  V.  Scheidegger, 
supra,  the  appointment  of  the  re- 
ceiver was  without  notice.  In  Pol- 
lard V.  Southern  Fertilizer  Co., 
supra.,  the  verification  was  that  the 
facts  and  allegations,  so  far  as  they 
came  within  affiant's  own  knowl- 
edge, were  true,  and  so  far  as  de- 
rived from  the  knowledge  of  others, 
he  believed  them  to  be  true.  This 
was  held  insufficient.  In  Schilcer 
V.  Brock,  supra,  the  verification  was 
to  the  efTect  that  the  matters  alleged 
in  the  bill  as  facts  were  true  and 
those  alleged  upon  information  and 
belief,  the  affiant  believed  to  be  true. 
This  was  held  to  be  insufficient  for 
the  appointment  of  a  receiver  with- 
out notice. 


CHAP.  IV.]  PRACTICE.  115 

the  laws  of  a  state  it  is  made  the  duty  of  the  attorney-general, 
upon  the  insolvency  of  a  banking  corporation,  to  apply  for  an 
injunction  and  a  receiver  for  the  winding  up  of  its  affairs,  it 
is  not  necessary  that  the  information  filed  by  the  attorney- 
general  for  this  purpose  should  be  verified  by  a  positive  affi- 
davit as  to  the  insolvency  of  the  bank,  but  it  is  sufficient  that 
it  is  alleged  upon  information  and  belief,  since  only  the  officers 
of  the  bank  can  swear  positively  as  to  its  condition.^'^  And 
where  a  bill  for  an  injunction  is  improperly  verified  at  the  time 
of  the  appointment  of  a  temporary  receiver,  the  plaintiff  may, 
by  leave  of  court,  add  the  proper  verification  upon  an  interlocu- 
tory hearing  before  the  appointment  of  a  permanent  receiver.28 
And  it  is  to  be  observed  that  the  necessity  for  a  verification  may 
be  waived.29 

§  90.  Reference  to  master  to  appoint;  exceptions  to 
master's  appointment.  Under  the  English  practice,  as 
well  as  under  the  chancery  practice  in  New  York  prior  to  the 
adoption  of  the  code  of  procedure,  it  was  customary  to  grant  an 
order  of  reference  to  a  master  for  the  purpose  of  nominating 
or  appointing  a  receiver.  Under  the  New  York  practice,  when 
the  matter  was  referred  to  a  master  to  report  a  proper  person 
to  be  appointed,  the  appointment  was  not  regarded  as  complete 
until  confirmed  by  special  order  of  the  court.  Where,  however, 
the  master  was  himself  directed  to  appoint  the  receiver  and  to 
take  from  him  the  requisite  security,  no  confirmation  of  the 
appointment  was  necessary.  In  the  latter  case  the  master,  after 
approving  of  the  receiver  and  the  sureties  offered,  took  the 
necessary  bond,  which  he  filed  with  the  report  of  his  appoint- 
ment, stating  that  he  had  approved  of  the  bond  and  that  it  was 
duly  filed.  And  upon  the  filing  of  such  report  the  appointment 
was  deemed  completed  and  the  receiver  might  at  once  enter 
upon  his  duties.    If  either  party  was  dissatisfied  with  the  mas- 

27  Attorney-General    v.    Bank    of  German    National    Bank,    59    Neb., 
Columbia,  1  Paige,  511.  229,  80  N.  W.,  820;  Veith  v.  Ress, 

28  Rice  V.  Dodd,  94  Ga.,  414,  20  60  Neb.,  52,  82  N.  W.,  116;  Murphy 
S.  E..  339.  V.  Fidelity  M.  F.  Ins.  Co.,  69  Neb.,. 

29  Farmers  &  Merchants  Bank  v.  489,  95  N.  W.,  1022. 


116  RECEIVERS.  [chap.  IV. 

ter's  appointment,  the  practice  seems  to  have  been  to  present 
his  objections  to  the  court  by  a  petition,  upon  due  notice  to  all 
parties  in  interest,  praying  that  the  master  might  review  his  re- 
port.20  Under  the  English  practice,  when  a  reference  was  had 
to  a  master  with  directions  to  appoint,  the  appropriate  practice 
in  objecting  to  the  master's  action  was  by  exceptions  to  his 
report. 21 

§  91.  Successive  applications  for  receiver.  It  is  proper 
on  denying  a  motion  for  a  receiver  to  give  leave  to  the  moving- 
party  to  renew  his  motion  upon  additional  proof,  if  it  appears 
that  he  may,  by  obtaining  new  proof,  present  a  strong  case  for 
the  relief  sought.^^  ^^d  it  is  competent  for  plaintiff  to  ask 
and  for  the  court  to  appoint  a  receiver  after  a  hearing,  and  even 
after  a  rehearing  and  refusal,  when  an  altered  state  of  facts  is 
presented  showing  an  appropriate  case  for  the  relief.^^  But 
when  the  application  has  once  been  before  the  court  and  has 
been  denied,  a  receiver  will  not  be  appointed  upon  a  subse- 
quent application  upon  a  simple  notice  for  that  purpose,  found- 
ed upon  the  same  papers  as  before,  without  affidavits  or  addi- 
tional proof  showing  a  necessity  for  the  relief.  And  this  rule 
holds  good,  even  though  the  court  may  have  intimated,  on  the 
former  application,  that  a  receiver  might  afterward  be  granted 
if  circumstances  should  warrant  the  relief.^'* 

§  92.  When  motion  reheard  after  appointment.  After 
a  receiver  has  been  appointed  upon  motion,  pending  an  action 
against  defendant,  it  is  proper  for  the  court  to  entertain  an  ap- 
plication to  open  and  rehear  the  motion  for  the  receiver,  and 

30 /n    re    Eagle    Iron    Works,    8  tinued  to  the  hearing,  and  a  writ  of 

Paige,  385.  error   is  sued   out  to   reverse   such 

31  Creuze  v.  Bishop  of  London,  order  of  continuance,  it  is  compe- 
Dick.,  687.  tent    for  the   court  below   in   term 

32  Devlin  v.  Hope,  16  Ab.  Pr.,  314.  time,  and  before  any  remittitur  has 

33  Attorney-General  v.  Mayor  of  been  returned  from  the  supreme 
Galway,  1  Mol.,  95.  court,   to    appoint   a   receiver   upon 

34  Fenton  v.  Lumberman's  Bank,  the  same  bill  and  upon  the  same 
Clarke  Ch.,  360.  In  Georgia  it  is  state  of  facts.  McCaskill  v.  War- 
held   that    when   an   application   for  ren,  58  Ga.,  286. 

a  receiver  made  in  vacation  is  con- 


CHAP.  IV.]  PRACTICE.  117 

to  allow  defendant  to  introduce  proofs  which  could  not  be 
produced  upon  the  former  hearing.  And  if  satisfied  that  the 
case  is  not  a  proper  one  for  a  receiver,  the  court  may,  upon 
such  rehearing,  deny  the  motion. ^^  But,  since  a  motion  for 
a  receiver  in  a  creditor's  suit  is  not  regarded  as  involving  the 
merits  of  the  cause,  being  only  incidental  to  the  principal  re- 
lief sought,  where  the  courts  are  prohibited  by  statute  from  re- 
hearing orders  made  in  the  progress  of  a  cause  which  do  not 
involve  the  merits,  a  motion  for  a  receiver  will  not  be  reheard 
when  once  granted. ^^ 

§  93.  Practice  on  extending  receivers.  The  practice  is 
frequently  adopted,  when  a  receiver  has  been  appointed  over 
a  particular  subject-matter  in  behalf  of  one  creditor  or  a  class 
of  creditors,  of  extending  the  same  receiver  for  the  protection 
of  other  parties  interested  in  the  same  subject-matter,  for  the 
purpose  of  saving  the  expense  of  a  new  appointment;  or,  if 
appointed  over  a  part  only  of  defendant's  estate,  he  may  be  ex- 
tended over  the  residue  for  the  benefit  of  other  creditors.  In 
all  such  cases,  the  order  extending  the  receiver  is  regarded  as 
substantially  an  original  or  new  appointment.^"^  And  when 
a  receiver  has  already  been  appointed  in  a  pending  suit  and  ap- 
plication is  made  for  like  relief  in  a  subsequent  suit  concern- 
ing the  same  property,  the  court  will  not  ordinarily  displace 
the  existing  receiver,  preferring  as  a  general  rule  to  extend 
the  receivership  in  the  former  suit  to  the  latter.  But  in  all  such 
cases  of  extension  the  rights  of  the  parties  in  each  suit  are 
substantially  the  same  as  if  different  receivers  had  been  ap- 
pointed.^^ 

§  94.  Appointment  by  consent.  Under  the  Irish  chan- 
cery practice,  receivers  are  frequently  appointed  by  consent  of 

35  Belmont    v.    Erie    R.    Co.,    52  Association  v.  Newry  &  Armagh  R. 
Barb.,  637.  Co.,  Ir.  Rep.,  2  Eq.,  1;  LeGrand  v. 

36  Sheldon  v.  Weeks,  2  Barb.,  532.  O'Neill,  2  Ir.  Ch.,  N.  S.,  569;  Ab- 

37  Corbet  v.  Mahon,  2  Jo.  &  Lat.,  bott  v.  Stratten,  3  Jo.  &  Lat,  603. 
671 ;  Agra  &  Masterman's  Bank  v.  38  State  v.  J.,  P.  &  M.  R.  Co.,  15 
Barry,   Ir.   Rep.,   3   Eq.,   443.      See,  Fla.,  201. 

also.     Imperial     Mercantile     Credit 


118  RECEIVERS.  [chap.  rv. 

the  parties  to  a  cause,  the  consent  in  such  cases  being  made  a 
rule  of  court. ^^  But  such  a  consent  will  not  be  made  a  rule 
of  court  when  it  provides  that  the  receiver  shall  not  be  obliged 
to  account  before  the  master,  unless  called  upon  so  to  do,  since 
this  would,  in  effect,  make  him  merely  the  private  agent  of  the 
parties,  and  not  an  officer  of  court.'*^ 

§  95.  Effect  of  demurrer  pending;  amendment  to  bill; 
opportunity  to  plead  or  answer  when  demurrer  overruled. 
Upon  a  special  motion  for  a  receiver,  when  notice  has  been 
given  to  defendant's  solicitor,  who  does  not  appear  or  oppose 
the  motion,  the  fact  of  a  dem.urrer  pending  to  the  bill  affords 
no  objection  to  granting  the  order;  since,  if  defendant  intends 
to  rely  upon  such  demurrer  as  a  bar  to  the  appointment,  he 
should  appear  upon  the  hearing  of  the  motion  and  urge  his 
objections. ^1  And  when  an  answer  has  been  filed  to  the  origi- 
nal bill,  the  court  will  entertain  a  motion  for  a  receiver,  not- 
withstanding the  original  bill  has  been  amended  after  answer, 
and  a  plea  has  been  filed  to  the  amended  bill  and  the  plea  is 
still  undisposed  of.^^  g^t  where  a  demurrer  to  the  bill  is  over- 
ruled, the  court  should  ordinarily  not  appoint  a  receiver  at 
once  but  should  first  give  the  defendant  an  opportunity  to 
plead  or  answer. "^^ 

§  96.  English  practice  as  to  hearing  in  court  and  in  cham- 
bers. Under  the  English  practice  it  is  held  that,  when  the 
application  for  a  receiver  is  made  for  the  first  time  in  the  cause, 
i*-  must  be  heard  in  court ;  but  if  the  application  is  only  to  sup- 
ply the  place  of  a  receiver  already  appointed,  and  whose  office 
has  become  vacant  by  death  or  otherwise,  it  may  be  made  in 
chambers. ^^ 

§  97.  Regularity  of  original  appointment  not  exam- 
ined on  motion  to  substitute.     Upon  a  mere  formal  mo- 

39  See   Burke  v.   Burke,   Flan.  &  42  Thompson    v.    Selby,    12   Sim., 
K,  89.  100. 

40  Richey  v.  Gleeson,  Flan.  &  K.,  43  People    v.    District    Court,    33 
99.  Colo.,  293,  80  Pac,  908. 

41  Howard     v.      Palmer,     Walk.  44  Grote  v.  Bing,  9  Hare,  Appen- 
(Mich.),  391.  dix,  1. 


CHAP.  IV.]  PRACTICE.  119 

tion  to  substitute  one  person  in  place  of  another  as  receiver 
in  the  action,  the  opposing  party  is  not  at  hberty  to  examine  the 
regularity  of  the  original  appointment,  or  the  regularity  of  the 
proceedings  had  in  the  suit,  since  this  would  operate  as  a  sur- 
prise upon  the  moving  party,  and  he  is  entitled  to  notice  of  such 
objections.^^ 

§  98,  Receiver  may  be  appointed  on  application  for  an 
injunction.  It  would  seem  that  a  receiver  may  be  ap- 
pointed in  a  case  otherwise  proper  for  the  relief,  if  the  facts 
showing  the  necessity  for  the  relief  and  the  proper  parties  are 
before  the  court,  although  the  application  was  made  for  an 
injunction,  and  did  not  specify  the  appointment  of  a  re- 
ceiver.'*^ 

§  99.  Omission  of  receiver  to  be  sworn  not  fatal ;  when 
taking  of  oath  presumed.  Where  a  statute,  authorizing 
the  appointment  of  receivers  to  wind  up  the  affairs  of  banking 
corporations,  requires  them  to  be  sworn  before  entering  upon 
their  duties,  the  omission  to  be  sworn  does  not  have  the  effect 
of  vitiating  their  proceedings,  since  they  are  officers  of  the 
court  and  their  proceedings  are  subject  to  revision  by  the 
court.'*'^  And  in  an  action  by  a  receiver  to  recover  money  al- 
leged to  be  due  him  in  his  official  capacity,  where  it  appears 
that  he  duly  qualified  by  giving  bond  pursuant  to  the  order 
of  appointment  in  the  receivership  proceeding,  the  taking  of 
the  necessary  oath  will  be  presumed. ^^ 

§  100.  Order  of  appointment  should  not  apply  proceeds 
of  sale.  As  regards  the  form  of  an  order  appointing  a 
receiver  and  authorizing  him  to  sell  the  property  in  controver- 
sy, it  would  seem  to  be  the  better  practice  not  to  include  in  such 
order  a  direction  as  to  applying  the  proceeds  of  the  sale,  since 

45Fassett  v.   Tallmadge,    13    Ab.  47  American  Bank  v.   Cooper,  54 

Pr.,  12.  Me.,  438. 

46  Whitney  v.    Buckman,  26  Cal.,  48  Seymour  v.    Aultman  Co.,  109 

447;    Elk   Fork   Oil   &   Gas   Co.   v.  Iowa,  297,  80  N.  W.,  401. 
Foster,  39  C.  C.  A.,  615,  99  Fed., 
495. 


120  RECEIVERS.  [chap.  IV. 

this  is  a  matter  for  adjustment  after  a  final  decree  settling  the 
rights  of  all  parties  in  interest. "^^ 

§  101.  Appointment  no  bar  to  plaintiff  dismissing  his 
bill.  When  a  receiver  is  appointed  upon  an  interlocutory 
application,  before  final  decree  in  the  cause,  the  court  does  not 
thereby  acquire  such  absolute  control  over  the  cause  as  to  de- 
prive plaintiff  in  the  action  of  the  privilege  of  dismissing  his 
bill  if  he  sees  f^t.^*^ 

§  102.  Order  made  in  the  alternative.  There  are  fre- 
quent instances  to  be  met  with  in  the  reports  where  the  court, 
although  of  opinion  that  plaintiff  was  entitled  to  a  receiver, 
has  made  the  order  in  the  alternative,  requiring  defendant  to 
satisfy  plaintiff's  demand,  or  in  default  thereof  that  a  receiver 
be  appointed.^^ 

49  West  V.  Chasten,  12  Fla.,  315;  51  See  for  such  a  case,  Curling  v. 
Krohn  v.  Weinberger,  47  West  Va.,      Townshend,  19  Ves.,  628. 

127,  34  S.  E.,  746. 

50  White    V.     Lord     Westmeath, 
Beat.,  174. 


CHAP.  IV.]  PRACTICE.  121 


11.  Time  of  Appointment. 

§  103.     Formerly  appointed  only  after  answer;  modern  English  prac- 
tice. 

104.  Grounds  for  appointment  before  answer  under  English  prac- 

tice. 

105.  Granted  before  answer  in  this  country;  creditors'  suits. 

106.  Strong  case  must  be  shown  to  warrant  relief  before  answer; 

illustrations. 

107.  Application  before  answer  heard  on  affidavits;  motion  to  dis- 

charge receiver  after  answer. 

108.  Appointment  not  to  be  antedated. 

109.  May  be  made  at  the  final  hearing. 

110.  Allowed  after  final  decree  in  cases  of  emergency;  illustrations; 

appointed  pending  appeal. 

§  103.  Formerly  appointed  only  after  ansv/er;  modern 
English  practice.  Receivers  are  usually  appointed  upon 
interlocutory  application,  in  the  earlier  stages  of  the  cause,  al- 
though, as  will  hereafter  be  shown,  the  appointment  may  be 
made  at  the  final  hearing  and  as  a  part  of  the  final  decree. 
Under  the  earlier  English  practice,  the  court  would  not  en- 
tertain an  application  for  a  receiver  until  after  defendant  had 
appeared  and  answered.  The  rule,  however,  was  gradually 
relaxed,  and  under  the  modern  practice  receivers  were  fre- 
quently granted  before  answer.  And  although  the  English 
Court  of  Chancery  was  always  averse  to  interference  before 
answer,  unless  for  good  cause  shown,  yet  it  may  be  regarded  as 
the  settled  English  practice  to  grant  receivers  before  answer, 
in  cases  of  emergency  calling  for  the  immediate  interference 
of  the  court  to  protect  the  equities  of  plaintiffs,  and  where  the 
merits  of  the   case  are  sufficiently  disclosed  by  affidavits.^2 

52Vann  v.  Barnctt,  2  Bro.  C.  C,  not  granting  a  receiver  before  an- 

158;    Duckworth    v.    Trafford,    18  swer,  was  first  broken  through  by 

Ves.,  283;  Metcalfe  v.  Pulvertoft,  1  Lord   Kenyon  in  Vann  v.   Barnett, 

Ves.    &    Bea.,     180;    Woodyatt    v.  and  that  the  order  then  made  for  a 

Gresley,  8  Sim.,  180.    In  Duckworth  receiver    before    answer    had    been 

V.  Trafford,  18  Ves.,  283,  Lord  El-  followed  since.    He  seems,  however, 

don  observes  that  the  old  rule,  of  to  have  fallen  into  an  error  as  to 


122  RECEIVERS.  [chap.  IV. 

And  if  defendant  has  put  in  an  affidavit  in  opposition  to  plain- 
tiff's affidavits  upon  the  motion,  the  affidavit  will  be  regarded 
as  a  sufficient  appearance  for  the  purpose  of  entertaining  the. 
motion.  ^^ 

§  104.  Grounds  for  appointment  before  answer  under 
English  practice.  As  regards  the  grounds  upon  w^hich  the 
application  has  been  entertained  before  answer,  under  the 
English  practice,  it  has  been  held  that  where  plaintiff  shows 
a  good  equitable  title  to  the  property  in  controversy,  as  against 
which  the  title  of  defendant  can  not  prevail,  sufficient  cause 
is  presented.^*  So  when  habitual  and  manifest  abuse  is  shown 
on  the  part  of  a  defendant  executor  in  the  management  of  his 
trust,  and  when  he  is  wasting  and  endangering  the  property 
intrusted  to  him,  a  receiver  may  be  appointed  before  answer. ^^ 

§  105.  Granted  before  answer  in  this  country;  credit- 
ors' suits.  The  modern  English  practice,  allowing  the  ap- 
pointment of  a  receiver  before  answer  in  cases  of  emergency, 
was  adopted  by  the  New  York  Court  of  Chancery,  and  has 
been  generally  followed  in  this  country.  And  it  may  now  be 
regarded  as  the  uniform  and  well-established  practice  to  en- 
tertain the  application  and  to  grant  the  relief  before  answer, 
where  plaintiff  can  satisfy  the  court  that  he  has  an  equitable 
claim  to  the  property  in  controversy,  and  that  a  receiver  is 
necessary  to  preserve  it  from  loss,  or  where  a  clear  case  is  shown 
of  fraud  and  imminent  danger  unless  the  relief  is  granted.^^ 

the  first  departure  froiR  the  ancient  53  Vann  v.  Barnett,  2  Bro.  C.  C, 

practice,     since    Lord    Kenyon,    in  158. 

Vann  v.   Barnett,  only  says  that  a  54  Metcalfe  v.  Pulvertoft,  1  Ves. 

motion  for  a  receiver  before  answer  &  Bea.,  180. 

was  unusual,  and  that  he  would,  if  55  Middleton  v.  Dodswell,  13  Ves., 

necessary,   have  made   a  precedent.  266. 

Vann    v.    Barnett    was    decided    in  56  Bloodgood   v.   Clark,  4    Paige, 

1787,  and  in  a  note  to  the  case  as  574;  Bank  of  Monroe  v.  Schermer- 

reported  in  2  Bro.  C.  C,  158,  it  is  horn,    Clarke    Ch.,    214;    Jones    v. 

said  by  the  reporter  that  a  receiver  Dougherty,  10  Ga.,  273 ;  Williams  v. 

before  answer  was  granted  by  Lord  Jenkins,  11  Ga.,  595;  Johns  v.  Johns, 

Bathurst  in   Compton  v.  Bearcroft,  23  Ga.,  31 ;  Clark  v.  Ridgely,  1  Md. 

Trinity  Term,  1773.  Ch.,   70;   United    States  v.   Church, 


CHAP.  IV.] 


PRACTICE. 


123 


In  other  words,  if  the  emergency  shown  is  such  as  to  render 
it  essential  to  justice  that  a  receiver  should  be  immediately 
appointed,  it  may  be  done  before  answer,  since  to  delay  the  re- 
lief might  entirely  defeat  the  object  sought  by  the  applica- 
tion.^'^  The  practice  is  especially  salutary  in  cases  of  creditors' 
bills  in  aid  of  the  enforcement  of  judgments,  and  in  this  class 
of  cases  receivers  are  almost  uniformly  granted  before  an- 


swer 


-58 


§  106.  Strong  case  must  be  shovs^n  to  warrant  relief 
before  answer;  illustrations.  While  the  practice  of  ap- 
pointing receivers  before  answer,  in  cases  of  emergency,  is  thus 
shown  to  be  well  established  and  generally  followed  by  courts 
of  equity  in  this  country,  yet  the  grounds  which  will  induce  the 
court  to  interfere  at  this  stage  of  a  cause  must  be  very  strong, 
and  there  must  be  clear  proof  of  fraud,  or  of  immediate  danger 
to  the  property  unless  it  is  taken  into  the  custody  of  the  court.^^ 
And  when  there  are  no  allegations  of  defendant's  insolvency. 


5  Utah,  361.  See,  also,  Baker  v. 
Adm'r  of  Backus,  32  111.,  115,  116; 
Whitehead  v.  Wooten,  43  Miss., 
523;  Davis  v.  Browne,  2  Del.  Ch., 
188;  Probasco  v.  Probasco,  30  N. 
J.  Eq.,  108.  Bloodgood  v.  Clark,  4 
Paige,  574,  was  an  appeal  from  a 
decision  of  the  Vice-Chancellor,  re- 
fusing an  application  for  a  receiver 
of  the  property  and  effects  of  de- 
fendants in  a  creditor's  bill.  Wal- 
worth, Chancellor,  says,  p.  576: 
"The  Vice-Chancellor  was  wrong  in 
supposing  that  a  receiver  could  not 
be  appointed,  in  a  case  of  this  kind, 
until  after  the  defendants  had  put 
in  their  answer.  By  the  ancient 
practice  of  the  Court  of  Chancery 
in  England,  a  receiver  was  not  ap- 
pointed until  after  the  coming  in  of 
the  defendant's  answer.  This  prac- 
tice appears  to  have  been  first 
broken  in  upon  in  the  case  of  Comp- 
ton  V.  Bearcroft,  in  1773.    And  Lord 


Kenyon,  the  master  of  the  rolls,  ap- 
pointed a  receiver  before  answer  in 
the  case  of  Vann  v.  Barnett,  in  1787, 
2  Brown's  C.  C,  158.  He  said  that, 
although  a  motion  for  a  receiver 
before  answer  was  then  unusual, 
yet  had  it  been  necessary  he  would 
have  made  a  precedent.  And  it 
now  appears  to  be  well  settled,  both 
here  and  in  England,  that  a  receiver 
may  be  appointed  before  answer, 
provided  the  plaintiff  can  satisfy  the 
court  that  he  has  an  equitable  claim 
to  the  property  in  controversy,  and 
that  a  receiver  is  necessary  to  pre- 
serve the  same  from  loss." 

57  Johns  V.  Johns,  23  Ga.,  31. 

58  See  Bloodgood  v.  Clark,  4 
Paige,  574;  Bank  of  Monroe  v. 
Schermerhorn,  Clarke  Ch.,  214. 

59  Clark  v.  Ridgely,  1  Md.,  Ch., 
70;  Brick  Company  v.  Robinson,  55 
Md.,  410;  Latham  v.  Chafee,  7  Fed., 
525;   West  v.    Swan,  3   Edw.   Ch., 


124  RECEIVERS.  [chap.  IV. 

or  of  danger  to  the  property  and  interests  concerned,  the  re- 
lief will  not  be  granted  before  answer,^^  So  when  insolvency 
is  the  ground  relied  upon,  but  the  affidavit  on  which  the 
application  is  based  merely  states  that  defendant  is  not  deemed 
a  responsible  man  by  those  who  know  him,  and  the  affidavit  of 
defendant  fully  negatives  the  insolvency,  a  receiver  will  be  re- 
fused.^^  And  in  an  action  brought  by  a  shareholder  of  a  cor- 
poration to  cancel  certain  illegal  stock,  and  to  restrain  the 
holders  of  such-  shares  from  assigning  or  incumbering  them, 
the  appointment  of  a  receiver  of  the  shares  is  improper  upon 
an  ex  parte  application  before  answer,  when  it  is  not  shown 
that  defendants  are  irresponsible,  or  that  there  is  any  danger 
of  loss  from  a  transfer  of  the  shares.^2 

§  107.  Application  before  answer  heard  on  affidavits; 
motion  to  discharge  receiver  after  ansv^er.  Interlocutory 
applications  for  a  receiver  before  answer  are  usually  supported 
by  affidavits  of  the  grounds  relied  upon,  and  it  would  ordinarily 
seem  to  be  sufficient  if  the  facts  upon  which  the  application 
is  based  are  verified  by  the  affidavit  of  plaintiff  alone.^^  And 
when  plaintiff  moves  for  an  injunction  and  a  receiver  upon 
bill  filed,  before  the  coming  in  of  the  answer,  upon  grounds  of 
emergency,  defendant  may  be  heard  by  affidavit  in  opposition 
to  the  motion. ^^     If  the  appointment  is  made  before  answer, 

420;  Baker  v.  Adm'r  of  Backus,  32  must  be  strong  and  special  reasons 

III.,   lie,   116;   Beecher  v.   Bininger,  for  the  appointment  before  answer, 

7     Blatchf.,     170;     Whitehead     v.  as  on  proof  of  fraud,  by  affidavits, 

Wooten,  43    Miss.,   523.     "The   ap-  or  immediate  danger  to  the  proper- 

pointment  of  a  receiver,"  says  Sim-  ty,   unless  at  once  taken  in  charge 

rail,  J.,  in  the  case  last  cited,  "is  a  by  the  court." 

peremptory   remedial   measure.     Its  60  Simmons    v.    Wood,    45    How. 

effect   is   to   deprive   the   defendant  Pr.,  269. 

in  possession,  temporarily  at  least,  61  West  v.  Swan,  3  Edw.  Ch.,  420. 

of  his  property,  before  final  decree  62  People   v.    Albany    &    Susque- 

settling   the    rights    of   parties    liti-  hanna  R.  Co.,  7  Ab.  Pr.,  N.  S.,  290. 

gant.      If   the    application    is    made  63  Jones    v.    Dougherty,    10    Ga., 

before  the  merits  of  the  cause  are  273 ;  Krohn  v.  Weinberger,  47  West 

disclosed,  as  before  a  pro  confesso  Va.,  127,  34  S.  E.,  746. 

or  answer  filed,  there  must  be  64  Kean  v.  Colt,  1  Halst.  Ch.,  365 
strong  grounds  laid.    .    .    .    There 


CHAP.  IV.]  ■   PRACTICE.  125 

it  is  proper  for  the  defendant,  after  filing  his  answer,  to  move 
to  discharge  the  receiver;  and  if,  upon  such  motion,  the  bill  and 
answer,  taken  together,  show  that  a  receiver  ought  not  to  have 
been  appointed,  he  will  be  discharged.^^ 

§  108.  Appointment  not  to  be  antedated.  It  would 
seem  that,  as  regards  the  rights  of  third  persons,  the  appoint- 
ment of  a  receiver  will  not  be  allowed  to  take  effect  or  date 
back  by  relation  to  a  period  prior  to  his  appointment.  It  is, 
therefore,  improper  to  insert  such  a  clause  in  the  order  of  ap- 
pointment, and  its  insertion  will  not  be  allowed  to  affect  the 
rights  of  parties  in  interest  and  not  notified. ^^ 

§  109.  May  be  made  at  the  final  hearing.  Although  it 
is  the  usual  practice  to  apply  for  a  receiver  upon  interlocutory 
motion,  yet  in  a  proper  case  the  appointment  may  be  made  at 
the  final  hearing,  and  as  a  part  of  the  final  decree.^^  Thus,  in 
case  of  a  judgment  or  decree  dissolving  a  partnership,  when 
a  receiver  is  necessary  to  wind  up  the  firm  business,  the  ap- 
pointment may  be  made  as  a  part  of  the  decree  and  for  the 
purpose  of  carrying  it  into  effect.^s  go  where  the  right  to  a 
receiver  depends  upon  questions  of  law  of  much  nicety,  as  well 
as  questions  of  title  which  are  involved  in  considerable  doubt, 
the  court  may  properly  refuse  the  application  in  limine,  and 
leave  it  to  be  determined  upon  a  final  hearing  of  the  cause.^^ 
And  the  appointment  may  be  made  at  the  final  hearing,  even 
though  the  bill  contains  no  prayer  for  a  receiver.'^*^ 

§  110.  Allowed  after  final  decree  in  cases  of  emergency : 
illustrations;  appointed  pending  appeal.  While  it  rarely 
happens  that  courts  are  called  upon  to  appoint  a  receiver  after 

65  PhcEiiix  Mutual  Life  Insurance  68  Shulte  v.  Hoffman,  18  Tex., 
Co.  V.  Grant,  3  MacArthur,  220.  678. 

66  Artisans  Bank  v.  Treadwell,  34  69  Hawkins  v.  Luscombe,  2 
Barb.,  553.  Swans.,  375. 

67  Shulte  V.  Hoffman,  18  Tex.,  "0  See  observations  of  the  Vice- 
678;  Shee  v.  Harris,  1  Jo.  &  Lat.,  Chancellor  in  Osborne  v.  Harvey, 
91.  See,  also,  Bowman  v.  Bell,  14  1  Y.  &'C.  C.  C,  116;  Bowman  v. 
Sim.,   392;    Sheldon   v.    Parker,    66  Bell,  14  Sim.,  392. 

Neb.,  634,  92  N.  W.,  923,  95  N.  W., 
1015.    And  see,  ante,  §  6. 


126  RECEIVERS.     •  [chap.  IV. 

a  final  decree  in  the  cause,  the  power  of  appointment  after 
decree  is  well  settled  and  is  exercised  in  cases  of  great  emer- 
gency, or  where  the  relief  is  indispensable  for  the  protection  of 
the  parties  in  interest."^!  Thus,  in  an  action  brought  by  persons 
beneficially  interested  under  a  will,  against  the  trustees  and 
executors,  to  have  the  trusts  of  the  will  performed  under 
direction  of  the  court,  if  after  decree  the  conduct  of  the  trus- 
tees is  such  as  to  render  a  receiver  necessary,  the  court  will  en- 
tertain the  application,  even  though  the  bill  contains  no  prayer 
for  a  receiver.'^^  Sq  in  an  action  to  determine  the  conflict- 
ing rights  of  parties  to  real  estate,  when  a  final  decree  has  been 
rendered  establishing  plaintiff's  title  and  right  to  a  portion  of 
the  property,  but  the  decree  contains  no  specific  directions  to 
defendants  to  surrender  possession  of  such  portion,  and  they 
refuse  so  to  do,  plaintiff  may  have  a  receiver  for  the  purpose  of 
collecting  and  preserving  the  rents,  and  to  insure  their  proper 
application  to  the  expenses  of  the  estate.  In  such  case,  the  re- 
ceiver is  not  appointed  for  the  purpose  of  executing  the  de- 
cree, or  to  turn  defendants  out  of  possession,  but  only  to  pro- 
tect the  rights  of  plaintiffs  in  the  property.  And  the  fact  that 
the  bill  did  not  pray  a  receiver  is  no  bar  to  the  relief  in  such 
case,  since  the  appointment  is  made  because  of  circumstances 
subsequent  to  the  decree.''^  So  after  a  decree  for  the  fore- 
closure of  a  mortgage,  a  receiver  of  the  rents  of  the  mortgaged 
premises  was  allowed,  as  against  a  tenant  in  possession  for 
more  than  nineteen  years,  but  who  was  not  a  party  to  the  suit, 
ihe  exigency  of  the  case  requiring  the  relief  to  prevent  the  ten- 
ant from  setting  up  an  adverse  possession  of  twenty  years.*^* 
And  after  a  final  decree  confirming  a  sale  of  land  to  a  purchas- 

71  Wright    V.    Vernon,    3    Drew.,  208,  4  N.  W.,  124 ;  Haas  v.  Chicago 

112;  Bowman  v.  Bell,  14  Sim,  392;  Building  Society,  89  111,  498.     See, 

Thomas    v.    Davies,    11    Beav.,    29;  also,  Hiles  v.  Moore,  15  Beav.,  175. 

Connelly  v.  Dickson,  76  Ind.,  440;  72  Bowman  v.    Bell,  14  Sim,  392. 

Brinkman  ?/.  Ritzinger,  82  Ind.,  358;  73  Wright    v.    Vernon,    3    Drew., 

Chicago  &  Southeastern  Ry.  Co.  v.  112. 

St.  Clair,  144  Ind.,  371,  42  N.  K,  74  Thomas  v.  Davies,  11  Beav.,  29. 
225;    Schreiber  v.   Carey,  48  Wis., 


CHAP.  IV.]  PRACTICE.  127 

er  at  a  judicial  sale  and  awarding  a  writ  of  assistance,  the  pur- 
chaser being  entitled  to  the  rents  may  have  a  receiver  pending 
an  appeal  by  defendant,  it  appearing  that  defendant  is  in- 
solvent, and  that  if  he  is  permitted  to  retain  possession  the 
rents  will  be  lost  to  the  purchaser.'^^  So,  pending  an  appeal 
from  a  decree  for  the  sale  of  real  property  in  satisfaction  of 
liens  thereon,  the  court  below  has  power  to  appoint  a  receiver 
to  care  for  and  rent  the  property  until  the  further  order  of  the 
court."^^  So,  pending  an  appeal  from  a  decree  dismissing  a 
bill  to  foreclose  a  mortgage,  the  lower  court  may  appoint  a  re- 
ceiver to  collect  the  rents  and  profits  pending  the  appeal.'^''' 
So  when  real  estate  of  a  debtor  has  been  decreed  to  be  sold  in 
satisfaction  of  liens  and  demands  of  his  creditors,  a  receiver 
has  been  appointed  by  the  court  below  upon  the  application 
of  the  creditors,  to  receive  the  rents  and  profits  pending  an 
appeal  and  supersedeas  to  such  decree,  the  defendant  being 
insolvent,  and  the  lands  being  insufficient  to  satisfy  the  liens 
thereon.'''^  But  a  strong  case  of  probable  injury  must  be  made 
out  to  warrant  the  court  in  entertaining  the  application  at  this 
stage  of  the  cause."^^  And  upon  a  bill  by  a  mortgagor  against 
a  mortgagee  for  redemption  of  the  mortgaged  premises,  after 
a  decree  directing  the  redemption,  the  court  will  not,  upon  the 
ex  parte  application  of  defendant,  entertain  a  motion  for  a 
receiver,  such  a  practice  being  without  precedent  or  authority. ^^ 

"^5  Merrill  v.  Elam,  2  Tenn.   Ch.,  action    involving    the    title    to    real 

513.     As  to  the  effect  of  the  appeal  property,  a  decree  had  been  entered 

upon   such    order    appointing   a    re-  adjudging  the  title  in  the  plaintiff, 

ceiver,  see  Payne  v.  Baxter,  2  Tenn.  whereupon  the  defendant  had  prayed 

Ch.,  517.  and  perfected  an  appeal,  it  was  held 

7^6  Moran   v.   Johnston,   26   Grat.,  under  the  code  of  Iowa  that  a  re- 

108;    Adkins    v.    Edwards,    83    Va.,  ceiver  should  be  appointed  to  take 

316,  2  S.  E.,  439.  care    of   the    property    pending   the 

77  Coleman  v.  Fisher,  66  Ark.,  43,  appeal.  Mitchell  v.  Roland,  95 
48  S.  W.,  807.  Iowa,  314,  63  N.  W.,  606. 

78  Beard  v.  Arbuckle,  19  West  79  Adair  v.  Wright,  16  Iowa,  385. 
Va.,  145;  Hutton  v.  Lockridge,  27  80  Barlow  v.  Gains,  8  Beav.,  329. 
West  Va.,  428.     And  where,  in  an 


128  RECEIVERS.  [chap.  IV. 


III.  Notice  of  the  Application. 

§  111.     Courts  exceedingly  averse  to  interfering  without  notice. 

112.  The  rule  imperative,  not  discretionary;  want  of  notice  ground 

for  reversal;  how  taken  advantage  of;  no  receiver  without 
notice  where  injunction  is  sufficient. 

113.  What  must  be  shown  to  warrant  departure  from  the  rule. 

114.  Whether  service  of  process  necessary,  qiiccre. 

115.  Notice  required  in  case  of  insolvent  corporation. 

116.  Personal  service  of  notice  not  always  requisite;  parties  in  court 

by  counsel. 

117.  Notice   dispensed  with  when  defendant  has   absconded;  non- 

resident defendants;  partnership;  foreclosure. 

§  111.  Courts  exceedingly  averse  to  interfering  without 
notice.  Courts  of  equity  are  exceedingly  averse  to  the  ex- 
ercise of  their  extraordinary  jurisdiction  by  the  appointment 
of  receivers  upon  ex  parte  applications,  and  this  practice  is 
never  tolerated  except  in  cases  of  the  gravest  emergency,  de- 
manding the  immediate  interference  of  the  court  for  the  pre- 
vention of  irreparable  injury,  or  in  cases  where  defendant 
has  absconded  and  wilfully  put  himself  beyond  the  jurisdiction 
of  the  court.  And  it  may  be  stated  as  the  settled  practice, 
both  in  England  and  in  America,  to  require  the  moving  party 
to  give  due  notice  of  the  application  to  defendant,  over  whose 
efifects  he  seeks  the  appointment  of  a  receiver,  in  order  that 
he  may  have  an  opportunity  of  being  heard  in  defense,  and  that 
his  property  may  not  be  summarily  wrested  from  him  upon  an 
ex  parte  application.  Even  in  exceptional  cases  of  great  emer- 
gency, when  the  relief  is  demanded  for  the  prevention  of  ir- 
remediable injury,  the  courts  are  extremely  averse  to  interfer- 
ence ex  parte,  and  will  ordinarily  entertain  the  application  only 
after  notice  to  defendant,  or  after  a  rule  to  show  cause.^^ 

81  Verplanck  z'.  Mercantile  Insur-  Field  v.   Ripley,  20  How.   Pr.,  26; 

ance  Co.,  2  Paige,  438;  Sandford  v.  Crowder   v.    Moone,    52   Ala.,   220; 

Sinclair,    8    Paige,    373;    People    v.  Moritz  j;.  Miller,  87  Ala.,  331,  6  So., 

Albany   &    Susquehanna    R.    Co.,    7  269;   Thompson  v.   Tower   M.   Co., 

Ab.   Pr.,   N.   S.,  265,   1   Lans.,  308,  87  Ala.,  77,2,,  6  So.,  928;   Bank  of 

55    Barb.,    34,    38    How.    Pr.,    228;  Florence  v.  United   States  S.  &  L. 


CHAP.  IV.] 


PRACTICE. 


129 


§  112.  The  rule  imperative,  not  discretionary;  want  of 
notice  ground  for  reversal;  how  taken  advantage  of;  no 
receiver  without  notice  where  injunction  is  sufficient.  Xhe 
rule  of  practice  thus  stated,  requiring  notice  to  defendant 
before  an  application  for  a  receiver  will  be  entertained,  would 
seem  to  be  not  a  matter  of  discretion  with  the  court,  but  an 
inflexible  rule  which  the  courts  are  not  at  liberty  to  disregard. 


Co.,  104  Ala,  297,  16  So.,  110;  Little 
Warrior  Coal  Co.  v.  Hooper,  105 
Ala.,  665,  17  So.,  118;  Gilreath  v. 
Union  Bank  &  Trust  Co.,  121  Ala., 
204,  25  So.,  581 ;  Pollard  v.  South- 
ern Fertilizer  Co.,  122  Ala.,  409,  25 
So.,  169;  Ensley  Development  Co. 
V.  Powell,  147  Ala.,  300,  40  So.,  137 ; 
Fischer  v.  Superior  Court,  110  Cal., 

129,  42  Pac,  561 ;  State  v.  J.,  P.  & 
M.  R.  Co.,  15  Fla.,  201;  Stockton 
V.  Harmon,  32  Fla.,  312,  13  So.,  833 ; 
Jacksonville  Ferry  Co.  v.  Stockton, 
40  Fla.,  141,  23  So.,  557;  Rogers  v. 
Dougherty,  20  Ga.,  271 ;  Cummings 
V.  Steele,  6  Idaho,  666,  59  Pac,  15; 
Wabash  R.  Co.  v.  Dykeman,  133 
Ind.,  56,  32  N.  E.,  823;  Continental 
Clay  &  M.  Co.  v.  Bryson,  168  Ind., 
485,  81  N.  E.,  210;  Henderson  v. 
Reynolds,  168  Ind.,  522,  81  N.  E., 
494;  Bisson  v.  Curry,  35  Iowa,  72, 
following  French  v.  Gifford,  30 
Iowa,  148;  Howe  v.  Jones,  57  Iowa, 

130,  8  N.  W.,  451,  10  N.  W.,  299; 
State  V.  City  of  New  Orleans,  43 
La.  An.,  829;  Blondheim  v.  Moore, 
11  Md.,  365;  Triebert  v.  Burgess,  11 
Md..  452;  Nusbaum  v.  Stein,  12 
Md.,  315;  Voshell  v.  Hynson,  26 
Md.,  83 ;  Anderson  v.  Cecil,  86  Md., 
490,  38  Atl.,  1074;  Whitehead  v. 
Wooten,  43  Miss.,  523 ;  Buckley  v. 
Baldwin,  69  Miss.,  804,  13  So.,  851; 
Meridian  N.  &  P.  Co.  v.  Diem  & 
W.  P.  Co.,  70  Miss.,  695.  12  So., 
702;  Rees  v.  Andrews,  169  Mo.,  177, 

Receivers — 9. 


69  S.  W.,  4;  State  v.  Dearing,  184 
Mo.,  647,  111  S.  W.,  967;  State  v. 
District  Court,  20  Mont,  284,  50 
Pac,  852;  Grandin  v.  La  Bar,  2  N. 
Dak.,  206;  Fredenheim  v.  Rohr,  87 
Va.,  764,  13  S.  E.,  193,  266;  Larsen 
V.  Winder,  14  Wash.,  109,  44  Pac, 
123,  53  Am.  St.  Rep.,  864;  Ruffner 
V.  Mairs,  33  West  Va.,  655,  11  S. 
E.,  5;  Davelaar  v.  Blue  M.  I.  Co., 
110  Wis.,  470,  86  N.  W.,  185;  North 
America  Land  &  T.  Co.  v.  Watkins, 
48  C.  C.  A.,  254,  109  Fed.,  101; 
Cabaniss  v.  Reco  M.  Co.,  54  C.  C. 
A.,  190,  116  Fed.,  318;  Joseph  Dry 
Goods  Co.  V.  Hecht,  57  C.  C.  A., 
64,  120  Fed.,  760;  Huff  v.  Bidwell, 
81  C.  C.  A.,  43,  151  Fed.,  563;  Ford 
V.  Taylor,  137  Fed.,  149;  Caillard 
V.  Caillard,  25  Beav.,  512;  In  re 
Potts,  (1893)  1  Q.  B.,  648.  And  see 
Fisher  v.  Trust  Co.,  138  N.  C,  90, 
50  S.  K,  592;  Baker  v.  Baker,  108 
Md.,  269,  70  Atl.,  418.  But  see 
Heard  v.  Murray,  93  Ala.,  127,  9 
So.,  514;  Werborn's  Adm'r  t/.  Kahn, 
93  Ala.,  201,  9  So.,  729.  Under  the 
statutes  of  Iowa,  a  receiver  may  be 
appointed  in  an  action  at  law,  be- 
fore notice  to  the  defendant.  Jones 
V.  Graves,  20  Iowa,  596.  In  Sulli- 
van Electric  L.  &  P.  Co.  v.  Blue, 
142  Ind.,  407,  41  N.  E.,  805,  it  was 
held  that  no  sufficient  cause  was 
shown  for  the  appointment  of  a  re- 
ceiver without  notice  under  a  stat- 
ute   which    provided    that    receivers 


130  RECEIVERS.  [chap.  IV. 

And  it  is  held  to  be  error  for  the  court  to  entertain  the  appli- 
cation, and  to  appoint  a  receiver  without  notice  to  the  adverse 
party.^2  And  the  fact  that  a  receiver  is  appointed  upon  the 
same  day  with  the  filing  of  the  bill,  without  notice  to  defendant 
of  the  application,  is  deemed  sufficient  ground  for  reversing 
the  action  of  the  court.^^  So  when  the  appointment  was  made 
without  notice  to  defendants,  who  were  merchants  residing  and 
doing  business  in  the  same  city,  and  within  a  short  distance 
from  the  court,  no  imperative  necessity  being  shown  for  such 
haste,  the  order  of  the  court  was  revoked. ^^  So  it  is  improper 
to  appoint  a  receiver  without  notice  where  the  verification  of 
the  bill  is  based  merely  upon  the  opinion  of  the  affiant  and  con- 
tains no  recital  of  facts  upon  which  such  opinion  is  founded. ^^ 
And  it  is  held  that  a  court  should  not  appoint  a  receiver  with- 
out notice  for  a  longer  time  than  is  fairly  and  reasonably  neces- 
sary to  allow  defendant  whose  possession  is  invaded  to  show 
cause  against  the  further  continuance  of  the  receivership.^^ 
And  especially  should  the  court  not  appoint  a  receiver  with- 
out notice  where  no  summons  has  been  issued  in  the  cause.^ 
And  when  plaintilT  had  procured  the  appointment  of  a  receiver 
upon  an  ex  parte  application,  late  at  night,  and  the  receiver 

should  not   be   appointed   until   the  22  Fla.,  422;  Larsen  v.  Winder,  14 

adverse  party  should  have  appeared  Wash.,  109,  44  Pac,  123,  53  Am.  St. 

or  should  have  had  reasonable  no-  Rep.,  864.     See,  also.   Railway  Co. 

tice  of  the  application,  except  upon  v.  Jewett,  2>7  Ohio  St.,  649. 

sufficient  cause  shown  by  affidavit.  83  Nusbaum  v.  Stein,  12  Md.,  315. 

And   see  Winchester  E.   L.   Co.   v.  84  Triebert    v.    Burgess,    11    Md., 

Gordon,  143  Ind.,  681,  42  N.  E.,  914.  452. 

In  Michigan  it  is  held  that  the  ap-  85  Continental  Clay  &  M.  Co.  v. 

pointment  of  a  receiver  ex  parte  is  Bryson,  168  Ind.,  485,  81  N.  E.,  210. 

a  nullity  and  that  a  writ  of  manda-  86  St.   Louis,   K.   &   S.   R.   Co.   v. 

mils  will  lie  from  the  supreme  court  Wear,  135  Mo.,  230,  36  S.  W.,  357, 

to  compel  the  lower  court  to  vacate  658,  33  L.  R.  A.,  341.     In  this  case 

such  order  of  appointment.     Gold-  it  was  held  that  the  appointment  of 

man  v.  Manistee  Circuit  Judge,  155  a  receiver  without  notice  with  a  rule 

Mich.,  47,  —  N.  W.,  — .  to  defendant  to  show  cause,  which 

82  Bisson  V.   Curry,  35  Iowa,  72,  could  not  be  heard  for  three  months, 

following     French     v.     Gifford,     30  was  improper. 

Iowa,   148;   Fricker  v.   Peters  &  C.  87  Alexander    Gas    Co.    v.    Irish, 

Co.,  21  Fla.,  254;  Moyers  v.  Coiner,  152  Ind.,  535,  53  N.  E.,  762. 


CHAP.  IV.]  PRACTICE.  131 

sold  the  property  early  the  following  morning,  the  court  set 
aside  the  sale,  and  revoked  the  appointment  as  contrary  to 
equity,  and  in  conflict  with  the  due  and  ordinary  course  of 
procedure  in  courts  of  justice.^^  And  a  receiver  should  not  be 
appointed  without  notice  where  a  temporary  restraining  order 
or  an  interlocutory  injunction  will  afford  ample  protection.^^ 
And  the  judgment  of  a  lower  court,  revoking  the  appointment 
of  a  receiver,  because  of  want  of  notice,  will  be  affirmed  by  a 
court  of  error.^o  But  it  is  held  in  Maryland  that  no  advantage 
can  be  taken  in  an  appellate  court  of  the  want  of  notice,  except 
by  an  appeal  from  the  order  appointing  the  receiver.^^  Under 
the  New  York  chancery  practice,  however,  if  the  court  below 
had  improperly  allowed  an  ex  parte  application  for  a  receiver 
and  the  appointment  was  clearly  irregular,  defendant  could 
not  appeal  directly  from  that  order,  but  was  required  first  to 
apply  to  the  court  below  to  set  aside  or  modify  the  order, 
and  if  upon  a  proper  application  the  court  refused  so  to  do,  an 
appeal  would  then  lie  from  the  order  denying  the  application.^^ 
But  where  the  propriety  of  the  action  of  the  court  in  appoint- 
ing a  receiver  without  notice  has  been  considered  by  the  court 
upon  a  motion  to  discharge  the  receiver  and  the  court  has  sus- 
tained the  original  order  by  refusing  to  discharge  him,  the 
want  of  notice  of  the  appointment  is  thereby  cured.^^  But 
upon  an  appeal  from  an  order  appointing  a  receiver,  if  the 
record  is  silent  as  to  whether  due  notice  of  the  application  was 
given  to  defendant,  it  will  be  presumed  that  the  court  below 
did  not  act  without  proof  of  notice.^^  And  the  statutory  re- 
quirement of  notice  to  the  defendant  of  an  application  for  a 
receiver  is  waived  where  the  parties  have  appeared  and  con- 

88  Simmons    v.    Wood,    45    How.  91  Voshell  v.  Hynson,  26  Md.,  83. 
Pr.,  268.  92  Gibson  v.  Martin,  8  Paige,  481. 

89  Fischer  v.  Superior  Court,  110  93  Bristow   v.    Home    B.    Co.,   91 
Cal.,  129,  42  Pac,  561 ;  Henderson  Va.,  18,  20  S.  K,  946. 

V.   Reynolds,   168   Ind.,   522,   81    N.  94  Miller  v.  Shriner,  86  Ind.,  493. 

E.,  494. 

90  Rogers  v.  Dougherty,  20  Ga., 
271. 


132  RECEIVERS.  [chap.  IV. 

sented  to  the  appointment  or  have  resisted  the  application  upon 
grounds  other  than  the  want  of  notice.^^ 

§  113.  What  must  be  shown  to  warrant  departure  from 
the  rule.  To  warrant  a  court  in  entertaining  an  apphca- 
tion  for  a  receiver  without  notice,  it  must  be  clearly  shown  that 
the  delay  which  would  result  from  giving  notice  would  defeat 
the  rights  of  plaintiff,  or  would  result  in  great  injury  to  him.^^ 
Thus,  it  has  been  held  proper  to  appoint  a  receiver  without 
notice  where  it  appeared  that  there  was  imminent  danger  that 
the  property  involved  would  be  removed  beyond  the  jurisdic- 
tion and  unlawfully  disposed  of  if  notice  should  be  given,^'^ 
And  when  the  relief  is  sought  upon  an  ex  parte  application, 
upon  the  ground  of  extreme  necessity,  the  particular  facts  and 
circumstances  rendering  such  summary  proceeding  necessary 
should  be  set  forth  in  the  application,  and  a  mere  statement  of 
opinion  as  to  such  necessity,  even  though  made  under  oath, 
will  not  justify  a  departure  from  the  established  rule  requiring 
notice  of  the  application.^^    And  where  no  notice  is  given,  the 

95  Farmers  &  Merchants  Bank  v.  ance  Co.,  2  Paige,  438 ;  Wabash  R. 
German  National  Bank,  59  Neb.,  Co.  v.  Dykeman,  133  Ind.,  56,  32 
229,  80  N.  W.,  820;  Veith  v.  Ress,  N.  E.,  823;  Bank  of  Florence  v. 
60  Neb.,  52,  82  N.  W.,  116;  Murphy  United  States  S.  &  L.  Co.,  104  Ala., 
V.  Fidelity  M.  F.  Ins.  Co.,  69  Neb.,  297,  16  So.,  110;  Gilreath  v.  Union 
489,  95  N.  W.,  1022.  Bank  &  Trust  Co.,  121  Ala.,  204, 
96Maynard  v.  Railey,  2  Nev.,  25  So.,  581;  Pollard  v.  Southern 
313 ;  Culver  v.  Guyer,  129  Ala.,  602,  Fertilizer  Co.,  122  Ala.,  409,  25  So., 
29  So.,  779;  Tuttle  v.  Blow,  176  169;  Fricker  v.  Peters  &  C.  Co.,  21 
Mo.,  158,  75  S.  W.,  617,  98  Am.  St.  Fla.,  254;  Jacksonville  Ferry  Co.  v. 
Rep.,  488;  Cole  v.  Price,  22  Wash.,  Stockton,  40  Fla.,  141,  23  So.,  557; 
18,  60  Pac,  153;  Baltimore  Bargain  Davelaar  v.  Blue  M.  I.  Co.,  110 
House  V.  St.  Clair,  58  West  Va.,  Wis.,  470,  86  N.  W.,  185.  In  Ver- 
565,  52  S.  E.,  660.  For  facts  justi-  planck  v.  Mercantile  Insurance  Co., 
fying  the  appointment  of  receivers  2  Paige,  438,  Walworth,  Chancellor, 
without  notice,  see  Maxwell  v.  says,  p.  450:  "By  the  settled  prac- 
Peters  Shoe  Co.,  109  Ala.,  371,  19  tice  of  the  court  in  ordinary  suits, 
So.,  412;  O'Donnell  v.  First  Na-  a  receiver  can  not  be  appointed,  ex 
tional  Bank,  9  Wyo.,  408,  64  Pac,  parte,  before  the  defendant  has  had 
337.  an  opportunity  to  be  heard  in  rela- 
97  State  V.  District  Court.  22  tion  to  his  rights,  except  in  those 
Mont.,  241,  56  Pac,  281.  cases  where  he  is  out  of  the  juris- 
ts Verplanck  v.  Mercantile  Insur-  diction  of  the  court,  or  can  not  be 


CHAP.  IV.]  PRACTICE.  133 

bill  should,  in  addition  to  showing  the  necessity  for  the  ap- 
pointment, set  forth  the  reasons  justifying  the  failure  to  give 
the  necessary  notice,  or  such  reasons  must  at  least  appear  from 
the  affidavits  presented  in  support  of  the  application.^^  And 
a  receiver  should  not  be  appointed  without  notice  where  at  the 
hearing  of  the  motion  there  was  no  testimony  of  witnesses 
and  the  verification  of  the  bill  was  upon  information  and  be- 
lief.l 

§  114.  Whether  service  of  process  necessary,  quaere. 
As  to  whether  defendant  must  be  actually  served  with  process 
in  the  cause,  in  addition  to  notice  of  the  motion  for  a  receiver, 
before  the  court  will  entertain  the  application,  is  not  quite  clear 
from  the  authorities.  It  would  seem,  upon  principle,  that  un- 
der the  prevailing  practice  of  hearing  the  application  before 
answer,  no  real  necessity  exists  of  formal  service  of  process 
in  the  cause  as  a  foundation  for  the  motion,  if  defendant  has 
due  notice  of  the  application.  And  under  the  English  chan- 
cery practice,  plaintiff  was  at  liberty,  immediately  upon  filing 
his  bill,  to  serve  defendant  with  notice  of  the  motion  before  ap- 
pearance.2  But  it  has  been  held  that  a  receiver  should  not  be 
appointed  unless  the  court  has  obtained  jurisdiction  by  service 
of  process,  as  well  as  notice  to  the  parties  in  interest  of  the 
application.^     And  it  has  been  held  erroneous  to  appoint  a 

found ;    or   where,    for   some   other  Ogilvie's  affidavit  in  this  case,  that 

reason,  it  becomes  absolutely  neces-  he  was  satisfied  of  the  necessity  of 

sary  for  the  court  to  interfere  be-  such    a   proceeding,    was    not    suffi- 

fore  there  is  time  to  give  notice  to  cient.     He  should   have   stated  the 

the   opposite  party,   to   prevent  the  facts    on    which    his    opinion    was 

destruction     or    loss     of    property.  founded,    to    enable    the    court    to 

Formerly  it  was   never  done  until  judge  of  its  correctness." 

after  answer.     In  every  case  where  99  Baltimore    Bargain    House    v. 

the  court   is   asked   to   deprive  the  St.   Clair,  58  West  Va.,  565,  52  S. 

defendant  of  possession  of  his  prop-  E.,  660. 

erty  without  a  hearing,  or  an  op-  1  Benepe-Owenhouse        Co.        v. 

portunity  to  oppose  the  application,  Scheidegger,  32  Mont,  424,  80  Pac, 

the    particular    facts    and    circum-  1024;    Henderson  v.   Reynolds,    168 

stances  which  render  such   a   sum-  Ind.,  522,  81  N.  E.,  494. 

mary  proceeding  proper  should  be  2  Meaden  v.  Sealey,  6  Hare,  620. 

set  forth  in  the  bill  or  petition  on  3  Whitehead  v.  Woolen,  43  Miss., 

which  such  application   is   founded.  523.     "It  can  not  well  be  seen,"  say 


134  RECEIVERS.  [CPIAP.  IV. 

receiver  without  notice  where  no  summons  has  been  issued  in 
the  cause.^  If,  however,  a  receiver  is  prayed  for  as  a  part  of 
the  final  rehef  sought  in  the  action,  the  process  which  brings 
defendant  into  court  to  answer  is  sufficient  notice  of  the  final 
relief  prayed.  Upon  appeal,  therefore,  from  the  appointment 
of  a  receiver  in  such  case  as  part  of  the  final  decree,  it  will  not 
be  reversed  because  of  the  want  of  other  notice  of  the  appli- 
cation.^ And  it  has  been  held  by  the  Court  of  Appeals  of  the 
District  of  Columbia  that,  while  it  is  an  unusual  practice  to  ap- 
point a  receiver  before  service  of  process,  yet  where  the  court 
has  jurisdiction  of  the  subject-matter,  the  power  exists  to  do 
so  in  case  of  an  emergency  and  that  the  existence  of  such  emer- 
gency is  not  subject  to  collateral  inquiry,^ 

§  115.  Notice  required  in  case  of  insolvent  corporation. 
Even  under  a  statute  authorizing  the  appointment  of  receiv- 
ers over  insolvent  corporations,  the  appointment  will  not  be 
made  ex  parte  and  without  an  opportunity  to  the  defendant  of 
being  heard.  And  the  practice  of  the  New  York  Court  of 
Chancery  in  such  cases  was,  upon  the  filing  of  a  petition  duly 
verified,  setting  forth  the  grounds  upon  which  the  application 
was  based,  to  issue  an  order  to  show  cause,  a  copy  of  which  was 
served  upon  the  proper  officers  of  the  corporation,  directing 
them,  at  a  future  day  therein  named,  to  show  cause  why  the 
application  should  not  be  granted.*^ 

§  116.  Personal  service  of  notice  not  always  requisite; 
parties  in  court  by  counsel.  It  is  not  in  all  cases  indis- 
pensable that  the  notice  should  be  personally  served  upon  each 
defendant,  provided  service  be  had  upon  one  of  the  defend- 
ants authorized  to  represent  the  others.  Thus,  it  is  held  suffi- 
cient to  serve  the  notice  upon  a  defendant  who  is  the  author- 

the  court,  Simrall,  J.,  p.  527,  "how  4  Alexandria  Gas  Co.  v.  Irish,  152 

the  court  can  take  from  a  defend-  Ind.,  535,  53  N.  E.,  762. 

ant  the  possession  of  property,  un-  5  Newell  v.  Schnull,  72>  Ind.,  241. 

less  it  has  jurisdiction  by  service  of  6  Barley  v.   Gittings,   15   App.   D. 

process  and  also  by  notice  of  mo-  C,  427. 

tion."    And  see  Hyslop  v.  Hoppock,  7  Devoe   v.    Ithaca   &   Owego   R. 

5  Benedict,  447.  Co.,  5  Paige,  521. 


CHAP.  IV.]  PRACTICE.  135 

ized  agent  of  his  co-defendant,  and  who  is  acting  under  a  power 
of  attorney  from  him  in  the  management  of  the  very  property 
over  which  a  receiver  is  sought.^  And  the  apphcation  may  be 
entertained  and  determined  without  any  previous  formal  no- 
tice to  the  parties  in  interest,  when  they  are  actually  repre- 
sented in  court  by  counsel  who  appear  in  resistance  to  the 
motion.^ 

§  117.  Notice  dispensed  with  v^hen  defendant  has  ab- 
sconded; non-resident  defendants;  partnership;  foreclo- 
sure. While  it  is  the  uniform  practice,  as  already  shown, 
to  entertain  applications  for  receivers  only  after  due  notice  to 
the  parties  against  whom  the  relief  is  sought,  a  departure  from 
this  practice  is  allowed  when  a  defendant  has  absconded  for 
the  purpose  of  avoiding  service  of  process.  And  in  such  cases 
the  application  may  be  entertained  without  notice,  service  of 
process,  or  appearance  by  defendant ;  i^  especially  when  plain- 
tiff has  given  notice  of  the  application  to  the  agents  and  ten- 
ants of  defendant's  estate,  over  which  a  receiver  is  sought.^l 
So  notice  may  be  dispensed  with  when  defendant  has  left  the 
state  and  is  not  expected  to  return  for  several  months,  and  no 
person  is  authorized  to  represent  him,  and  it  is  necessary  to 
appoint  a  receiver  without  delay  to  collect  rents  which  would 
otherwise  be  lost.  In  such  case  the  order  of  appointment 
should  reserve  to  defendant  the  right  to  apply  for  relief  against 
the  order  upon  cause  shown.^^  Sq  a  receiver  has  been  ap- 
pointed without  notice  upon  a  bill  by  one  partner  against  his 
copartners,  the  bill  alleging  the  insolvency  of  defendants,  that 

8  Mays  v.  Rose,  Freem.  (Miss.),  10  Maguire  v.  Allen,  1  Ball  &  B., 
703.  And  see  Maguirc  v.  Allen,  1  75;  Dowling  v.  Hudson,  14  Beav., 
Ball  &  B.,  75.  423.     See  Gibbons  v.  Mainwaring,  9 

9  McLean  v.  Lafayette  Bank,  3  Sim.,  11;  Williams  v.  Jenkins,  11 
McLean,  503;  Miller  v.  Cavanaugh,  Ga.,  595. 

99  Ky.,  m,  35  S.  W.,  920,  59  Am.  H  Maguire  v.  Allen,  1  Ball  &  B., 

St.    Rep.,    463;    Consolidated    Barb      75. 

Wire  Co.  v.  Stevenson,  71  Kan.,  64,  12  People  v.  Norton,  1  Paige,  17. 

79  Pac,  1085.     See,  also,  Haugan  v. 

Netland,  51  Minn.,  552,  53  N.  W., 

873. 


136  RECEIVERS.  [chap.  IV. 

they  were  collecting  debts  due  to  the  firm  and  disposing  of  its 
assets,  and  that  they  had  excluded  complainant  from  the  part- 
nership premises. 12  So,  too,  the  relief  has  been  granted  upon 
a  bill  to  foreclose  a  mortgage  upon  growing  crops,  the  bill 
averring  the  insolvency  of  defendant,  the  mortgagor,  that  the 
crops  were  in  danger  of  being  lost  or  destroyed,  that  defendant 
had  applied  a  portion  of  them  in  disregard  of  complainant's 
rights,  and  that  the  security  was  inadequate.^*  And  where  real 
estate  had  been  conveyed  by  a  debtor  in  trust  for  the  payment 
of  his  debts,  and  the  trustee  had  been  in  possession  a  number 
of  years  without  paying,  a  creditor  was  allowed  a  receiver  un- 
til answer,  the  trustee  residing  beyond  the  jurisdiction  of  the 
court  and  not  having  appeared  in  the  action. ^^  And  under 
a  statute  authorizing  the  appointment  upon  such  notice  to 
the  adverse  party  as  the  court  may  prescribe,  when  such  adverse 
party  is  beyond  the  jurisdiction  of  the  court  in  another  state, 
it  is  not  error  to  make  the  order  without  notice,  when  neces- 
sary for  the  prevention  of  serious  loss.^^  So  under  the  code 
of  procedure  of  New  York,  it  is  held  that  a  receiver  may  be 
appointed  over  a  partnership  in  an  action  for  a  dissolution, 
upon  the  appearance  of  the  resident  partners,  without  notice 
to  a  non-resident  partner.^"^  But  when  it  does  not  appear  that 
defendant  has  left  the  country  to  avoid  service  of  process,  and 
no  particular  circumstances  of  hardship  are  shown,  an  ex 
parte  application  for  a  receiver  will  not  be  entertained. ^^ 

13  Sims  V.  Adams,  78  Ala.,  395.  16  Maish  v.  Bird,  59  la.,  307,  13 

14  Ashurst    V.    Lehman,    86    Ala.,      N.  W.,  298. 

370,  5  So.,  731.     See,  also,  Hendrix  17  Alford  v.  Berkele,  29  Hun,  633. 

V.  American  F.  L.  M.  Co.,  95  Ala.,  18  Stratton  v.  Davidson,  1  Russ. 

313,  11  So.,  213.  &  M.,  484. 

15  Malcolm     v.     Montgomery,     2 
Mol.,  500. 


CHAPTER  V. 

OF   THE   RECEIVER'S    BOND    AND    LIABILITY    THEREON. 

I.  Of  the  Bond  §  118 

II.  Liability  of  Sureties    127 

I.  Of  the  Bond. 

§  118.     Bond  or  recognizance  required;  English  practice;  when  bond 
dispensed  with. 

119.  Receiver's  own  recognizance    sometimes    sufficient;    appoint- 

ment by  consent. 

120.  New  York  doctrine;  security  dispensed  with. 

121.  Title  does  not  vest  until  bond  is  executed;  failure  ground  for 

nonsuit;  may  be  filed  nunc  pro  tunc. 
121a.  Upon   filing  bond  receiver's  title  relates  back  to  date  of  ap- 
pointment. 

122.  Appointment  on  final  decree;  effect  of  omitting  bond. 

123.  Additional  security  required  on  extending  receiver. 

124.  Eftect  of  bond  by  defendant  to  account  as  receiver. 

125.  Assignment  of  mortgage  as  security  for  receivership. 

126.  When  bond  to  be  approved  by  the  court. 
126c.  Statute  of  limitations. 

126b.  New  bond  upon  making  temporary  receiver  permanent. 

§  118.  Bond  or  recognizance  required;  English  prac- 
tice; when  bond  dispensed  with.  Receivers  are  usually- 
required,  before  entering  upon  their  duties,  to  enter  into  a  bond 
or  recognizance  for  the  faithful  performance  of  their  duties, 
with  adequate  security,  the  amount  and  conditions  of  the 
security  being  usually  determined  by  the  court  making  the 
appointment,  due  regard  being  had  to  the  value  of  the  property 
or  fund  intrusted  to  the  receiver's  management.  Under  the 
practice  of  the  English  Court  of  Chancery,  established  at  an 
early  period,  a  receiver  was  required  to  enter  into  a  recogni- 

137 


13S  RECEIVERS.  [chap.  V. 

zance  with  two  sureties,^  and  it  was  customary  to  require  him 
to  give  security  in  all  cases  when  the  order  was  made  in  the 
usual  way  by  the  court,  and  a  reference  had  to  a  master  to  ap- 
point ;  and  it  was  held  that  the  security  could  not  be  dispensed 
with  in  such  cases,  even  by  consent  of  the  parties  to  the  action.^ 
If,  however,  the  parties  themselves  agreed  upon  a  receiver  to 
be  appointed,  not  by  authority  of  court,  but  by  their  own 
consent,  and  then  asked  that  he  should  act  without  giving  the 
usual  security,  it  was  regarded  as  proper  to  permit  this  to  be 
done.3  And  when  a  receiver  was  appointed  without  salary, 
it  was  said  to  be  not  unusual  to  dispense  with  the  security 
otherwise  required.'*  And  a  mortgagee  of  West  Indian  estates 
was  in  one  case  appointed  receiver  in  England,  without  being 
required  to  give  the  usual  security.^ 

§  119.  Receiver's  own  recognizance  sometimes  suffi- 
cient; appointment  by  consent.  It  was  held  in  an  early 
English  case  that  persons  named  as  receivers  by  parties  to  the 
cause  might  be  appointed  upon  their  own  recognizances  only.^ 
And  when  a  receiver  was  satisfactory  to  all  parties  except  the 
defendant,  and  had  been  in  the  previous  possession  and  man- 
agement of  the  estate  in  controversy,  it  was  provided  by  the 
terms  of  the  decree  that  he  should  be  allowed  to  give  security 
by  his  individual  recognizance."^  But  in  the  Irish  Court  of 
Chancery  it  is  held  that  a  receiver  will  not  be  appointed  with- 
out giving  adequate  security,  even  though  the  parties  in  in- 
terest consent  that  he  may  be  appointed  merely  upon  his  own 
recognizance.^ 

§  120.  New  York  doctrine ;  security  dispensed  with.  In 
New  York  the  obligation  of  a  receiver  to  give  adequate  se- 
curity for  the  faithful  performance  of  his  trust  is  regarded  as 
being  founded  upon  the  general  practice  of  courts  of  equity, 

1  Mead  v.  Orrery,  3  Atk.,  235.  5  Davis  v.  Barrett,  13  L.  J.,  N.  S. 

2  Manners  v.  Furze,  11  Beav.,  30.      Ch.,  304. 

See,  also,  Tylee  v.  Tylee,  17  Beav.,  6  Ridout    v.    Earl    of    Plymouth, 

583.  Dick.,  68. 

3  Manners  v.  Furze,  11  Beav.,  30.  7  Carlisle  v.    Berkley,   Amb.,   599. 

4  Gardner  v.   Blane,   1   Hare,  381.  8  Bailie  v.  Bailie,  1  Ir.  Eq.,  413. 


CHAP,    v.]  BOND  AND   LIABILITY. 


139 


and  it  is  held  to  be  within  the  power  of  the  court  to  dispense 
with  the  security  in  cases  where  it  is  plainly  unnecessary.  For 
example,  where,  in  proceedings  by  judgment  creditors  against 
their  debtor,  the  same  person  is  appointed  receiver  in  different 
actions  brought  by  different  creditors,  it  is  held  that  he  need 
not  give  new  security  in  each  successive  action,  if  he  has  al- 
ready given  ample  security.^ 

§  121.  Title  does  not  vest  until  bond  is  executed;  failure 
ground  for  nonsuit;  may  be  filed  nunc  pro  tunc.  The  re- 
ceiver's title  and  authority  as  well  as  his  right  of  possession 
are  dependent  on  and  accrue  only  upon  his  giving  the  requisite 
bond  or  security  as  fixed  by  the  order  of  his  appointment.i^ 
And  a  failure  to  execute  the  bond  in  due  form,  as  required  by 
the  order,  is  ground  for  a  nonsuit  in  an  action  brought  by  the 
receiver  in  his  official  capacity/^  although  a  mere  informality 
in  the  bond,  as  the  fact  that  it  was  not  executed  under  seal,  can 
not  be  taken  advantage  of  in  an  action  brought  by  the  receiver 
against  third  parties.^^  But  if  the  order  appointing  a  receiver 
does  not  require  the  giving  of  any  security,  the  omission  to 
give  a  bond  constitutes  no  defense  to  an  action  brought  by  the 
receiver.12  And  in  an  action  brought  by  a  receiver  pursuant 
to  an  order  of  the  court,  in  the  absence  of  any  affirmative  or 
direct  evidence  as  to  the  giving  of  a  bond,  the  fact  that  the 
court  directed  the  bringing  of  such  action  may  be  taken  as 
presumptive  evidence  that  he  had  perfected  his  title  by  filing 
a  bond.  And  in  such  case  it  is  improper  to  dismiss  his  action 
for  want  of  evidence  tending  to  show  the  filing  of  the  bond.i"^ 

9  Banks  v.  Potter,  21  How.  Pr.,  H  Johnson  v.  Martin,  1  Thomp.  & 
469.                                                               C.    (N.    Y.    Supreme    Court),    504. 

10  Johnson  v.  Martin,  1  Thomp.  &  And  see  as  to  receiver's  failure  to 
C.  (N.  Y.  Supreme  Court),  504;  give  security  as  ground  for  revers- 
Defries  v.  Creed,  34  L.  J.,  N.  S.  ing  decree,  Tomlinson  v.  Ward,  2 
Eq.,   607;    Edwards   v.   Edwards,   2  Conn.,  396. 

Ch.  D.,  291,  reversing  S.  C,  1  Ch.  12  Morgan  v.  Potter,  17  Hun,  403. 

D.,  454;  Woods  ^'.  Ellis,  85  Va.,  471,  13  Wilson    v.    Welch,    157    Mass., 

7  S.   E.,  852;   Crumlish's  Adm'r  v.  77,  31  N.  E.,  712. 

Shenandoah  V.  R.  Co.,  40  West  Va.,  14  Hegewisch  v.  Silver,  140  N.  Y., 

627,  22  S.  E.,  90.    But  see  Ex  parte  414,  35  N.  E.,  658. 

Evans,  13  Ch.  D.,  252. 


140  RECEIVERS.  [chap.  V. 

If,  however,  between  the  date  of  the  appointment  and  the  time 
of  giving  the  required  bond  of  recognizance,  a  sohcitor  in  the 
cause  receives  money  due  as  rents  or  proceeds  of  the  sale  of 
property  which  is  the  subject-matter  of  the  receivership,  he 
may  be  compelled,  after  the  bond  or  recognizance  is  perfected, 
to  pay  such  money  to  the  receiver.^^  And  when  a  receiver  exe- 
cutes his  bond  in  due  form,  with  sufficient  sureties,  and  the 
bond  is  approved  by  the  parties,  but  through  inadvertence  is 
not  filed  with  the  court,  and  the  receiver  takes  possession  of 
the  assets  committed  to  his  charge,  it  is  proper  for  the  court  to 
direct  the  bond  to  be  filed  nunc  pro  tunc,  so  as  to  complete  the 
receiver's  appointment  and  render  him  liable  to  account  as  an 
officer  of  the  court,  for  the  property  which  came  to  his  hands 
subsequent  to  the  time  when  the  bond  should  have  been  filed. 
And  this  may  be  done,  notwithstanding  the  parties  to  the  liti- 
gation have,  after  the  receiver's  appointment,  submitted  the 
matter  in  dispute  to  referees  for  settlement,  and  have  consent- 
ed to  a  decree  dividing  the  property  equally  between  them; 
since  such  submission  to  arbitration  does  not  alter  or  affect  the 
liability  of  the  receiver  to  account  for  the  property  intrusted 
to  him.l^  So  where,  on  his  appointment,  a  receiver  had  en- 
tered into  a  recognizance  with  two  sureties,  and  one  of  them 
afterward  caused  himself  to  be  discharged,  and  the  receiver 
entered  into  a  new  recognizance,  but  the  time  for  enrolling  it 
had  elapsed,  it  was  ordered  to  be  entered  mine  pro  tunc.^'^ 

§  121a.  Upon  filing  bond,  receiver's  title  relates  back  to 
date  of  appointment.  Notwithstanding  some  conflict  of 
authority,  the  doctrine  may  now  be  regarded  as  well  estab- 
lished that,  upon  the  filing  of  his  bond  in  accordance  with  the 
order  of  the  court,  the  receiver's  title  to  and  right  to  the  pos- 
session of  the  property  over  which  he  is  appointed  have  rela- 
tion back  to  the  date  of  his  appointment.     Such  title  will, 

15  Wickens      v.      Townshend,      1  17  Vaughan    v.    Vaughan,    Dick., 
Russ.  &  M.,  361 ;  In  re  Birt,  22  Ch.      90. 

D.,  604. 

16  Whiteside    v.     Prendergast,    2 
Barb.  Ch.,  471. 


CHAP,  v.] 


BOND  AND   LIABILITY. 


141 


therefore,  be  upheld  as  against  creditors  levying  upon  the 
property  between  the  date  of  the  receiver's  appointment  and 
the  filing  of  his  bond.i^  And  this  is  true,  even  though  such 
intermediate  process  issues  from  a  federal  court,  the  receiver 
having  been  appointed  by  a  state  court,  since  the  question  is 
purely  one  of  jurisdiction,  to  be  determined  in  favor  of  the 
court  which  first  acquires  control  over  the  property  in  contro- 
versy. ^^ 

§  122.  Appointment  on  final  decree;  effect  of  omitting 
bond.  When  a  receiver  is  appointed  as  a  part  of  the  final 
judgment  or  decree  in  the  cause,  and  for  the  purpose  of  car- 
rying out  and  executing  that  decree,  the  fact  that  the  court  has 
failed  to  require  any  bond  of  the  receiver  constitutes  no  ground 
for  reversing  the  decree  on  error,  since  the  omission  will  be 
regarded  as  the  fault  of  the  defendant  in  not  insisting  upon  a 
bond.20    And  the  omission  to  require  a  bond  is  not  error  when 


18  Steele  v.  Stiirgis,  5  Ab.  Pr., 
442;  In  re  Christian  Jensen  Co.,  128 
N.  Y.,  550,  28  N.  E.,  665;  In  re 
Schuyler's  S.  T.  B.  Co.,  136  N.  Y., 
169,  32  N.  E.,  623;  Maynard  v. 
Bond,  67  Mo.,  315;  Clinkscales  v. 
Pendleton  M.  Co.,  9  S.  C,  318; 
Regenstein  v.  Pearlstein,  30  S.  C, 
192,  8  S.  E.,  850;  Temple  v.  Glas- 
gow, 25  C.  C.  A.,  540,  80  Fed.,  441, 
42  U.  S.  App.,  417,  affirming  S.  C, 
73  Fed.,  709.  And  see  Ex  parte 
Evans,  13  Ch.  D.,  252.  See,  contra, 
De  Fries  v.  Creed,  34  L.  J.,  N.  S. 
Eq.,  607;  Edwards  v.  Edwards,  2 
Ch.  D.,  291,  reversing  S.  C,  1  Ch. 
D.,  454.  In  Virginia  it  is  held  that 
when  a  receiver,  appointed  to  col- 
lect the  purchase  money  of  real  es- 
tate, collects  such  money  before  fil- 
ing his  bond  and  defaults  as  to  the 
proceeds,  the  purchaser  may  be  com- 
pelled to  again  make  payment,  not- 
withstanding the  receiver  files  his 
bond    after    collecting    the    money. 


Woods  V.  Ellis,  85  Va.,  471,  7  S.  E., 
852.  But  the  case  is  plainly  incon- 
sistent with  the  doctrine  as  stated 
in  the  text,  that  upon  filing  his  bond 
the  receiver's  title  relates  back  to 
the  date  of  his  appointment.  Un- 
der the  statute  of  Alabama  which 
provides  that  before  a  receiver  shall 
be  appointed  without  notice  the 
plaintiff  shall  give  bond  conditioned 
to  pay  all  damages  suffered  by  the 
adverse  party  if  the  appointment  is 
vacated,  it  is  held  error  to  appoint 
a  receiver  without  requiring  plain- 
tiff to  file  such  a  bond.  Capital 
City  Water  Co.  v.  Weatherly,  108 
Ala.,  412,  18  So.,  841;  Dreyspring 
V.  Loeb,  113  Ala.,  263,  21  So.,  11; 
David  V.  Levy,  119  Ala..  241,  24  So., 
589. 

19 /«  re  Schuyler's  S.  T.  B.  Co., 
136  N.  Y.,  169,  32  N.  E.,  623. 

20Shulte  V.  Hoffman,  18  Tex., 
678. 


142  RECEIVERS.  [chap.  V. 

no  bond  is  required  by  the  statute  or  code  of  procedure  under 
which  the  proceeding  is  had.-^ 

§  123.  Additional  security  required  on  extending  re- 
ceiver. Under  the  Irish  chancery  practice  it  is  customary, 
Avhen  a  receiver  has  been  appointed  over  real  property,  and 
subsequent  apphcations  are  made  for  a  receiver  over  the  same 
estate,  to  extend  the  appointment  of  the  former  receiver  to  such 
apphcations.  And  on  being  so  extended,  he  is  required  to  give 
additional  security,  or,  in  defauh  thereof,  he  will  be  removed 
and  another  appointment  made.22 

§  124.  Effect  of  bond  by  defendant  to  account  as  re- 
ceiver. Where,  upon  a  bill  in  equity  to  enforce  an  interest 
in  a  trust  fund  and  for  a  receiver  pendente  lite,  the  court  re- 
fuses to  appoint  a  receiver,  upon  condition  of  defendant  exe- 
cuting a  bond  to  account  as  receiver  for  all  goods  and  money 
which  have  come  into  his  possession,  and  to  pay  them  over 
pursuant  to  the  decree  of  the  court,  such  a  bond  will  be  deemed 
good  as  a  common-law  obligation.  And  the  obligor,  although 
not  considered  as  a  receiver  or  officer  of  the  court,  stands  in  the 
light  of  one  who,  for  a  personal  accommodation,  has  assumed 
a  legal  responsibility,  and  after  receiving  the  benefits  of  the 
obligation  he  is  estopped  from  denying  its  legality.^^ 

§  125.  Assignment  of  mortgage  as  security  for  receiver- 
ship. Where  one  of  three  executors  of  an  estate  was  ap- 
pointed receiver  in  another  matter,  and  he,  with  the  other  ex- 
ecutors, united  in  assigning  a  mortgage  of  their  testator, 
held  by  them  as  executors,  as  security  for  such  receivership, 
although  such  course  was  regarded  as  exceedingly  reprehen- 
sible, it  was  held  that  the  assignment  was  good  and  could  not 
be  questioned,  and  that  it  must  stand  as  security  for  whatever 
amount  might  be  due  from  the  receiver.24 

§  126.  When  bond  to  be  approved  by  the  court.  It  is 
customary  in  the  order  of  appointment  to  provide  that  the 

21  Dilling  V.  Foster,  21  S.  C,  334.      And  see,  ante,  §  9  and,  post,  §§  308 

22  Wise  V.  Ashe,  1  Ir.  Eq..  210.  and  478. 

23  Baker   v.    Bartol,    7    Cal.,   551.  24  Mead  v.  Orrery,  3  Atk..  235. 


CHAP,    v.]  BOND  AND   LIABILITY.  143 

sureties  upon  the  bond  shall  be  approved  by  the  court,  although 
it  is  sometimes  provided  that  they  may  be  approved  by  the 
clerk.  But  when  the  law  under  which  a  receiver  is  appointed 
authorizes  his  appointment  and  the  approval  of  his  bond  by 
the  court,  both  acts  being  required  to  be  performed  by  the  court 
itself,  it  is  not  proper  that  the  bond  should  be  approved  by  the 
clerk  of  the  court.25  But  it  is  not  necessary  that  the  sureties 
should  be  citizens  of  the  state  in  which  the  action  is  pending, 
and  the  court  may  accept  non-resident  sureties.26 

§  126(7.  Statute  of  limitations.  It  is  held  in  England 
that  money  due  from  a  receiver,  and  not  accounted  for  in  the 
settlement  of  his  accounts,  is  to  be  treated  as  a  debt  of  record, 
as  regards  the  application  of  the  statute  of  limitations  in  an 
action  for  the  recovery  of  such  money.  And  it  would  seem 
that,  as  to  money  due  from  the  receiver  and  not  accounted  for, 
he  occupies  the  relation  of  a  trustee  to  the  parties  in  interest, 
and  that  such  indebtedness  is  not  barred  by  the  statute  of  limi- 
tations.27 

§  126b.  New  bond  upon  making  temporary  receiver  per- 
manent. Where  a  temporary  receiver  is  appointed  and 
files  a  proper  bond  which  is  approved  by  the  court,  if  he  is 
afterward,  by  the  judgment  of  the  court,  made  permanent  re- 
ceiver in  the  cause,  the  court,  may  in  its  discretion  require  a 
new  bond,  or,  if  satisfied  with  the  security  of  the  one  already  on 
file,  may  permit  him  to  act  without  exacting  an  additional 
bond,  and  until  required  by  the  court  to  do  so,  the  receiver  is 
under  no  obligation  to  furnish  such  additional  security.28 

25  Newman  v.  Hammond,  46  Ind.,  27  Seagram  v.   Tuck,    18   Ch.   D., 
119.  296. 

26  Taylor  v.   Life   Association  of  28  Jones  v.  Blun,  145  N.  Y.,  333, 
America,  3  Fed.,  465.  39  N.  E.,  954. 


1 44  RECEIVERS.  [chap.  V. 


II.  Liability  of  Sureties. 

§  127.     Sureties  held  to  strict  liability;  how  discharged, 

128.  On  death  of  one  surety  receiver  must  procure  another. 

129.  When  liability  becomes  absolute;  right  of  action;  practice. 
129a.  Independent  action  against  surety. 

130.  Suit  against  sureties  on  death  of  receiver. 

130a.  How  far  sureties  concluded  by  order  on  receiver. 

131.  Liability  for  interest;  costs  of  attachment;  surety  protected  by 

injunction. 

132.  Effect  of  payment  by  surety  to  solicitor. 

133.  Surety  may  be  reimbursed  out  of  balance  in  receiver's  hands; 

ordered  to  refund;  remedy  in  equity. 

133a.  Sureties  of  clerk  of  court  appointed  receiver;  liability  to  credit- 
ors not  named  in  bond. 

I33b.  Surety  not  liable  for  violation  of  duties  beyond  scope  of  ap- 
pointment. 

133(7.  Surety  may  be  liable  although  bill  is  afterwards  dismissed. 

§   127.  Sureties  held  to  strict  liability;  how  discharged. 

The  sureties  of  a  receiver  are  usually  held  very  strictly  to 
the  obligation  of  their  recognizance  or  bond,  and  will  not  be 
discharged  therefrom  upon  their  own  application,  unless  such 
course  appears  to  be  for  the  benefit  of  the  parties  to  the  cause,^^ 
or  unless  fraud  is  shown,  and  it  is  made  to  appear  that  the 
person  secured  by  the  recognizance  is  connected  with  such 
fraud ;  and  if  these  facts  are  not  shown,  a  bill  to  have  a  recog- 
nizance vacated  will  be  dismissed. ^^  But  it  is  competent  for 
the  parties  in  interest  in  a  cause  to  consent  that  the  receiver's 
recognizance  or  bond  be  vacated  as  to  one  surety,  and  that  he 
be  discharged,  without  releasing  the  remaining  surety  from  his 
liability.  When  it  is  desired  to  pursue  this  course,  the  contin- 
uing surety  and  the  receiver  should  enter  into  a  written  consent 
or  agreement,  providing  that  the  recognizance  shall  continue  to 
be  binding  upon  them,  notwithstanding  it  has  been  vacated  as 

29  Griffith  V.  Griffith,  2  Ves.,  400.         30  Hamilton  v.  Brewster,  2  Mol., 

407. 


CHAP,  v.]  BOND  AND  LIABILITY.  145 

to  the  retiring  surety.  This  agreement  should  be  verified  by 
affidavit,  and  should  state  that  the  parties  consent  to  the  vacat- 
ing of  the  recognizance  as  to  the  one  surety,  without  prejudice 
to  the  liability  of  the  receiver  and  of  the  other  surety,  as  well  for 
acts  before  as  for  those  afterward  done,  and  that  they  will  not 
rely  on  such  discharge  in  defense  of  any  future  proceedings 
which  may  be  brought  against  them.^^  Where  the  premises 
subject  to  a  receivership  have  been  sold  under  the  final  decree 
in  the  cause,  and  the  purchaser  has  been  put  in  possession,  this 
has  been  held  equivalent  to  a  discharge  of  the  receiver,  and 
sufficient  ground  for  vacating  his  recognizance.^2 

§  128.  On  death  of  one  surety  receiver  must  procure  an- 
other. Where  one  of  the  sureties  upon  the  recognizance 
of  a  receiver  dies,  without  leaving  any  property  which  may  be 
made  available  for  the  purpose  of  satisfying  the  recognizance, 
the  court  will  require  the  receiver  to  procure  a  new  surety.^s 

§  129.  When  liability  becomes  absolute ;  right  of  action ; 
practice.  When  the  bond  or  recognizance  given  by  a  re- 
ceiver is  conditioned  to  be  void  if  he  shall  duly  perform  his 
duties  as  receiver  and  account  to  the  court,  the  obligation  be- 
comes absolute  upon  his  failure  so  to  do.34  It  is  held,  how- 
ever, that  the  receiver  and  his  sureties  are  not  liable  to  an  action 
upon  the  bond  until  he  has  failed  to  obey  some  order  of  the 
court  touching  the  effects  placed  in  his  hands.  And  the  proper 
practice  would  seem  to  be,  to  first  apply  to  the  court  for  a  rule 
upon  the  receiver  to  render  his  account.  After  the  account  is 
adjusted  and  approved  by  the  court,  and  the  receiver  is  or- 
dered to  pay  the  effects  in  his  hands  into  court,  or  to  the  person 
entitled  thereto,  a  failure  to  comply  with  such  order  renders 
himself  and  his  sureties  liable.  The  receiver  and  his  sureties 
can  not,  therefore,  be  sued  upon  the  bond  until  the  court  has 

31  Callaghan   v.    Callaghan,   8   Ir.  33Averall   v.   Wade,    Flan.  &  K., 
Eq.,  572;  O'Keeffe  v.  Armstrong,  2      341. 

Ir.  Ch.,  N.  S.,  115.  '^^  Maunsell   v.    Egan,   3   Jo.    & 

32  Anonymous,  2  Ir.  Eq.,  416.  Lat,  251. 

Receivers — 10. 


146  RECEIVERS.  [chap.  V. 

adjudicated  the  question,  and  made  some  order  touching  the 
rights  of  the  parties  to  the  property  in  his  hands. ^^ 

§  129a.  Independent  action  against  surety.  While  a 
court  of  equity  has  the  undoubted  power,  either  by  its  decree 
or  by  rule  of  court,  to  provide  that  a  receiver  and  his  surety 
may  be  proceeded  against,  in  order  to  enforce  the  liability  of 
the  bond,  in  the  original  action,  yet,  where  the  court  takes 
from  the  receiver  an  ordinary  common-law  bond  with  surety, 
conditioned  for  the  faithful  discharge  of  his  duties  and  a  com- 
pliance with  the  orders  of  the  court,  the  obligation  of  the 
surety  is  one  which  can  be  enforced  only  in  a  separate  action 
at  law  upon  the  bond  in  which  he  may  have  his  constitutional 
right  of  trial  by  jury.  And  the  court  has  no  power  to  proceed 
against  him  summarily  by  rule  to  show  cause  or  by  motion 
in  the  cause  unless  he  has  part  of  the  trust  fund  in  his  hands 
and  then  only  to  the  extent  of  such  fund.^^ 

§  130.  Suit  against  sureties  on  death  of  receiver. 
Where,  upon  the  death  of  a  receiver,  there  is  a  balance  due  from 
him  to  the  estate,  the  amount  of  which  is  not  definitely  ascer- 
tained, the  court,  on  petition  of  the  parties  in  interest,  will 
grant  leave  to  put  the  recognizance  in  suit  against  the  sureties. 
The  receiver  in  such  case  not  having  paid  the  balance  into 
court,  there  is  a  forfeiture  of  the  recognizance,  constituting  a 
debt  due  from  the  receiver,  and,  there  being  no  means  of  pur- 
suing the  ordinary  remedy  against  him,  resort  may  be  had  to 
the  surety.^"^ 

35  State  V.  Gibson,  21  Ark.,  140;  to  the  estate,  and  prayed  that  the 
Bank  of  Washington  v.  Credit-  recognizance  into  which  he  had 
ors,  86  N.  C,  323;  Atkinson  v.  entered  might  be  put  in  suit 
Smith,  89  N.  C,  72.  against     his     real     and     personal 

36  Kirker  v.  Owings,  39  C.  C.  A.,  representatives  and  his  sureties, 
132,  98  Fed.,  499;  Black  v.  Gent-  or  that  his  personal  representa- 
ery,  119  N.  C.,  502,  26  S.  E.,  43.  tive  might  forthwith  pass  the  ac- 

37  Ludgater  v.  Channell,  3  Mac.  counts  of  his  receipts  and  pay- 
&  G.,  175,  reversing  S.  C.,  15  Sim.,  ments  in  respect  to  the  estate. 
479.  The  petition  in  this  case  al-  On  appeal  from  the  decision  of 
leged  that  the  receiver  had  died,  the  Vice-Chancellor  dismissing 
leaving  a  balance   due  from  him  the    petition,    leave    was    granted 


CHAP,  v.] 


BOND  AND   LIABILITY. 


147 


§  130a.  How  far  sureties  concluded  by  order  on  re- 
ceiver. In  an  action  against  the  sureties  upon  the  bond 
of  a  receiver  of  an  insolvent  corporation,  an  order  made  in  the 
cause  in  which  the  receiver  was  appointed,  fixing  the  amount 
due  from  him  and  directing  its  payment,  is  competent  evidence 
against  the  sureties,  both  as  to  the  breach  of  the  bond  and  as 
to  the  amount  due.  And  in  such  an  action,  the  omission  of  the 
receiver  to  pay  to  himself  as  receiver  money  which  he  had 
borrowed  from  the  corporation  before  his  appointment  is  a 
breach  of  the  condition  of  his  bond,  for  which  the  sureties  are 
liable.     Nor,  in  such  case,  can  the  liability  of  the  sureties  be 


to  bring  suit  against  the  sureties. 
Lord  Truro  observes,  p.  179,  as 
follows:  "It  is  of  the  utmost  im- 
portance that  the  functions  of  re- 
ceivers, who  are  the  officers  of 
this  court,  should  be  duly  dis- 
charged. The  respondents  in  the 
present  case  are  the  sureties,  and 
the  representatives  of  the  re- 
ceiver; and  the  recognizance  in 
question  was  entered  into  in  pur- 
suance of  a  general  order  of  the 
court.  Now  the  obligation  of  a 
receiver  is  to  account  once  a 
year,  and  to  pay  his  balances  into 
court;  but  here  this  duty  was  en- 
tirely omitted,  thus  involving  a 
forfeiture  of  the  recognizance, 
and  consequently  constituting  a 
debt  due  by  the  receiver.  Upon 
the  death  of  the  receiver  the 
parties  interested  in  the  fund 
come  to  the  court  and  state  that 
redress  may  be  had  in  one  of  two 
ways,  either  against  the  represent- 
atives of  the  receiver,  or  against 
his  sureties.  They  present  their 
claim  in  a  double  aspect,  and  call 
on  the  court  to  grant  them  relief 
as  against  one  or  other  of  the  re- 
spondents to  the  petition;  and  it 
is  obvious  that  if  either  of  the  re- 


spondents had  been  omitted,  the 
other  would  have  objected,  and 
with  some  reason,  to  his  absence. 
But  the  administratrix  says  she  is 
not  accountable  in  this  form  of  pro- 
ceeding; and  the  sureties,  on  their 
part,  allege  that  there  is  a  positive 
rule  of  practice  that  the  surety  can 
not  be  made  to  account  until  the 
receiver  has  been  called  upon,  and 
further,  that  the  mode  of  proceed- 
ing in  such  a  case  is  by  bill  against 
the  personal  representative.  I  can, 
however,  find  no  authority  for  the 
rule  which  it  is  thus  sought  to  es- 
tablish. .  .  .  The  books  of  prac- 
tice show  that  where  there  are  not 
the  means  of  pursuing  the  ordinary 
course  against  the  receiver,  the 
surety  may  be  had  recourse  to;  and 
the  first  part  of  the  prayer  of  the 
petition  is  for  leave  to  sue  the 
sureties.  Not,  therefore,  now  de- 
ciding whether  the  surety  shall  pay, 
or  whether  the  administratrix  may 
or  may  not  be  called  on  to  account 
in  this  form  of  proceeding,  I  think 
that  the  first  part  of  the  prayer  of 
the  petition  must  be  granted,  and 
it  is  unnecessary  for  me  to  advert 
further  to  the  alternative  relief 
sought." 


148  RECEIVERS.  [chap.  V. 

reduced  by  the  fact  that  the  receiver  has  rendered  vahiable 
services  as  such,  his  compensation  for  which  has  not  yet  been 
determined  or  paid.^^  But  when  the  undertaking  of  the  surety 
is  that  the  receiver  will  thenceforth  faithfully  discharge  his 
duties,  the  surety  will  not  be  liable  for  any  default  or  miscon- 
duct of  the  receiver  prior  to  the  execution  of  the  bond.  And 
in  such  case  the  surety,  in  an  action  upon  his  bond,  is  not  con- 
cluded by  an  accounting  as  to  the  amount  due  from  the  re- 
ceiver, and  by  an  order  fixing  the  amount,  made  in  the  cause 
in  which  the  receiver  was  appointed,  when  the  surety  was 
not  a  party  to  such  accounting,  and  was  not  heard  thereon. ^^ 
But  if  the  receiver  does  in  fact  receive  and  collect  certain  notes, 
which  he  is  not  authorized  to  receive  in  payment  for  the  hiring 
of  property  which  he  is  authorized  to  hire,  his  sureties  are  liable 
in  an  action  upon  the  bond  for  his  failure  to  account  for  the 
proceeds. ^^ 

§  131.  Liability  for  interest;  costs  of  attachment;  sure- 
ty protected  by  injunction.  As  a  general  rule,  the  sureties 
of  receivers  will  be  held  responsible,  not  only  for  all  sums  of 
principal  for  which  the  receiver  is  in  default,  but  also  for  in- 
terest due  thereon,  and  for  which  the  receiver  is  liable.^^  This 
liability  of  the  surety  for  interest  is,  however,  regarded  as 
somewhat  discretionary  with  the  court. ^^  And  where  the  re- 
ceiver had  been  bankrupt  with  full  knowledge  of  all  parties 
for  a  considerable  length  of  time,  and  no  steps  had  been  taken 
to  compel  the  passing  of  his  accounts,  the  sureties  were  relieved 
from  paying  interest.^s  But  the  sureties  of  a  defaulting  re- 
ceiver will  be  held  liable  to  the  extent  of  the  sum  secured  by 

3S  Commonwealth   v.    Gould,    118  ties  upon  the  bond  of  such  former 

Mass.,  300.  receiver. 

39  Thomson  v.  MacGregor,  81  N.  41  Dawson    v.    Raynes,    2    Russ., 

Y.,  592.  466. 

40Weems    v.    Lathrop,    42    Tex.,  42 /„  re   Herrick's   Minors,  3  In 

207.     And  see  this  case  as  to  the  Ch.,  N.  S.,  183. 

right  of  a  receiver,  appointed  upon  43  Dawson    v.    Raynes,    2    Russ., 

the  death  of  a  former  receiver,  to  466. 
maintain  an  action  against  the  sure- 


CHAP,   v.]  BOND  AND   LIABILITY  149 

the  recognizance,  for  the  costs  of  an  attachment  against  him 
for  not  accounting,  as  well  as  the  costs  of  an  application  for 
his  removal,  and  for  the  appointment  of  his  successor.^^  When 
the  surety  has  paid  in  full  the  entire  balance  due  from  the  re- 
ceiver, he  may  be  protected  by  injunction  from  the  enforcement 
of  judgment  upon  his  recognizance  for  anything  more.^^ 

§  132.  Effect  of  payment  by  surety  to  solicitor.  Where 
proceedings  at  law  were  instituted  against  the  surety  to  enforce 
payment  of  money  due  from  the  receiver,  who  had  been  dis- 
charged under  the  insolvent  debtor's  act,  it  was  held  that  pay- 
ment of  the  money  by  the  surety  to  the  solicitor  prosecuting 
the  proceedings  was  not  a  sufficient  payment,  and  the  court  re- 
fused to  discharge  the  proceedings  against  the  surety  until 
plaintiff  had  been  served  with  notice  of  the  application.  But 
notice  having  been  served,  and  the  plaintiff  not  appearing  or 
resisting,  the  proceedings  against  the  surety  were  discharged.^^ 

§  133.  Surety  may  be  reimbursed  out  of  balance  in  re- 
ceiver's hands;  ordered  to  refund;  remedy  in  equity.  A 
surety  upon  a  receiver's  bond  is  in  a  certain  sense  regarded  as 
an  officer  of  the  court,  to  the  extent  that  he  is  entitled  to  be  re- 
imbursed what  he  has  been  compelled  to  pay  for  the  receiver, 
out  of  the  balance  in  the  latter's  hands.  The  court  will  not, 
therefore,  permit  the  receiver  to  withdraw  a  balance  due  him 
until  the  surety  is  reimbursed,  and  only  the  balance  will  be  paid 
to  the  receiver.47  And  when  the  surety,  to  indemnify  himself 
for  his  liability,  receives  a  portion  of  the  funds  collected  by  the 
receiver,  knowing  them  to  be  a  part  of  the  trust  funds  in  the 

44  Mannsell  v.  Egan,  8  Ir.  Eq.,  out  of  court  the  balance  due  him 
372,  affirmed  on  appeal,  9  Ir.  Eq.,  until  he  should  satisfy  payments 
283;  S.  C,  3  Jo.  &  Lat.,  251.  made  by  the  surety  on  his  account. 

45  In  re  Herrick's  Minors,  3  Ir.  Lord  Eldon  observes,  page  135 : 
Ch.,  N.  S.,  183.  "Where   the   surety   for   a   receiver 

46  Mann  v.  Stennett,  8  Beav.,  189.  in  this  court  is  called  upon  to  pay, 

47  Glossup  V.  Harrison,  3  Ves.  &  as  the  receiver  is  an  officer  of  the 
Bea.,  134.  This  was  a  motion  by  court,  and  the  surety  is  so  in  a 
the  surety  of  a  receiver  vnho  had  sense,  if  there  is  anything  due  in 
been  discharged  by  order  of  the  account  between  them,  justice  re- 
court,  to  restrain  him  from  taking  quires    that    upon    the    application 


150 


RECEIVERS. 


[chap.  v. 


liands  of  the  latter,  the  court  has  sufficient  jurisdiction  over  the 
surety  by  reason  of  his  suretyship  and  of  his  intermeddhng 
with  the  funds,  to  act  by  an  order  in  personam  in  the  cause  in 
which  the  receiver  was  appointed,  directing  the  surety  to  pay 
such  money  into  court. ^^  And  in  Mississippi,  it  is  held  to  be 
an  appropriate  exercise  of  legislative  authority  to  confer  upon 
a  court  of  equity,  jurisdiction  over  the  bond  of  a  receiver  and 
over  the  sureties,  such  jurisdiction  being  regarded  as  an- 
cillary to  its  jurisdiction  over  the  subject-matter  in  controversy. 
A  statute,  therefore,  authorizing  a  court  of  equity  to  give  a 
remedy  by  scire  facias  against  the  sureties  is  held  to  be  valid  and 
constitutional.'*^ 

§  133a.  Sureties  of  clerk  of  court  appointed  receiver;  li- 
ability to  creditors  not  named  in  bond.  When  the  court 
has  appointed  its  own  clerk  as  receiver  in  a  cause,  in  the  ab- 
sence of  any  statute  in  force  at  the  date  of  the  bond  fixing  the 
liability  of  his  sureties  in  such  case,  the  sureties  upon  the  offi- 
cial bond  of  the  clerk  are  not  liable  for  his  default  as  receiver, 
since  they  are  presumed  to  have  contracted  with  reference  only 
to  his  liability  as  clerk.^^  But,  although  the  bond  is  conditioned 
for  the  payment  of  certain  creditors  named,  and  the  creditors 
have  been  fully  paid,  yet  if  it  is  further  conditioned  that  the 


of  the  surety  he  shall  be  indemnified 
for  what  he  has  paid  for  the  re- 
ceiver out  of  the  balance  due  him. 
If  that  has  not  been  decided,  as  I 
think  it  has,  it  must  be  decided 
upon  principle,  as  it  is  clearly  capa- 
ble of  being  maintained  upon  equi- 
table grounds.  The  court,  there- 
fore, can  not  part  with  the  fund, 
until  an  opportunity  is  given  of  de- 
termining the  claim  of  the  surety; 
the  amount  of  which,  when  ascer- 
tained, must  be  paid  to  him ;  and 
the  residue  only  must  be  paid  to 
the  receiver." 

48  Seidenbach    v.    Denklespeil,    11 
Lea.,  297. 

49  Bank  v.  Duncan,  52  Miss.,  740. 


As  to  the  right  of  a  surety  upon  a 
receiver's  bond  to  appeal  from  an 
order  for  the  payment  of  the 
amount  of  the  bond,  made  in  the 
cause  in  which  the  receiver  was 
appointed,  see  In  re  Guardian  Sav- 
ings Institution,  78  N.  Y.,  408. 

50  Kerr  v.  Brandon,  84  N.  C, 
128;  Rogers  v.  Odom,  86  N.  C, 
432;  Syme  v.  Bunting,  91  N.  C,  48. 
But  see  Syme  v.  Bunting,  91  N.  C, 
48,  and  Waters  v.  Melson,  112  N. 
C,  89,  16  S.  E.,  918,  as  to  the  effect 
of  a  statute  enlarging  the  clerk's 
liability  in  such  cases,  and  as  to  the 
liability  of  sureties  upon  his  official 
bond  given  after  the  passage  of  the 
statute. 


CHAP,    v.]  BOND  AND   LIABILITY.  151 

receiver  will  well  and  truly  account  for  all  moneys  received  by 
him,  and  will  pay  over  all  such  moneys  and  comply  with  all 
orders  of  the  court  concerning  the  same,  a  breach  of  such  condi- 
tion will  warrant  a  recovery  against  the  sureties  in  behalf  of 
creditors  who  are  not  expressly  named  in  the  bond.^^ 

§  133^7.  Surety  not  liable  for  violation  of  duties  beyond 
scope  of  appointment.  The  liability  of  a  surety  upon  the 
bond  of  a  receiver  conditioned  for  the  faithful  performance 
of  his  duties  is  limited  to  cases  of  a  violation  of  those  duties 
which  may  properly  be  said  to  be  within  the  scope  of  the  order 
of  appointment.  Accordingly,  where  a  receiver,  without  any 
authority  from  the  court,  has  proceeded  to  borrow  money  to 
pay  off  a  mortgage  upon  real  estate  which  is  in  his  possession 
as  receiver  and  fails  to  account  for  it,  the  surety  upon  his 
bond  is  not  liable  for  such  misappropriation  since  the  act  of 
the  receiver  was  entirely  beyond  the  scope  of  the  order  of  his 
appointment. ^2 

§  133c  Surety  may  be  liable  although  bill  is  afterward 
dismissed.  Where  the  appointment  of  a  receiver  was  reg- 
ularly made  in  a  matter  over  which  the  court  had  assumed 
jurisdiction,  and  the  receiver  afterwards  embezzles  the  pro- 
ceeds of  the  sale  of  certain  property  which  had  come  into  his 
possession  as  receiver,  the  sureties  upon  his  bond  are  liable  for 
the  loss  although  the  entire  proceeding  is  afterwards  dismissed 
for  want  of  jurisdiction.^^ 

51  Ross    V.    Williams,    11    Heisk.,  53  Baltimore  B.  &  L.  Assn.  v.  Al- 
410.  derson,  39  C,  C.  A.,  609,  99  Fed., 

52  Preston    v.    American    Surety  489. 
Co.,  104  Md.,  40,  64  Atl.,  292. 


CHAPTER  VI. 

OF  THE  RECEIVER'S  POSSESSION. 

I.  Nature  of  Receiver's  Possession   §  134 

II.  Ikterference  with  Receiver's  Possession  163 

I.  Nature  of  Receiver's  Possession. 

§  134.     Receiver's  possession  is  possession  of  the  court;  illustrations. 

135.  When   and   to   what   extent  regarded  as  possession  of  either 

party. 

136.  Title  and  right  to  possession  vest  back  to  time  of  appointment, 

but  not  beyond;  effect  of  appeal. 

137.  The  doctrine  in  Maryland. 

138.  Receiver  acquires   possession  subject  to   existing  liens;   liens 

for  taxes;  unrecorded  mortgage;  no  liens  acquired  after  ap- 
pointment. 

139.  Person  asserting  claim  to  property  must  apply  to  court. 

140.  Receiver's   possession    protected    by   injunction;    illustrations; 

may  proceed  by  petition  in  receivership  suit. 
140o.  Property  in  receiver's  hands  not  subject  to  seizure  for  taxes. 

141.  Property  not  allowed  to  be  sold  under  execution;  not  subject 

to  process  of  another  court. 

142.  Receiver  can  pay  money  only  by  order  of  court. 

143.  Interference   with    receiver's   possession  not  justified   because 

appointment  was  improper. 

144.  Receiver  entitled  to  aid  of  court  to  obtain  possession. 

145.  Courts  reluctant  to  interfere  by  receiver  with  property  of  third 

persons;  receiver  should  assert  claim  by  independent  action. 

146.  Third  persons  permitted  to  come  in  and  be  heard. 

147.  Practice  of  English  Chancery  to  compel  defendant  to  deliver 

lands  to  receiver. 

148.  New  York  practice  as  to  receiver  obtaining  possession. 

149.  Writ  of  assistance;  when  right  of  possession  not  determined  on 

motion;  state  and  federal  courts. 

150.  Third  person  forcibly  dispossessed  by  receiver;  how  redressed. 

151.  Receiver  not  subject  to  attachment  or  garnishment  as  to  funds 

in  his  possession;  exceptions;  may  be  garnisheed  by  leave  of 
court. 

152.  Possession  as  between  different  receivers  determined  by  prior- 

ity. 

152 


CHAP.  VI.]  POSSESSION.  153 

153.  Right  to  possession  as  between  receiver  and  assignee  in  bank- 

ruptcy. 

154.  Rights  of  common. 

155.  Mixture  of  funds  by  auctioneer;  right  of  receiver. 

156.  Distraint  for  rent  upon  goods  which  have  passed  into  receiv- 

er's  possession. 

157.  When    receiver    of    deceased    not    entitled    to    fund    held    by 

creditor. 

158.  Possession  of  wharf  by  receiver;  injunction  to  restrain  inter- 

ference with. 

159.  Possession  of  commercial  paper  by  receiver  not  that  of  bona 

fide  holder. 

160.  Defendant  relieved  from  responsibility  for  property  in  receiv- 

er's possession. 

161.  Receiver's  title  not  divested  by  order  when  he  is  not  a  party; 

effect  of  appeal  on  his  possession. 

162.  Disposal  of  property  by  final  decree. 

162a.  Right    to    possession    not    divested    when    property   taken   beyond 
state  or  country;  when  rule  not  applicable. 

§  134.  Receiver's  possession  is  that  of  court;  illustra- 
tions. The  precise  nature  of  the  possession  held  by  a 
receiver  of  the  property  or  estate  intrusted  to  his  charge  is  fre- 
quently a  question  of  much  importance  in  determining  the 
relative  rights  of  conflicting  claimants  to  and  parties  interested 
in  the  property.  The  general  proposition  is  well  established, 
that,  the  receiver  being  the  officer  or  agent  of  the  court  from 
which  he  derives  his  appointment,  his  possession  is  exclusively 
the  possession  of  the  court,  the  property  being  regarded  as  in 
the  custody  of  the  law,  m  gremio  legis,  for  the  benefit  of  who- 
ever may  be  ultimately  determined  to  be  entitled  thereto.^ 

1  See  Robinson  v.  Atlantic  &  St.  Louis,  A.  &  S.  R.  Co.  v.  Ham- 
Great  Western  R.  Co.,  66  Pa.  St.,  ilton,  158  III.,  366,  41  N.  E.,  777; 
160;  Skinner  v.  Maxwell,  68  N.  C,  Town  of  Vandalia  v.  St.  L.,  V.  &  T. 
400;  Simmons  v.  Allison,  118  N.  C,  H.  R.  R.  Co.,  209  111.,  7Z,  70  N.  E., 
761,  24  S.  E.,  740;  De  Visser  v.  662;  In  re  Receivership  of  the  N.  I. 
Blackstone,  6  Blatchf.,  235;  Mays  C.  Mill  Co.,  109  La.,  875,  33  So., 
V.  Rose,  Freem.  (Miss.),  703;  Day  903;  Bell  v.  American  Protective 
V.  Postal  Telegraph  Co.,  66  Md.,  League,  163  Mass.,  558,  40  N.  E., 
354,  7  Atl.,  608;  Angel  v.  Smith,  857,  28  L.  R.  A.,  452,  47  Am.  St. 
9  Ves.,  335;  HefTron  v.  Gage,  149  Rep.,  481;  State  v.  Reynolds,  209 
111.,  182,  36  N.  E.,  569;  Mulcahey  v.  Mo.,  161,  114  S.  W.,  1097;  Wehrs  v. 
Strauss,  151  III,  70,  37  N.  E.,  702;  Sullivan,  217  Mo.,  167,  —  S.  W.,  — . 


154  RECEIVERS.  [chap.  VI. 

The  recel\er*s  possession,  therefore,  is  neither  adverse  to  the 
plaintiff  nor  to  the  defendant  in  the  htigation,  being  only  the 
possession  of  the  court,  which  holds  the  property  for  the 
greater  safety  of  all  parties  in  interest,  the  primary  object  be- 
ing to  secure  the  thing  in  controversy,  so  that  it  may  be  sub- 
ject to  such  disposition  as  the  court  may  finally  direct. ^  And 
the  receiver  of  a  court  of  equity  being  regarded  as  its  executive 
of^cer,  in  much  the  same  light  in  which  a  sheriff  is  the  execu- 
tive officer  of  a  court  of  law,  the  property  in  his  possession  is 
regarded  as  in  the  custody  of  the  law,  to  the  same  extent  as  if 
levied  upon  under  an  execution  or  attachment.^  And  since 
the  possession  of  a  receiver  is  that  of  the  court,  it  is  held  that 
a  change  in  the  receiver  does  not  have  the  effect  of  interrupting 
such  possession.'*  And  such  possession,  being  that  of  the 
court,  is  not  adverse  to  any  of  the  parties  in  interest,  and  it 
is  accordingly  held  that  a  defendant  in  ejectment,  claiming 
by  adverse  possession,  can  not  tack  onto  his  possession  that 
of  a  receiver  who  had  held  the  property,  in  order  to  complete 

So  strictly  was  this  doctrine  ad-  in  fact  his  agent;  all  the  rents  are 
hered  to  by  Lord  Eldon  that  he  ob-  applied  to  his  use,  either  by  pay- 
served  in  Angel  v.  Smith,  supra,  ing  his  debts,  or  paramount  charges, 
that,  after  tenants  of  real  estate  had  or  by  being  handed  over  to  him." 
attorned  to  a  receiver  appointed  over  See  Simmons  v.  Allison,  118  N.  C, 
the  premises,  the  court  itself  be-  761,  24  S.  E.,  740,  supra,  as  to  the 
came  the  landlord.  But  it  was  said  power  of  a  receiver,  under  the  or- 
by  Mr.  Justice  Hargreave,  in  the  der  of  the  court,  to  make  a  lease  of 
Landed  Estates  Court  of  Ireland,  the  property  in  his  possession.  As 
In  re  Butler's  Estate,  13  Ir.  Ch.,  to  the  duty  of  a  receiver  of  mort- 
N.  S.,  456,  that  "the  general  prin-  gaged  property  to  lease  it  and  to 
ciple  is,  that  the  possession  of  the  reduce  the  rentals  if  such  a  step  be- 
receiver  is  that  of  all  parties  to  the  comes  necessary,  see  Northwestern 
suit,  according  to  their  titles.  As  Mutual  Life  Ins.  Co.,  v.  Burr,  60 
between  the  owner  and  incum-  Neb..  467,  83  N.  W.,  664. 
brancers,  it  is  for  some  purposes  2  Mays  7'.  Rose,  Freem.  (Miss.) 
the  possession  of  the  incumbran-  703;  Wilkinson  v.  Lehman-Durr 
cers,  who  have  obtained  or  extended  Co.,  136  Ala.,  463,  34  So.,  216. 
the  receiver;  as  between  the  owner  3  Blodgett,  J.,  In  re  Merchants 
whose  possession  has  been  displaced  Insurance  Co.,  3  Biss.,  165. 
and  a  third  party,  it  is  the  posses-  4  State  v.  Reynolds,  209  Mo., 
sion  of  the  former.    The  receiver  is  161,  114  S.  W.,  1097. 


CHAP.  VI.]  POSSESSION.  155 

the  statutory  period. ^  As  illustrating-  the  doctrine  that  the 
receiver's  possession  is  that  of  the  court  appointing  him,  it 
was  said  in  an  English  case  that  after  tenants  of  real  estate 
had  attorned  to  the  receiver  appointed  over  the  premises,  the 
court  itself  became  the  landlord.^  But  when  property  is  in 
the  actual  possession  of  a  receiver,  he  is  regarded  as  having 
such  a  special  interest  therein  that  the  ownership  may  be 
averred  in  him  in  an  indictment  for  larceny  of  the  property^ 
§  135.  When  and  to  what  extent  regarded  as  posses- 
sion of  either  party.  It  is  sometimes  asserted  as  a  general 
principle  in  the  reported  cases,  that  a  receiver  being  appointed 
primarily  for  the  benefit  of  all  parties  in  interest,  his  posses- 
sion will  be  treated  as  the  possession  of  the  party  who  is 
ultimately  determined  to  be  entitled  thereto,  and  that  when 
the  question  of  right  is  finally  determined,  the  possession  of 
the  party  prevailing  becomes  exclusive  throughout  the  whole 
period,  by  relation  to  the  date  of  the  receiver's  appointment.^ 
While  this  principle  is  true  to  a  limited  extent,  as  that  if  any 
benefit  is  to  ensue  to  the  successful  party  from  the  mere  act 
of  possession,  he  will  be  regarded  as  having  been  in  posses- 
sion from  the  first,  and  none  of  his  rights  will  be  lost  because 
of  the  receiver's  possession,  the  principle  will  not  be  carried 
to  the  extent  of  prejudicing  his  rights.  And  when  possession 
of  the  property  in  dispute  has  been  taken  from  defendant  by 
injunction,  and  the  property  has  been  placed  in  the  hands  of 
a  receiver,  the  injunction  rendering  the  appointment  of  a  re- 
ceiver indispensable  for  the  protection  of  all  parties,  if  defend- 
ant is  finally  adjudged  to  be  entitled  to  possession  and  the  in- 
junction is  dissolved,  the  receiver's  possession  during  the  inter- 
val will  not  be  treated  as  that  of  defendant,  so  as  to  prevent 
him  from  claiming  and  recovering  damages  because  of  the 
injunction.^    But  when  plaintiff  in  a  bill  to  recover  possession 

5  Wilkinson  v.  Lehman-Durr  Co.,  8  See  Beverley  v.  Brooke,  4  Grat., 
136  Ala.,  463,  34  So.,  216.                         212;  Sharp  v.  Carter,  3  P.  W.,  375. 

6  Angel  v.  Smith,  9  Ves.,  335.  9  Sturgis  v.   Knapp,  33  Vt.,   486. 
''State   V.   Rivers,   60   Iowa,    3S1. 

13  N.  W.,  73,  14  N.  W.,  738. 


156  RECEIVERS.  [chap.  VI. 

of  real  estate  obtains  a  receiver  as  against  defendant,  and  ob- 
tains a  verdict  in  his  favor  in  an  action  of  ejectment  to  try  the 
title,  and  the  receiver  is  then  ordered  to  surrender  possession 
to  the  plaintiff,  the  receiver's  possession  will  not  be  deemed 
that  of  the  defendant,  but  rather  of  the  plaintiff,  who  appears 
to  be  entitled  to  the  premises. ^^  And  when  a  receiver  of  mort- 
gaged premises  has  been  directed  to  pay  the  balance  in  his 
hands  to  a  mortgagee,  and  to  pass  his  accounts  preliminary  to 
his  final  discharge,  but  remains  in  possession  after  such  order, 
paying  the  rents  to  the  mortgagee,  his  possession  after  the 
date  of  the  order  will  be  regarded  as  that  of  the  mortgagee 
himself.l^  But  it  would  seem  that  the  appointment  of  a  re- 
ceiver does  not  so  alter  possession  of  the  estate  in  the  person 
who  is  ultimately  found  to  have  been  entitled  thereto  at  the 
time  of  such  appointment  as  to  prevent  the  statute  of  limita- 
tions from  running  during  the  dispute  as  to  the  right.^^ 

§  136.  Title  and  right  to  possession  vest  back  to  time 
of  appointment,  but  not  beyond;  effect  of  appeal.  As 
regards  the  precise  time  when  the  receiver's  title  and  right  of 
possession  attach  to  property  which  is  the  subject  of  the  receiv- 
ership, the  better  rule  would  seem  to  be,  as  held  in  New  York, 
that  they  vest  by  relation  back  to  the  date  of  the  original  order 
appointing  him,  although  the  proceedings  may  not  be  perfected 
until  a  later  date;  and  that  the  receiver's  title  and  right  of 
possession  during  the  interval  between  such  order  and  the  time 
of  perfecting  his  appointment  are  superior  to  those  of  judg- 
ment creditors,  or  of  attaching  creditors,  who  levy  upon  the 
property  during  such  interval. ^^     Thus,   when  an  order  of 

10  Sharp  V.  Carter,  3  P.  W.,  375.      dleton  I\I.  Co.,  9  S.  C,  318;  Regen- 

11  Horlock  V.  Smith,  11  L.  J.,  N.      stein   v.    Pearlstein,   30    S.    C,    192, 
S.  Ch.,  157;  S.  C,  6  Jur.,  478.  8  S.  E.,  850;  Maynard  v.  Bond,  67 

12  Anonymous,  2  Atk.,  15.  Mo.,  315;  Ardmore  National  Bank 
iSRutter  v.  Tallis,  5  Sandf.,  610;      v.    Briggs   M.  &   S.   Co.,  20  Okla., 

Steele  v.   Sturges,   5  Ab.    Pr.,  442;  427,    94    Pac,    533;    Horn    v.    Pere 

In  re  Christian  Jensen  Co.,  128  N.  Marquette    R.    Co.,    151    Fed.,    626. 

Y.,  550,  28  N.  E.,  665 ;  In  re  Schuy-  And  see  Ex  parte  Evans,  13  Ch.  D., 

ler's  S.  T.  B.  Co.,  136  N.  Y.,  169,  252;    Pope  v.   Ames,  20   Ore.,   199, 

32  N.  E.,  623;   Clinkscales  v.   Pen-  25  Pac,  393;  Baldwin  v.   Spear,  79 


CHAP.  VI.]  POSSESSION.  157 

reference  is  made  to  a  master  in  chancery  for  the  appointment 
of  a  receiver,  and  the  appointment  is  afterward  made  under  and 
pursuant  to  such  order,  the  receiver's  title  will  be  held  to  have 
vested  as  of  the  date  of  the  original  order,  and  to  have  attached 
upon  all  property  to  which  the  receivership  could  extend,  in 
like  manner  and  with  the  same  effect  as  if  the  original  order 
had  named  the  receiver,  instead  of  directing  a  reference  for 
that  purpose.l^  In  all  such  cases  actual  possession  by  the  court 
appointing  the  receiver  is  not  necessary  to  complete  its  juris- 
diction or  control  over  the  property  as  against  other  creditors. 
It  is  sufficient  that  the  court  has  assumed  jurisdiction  over  the 
property  in  controversy  by  appointing  a  receiver,  and  it  is, 
therefore,  as  much  in  the  possession  of  the  court  as  if  already 
in  the  hands  of  its  receiver,  even  though  he  has  not  yet  com- 
plied with  the  order  requiring  the  execution  of  a  bond.^^  So 
when  the  order  provides  that,  before  entering  upon  the 
discharge  of  his  duties,  the  receiver  shall  execute  a  bond 
with  sureties,  and  between  the  time  of  such  order  and  the  exe- 
cution of  the  bond  the  sheriff  levies  upon  the  property,  under 
an  execution  against  the  defendants,  the  receiver's  title  and 
right  to  possession,  on  perfecting  his  bond,  take  effect  back 
to  the  date  of  his  appointment,  and  the  sheriff  will  be  required 
to  surrender  possession  of  the  property  to  the  receiver.i^  So 
a  judgment  obtained  against  a  corporation  after  the  appoint- 
ment of  a  receiver  over  the  corporation  but  before  the  approval 
of  his  bond  creates  no  lien  upon  the  corporate  property,  since 
the  approval  of  the  bond  will  relate  back  to  the  date  of  the 
order  of  appointment.^'^  It  is  to  be  observed,  however,  that 
the  receiver's  title  does  not  take  effect  back  to  the  time  of  be- 

Vt.,  43,  64  Atl.,  235.     See,  contra,  Co.,  9  S.  C,  318.    And  see  Bank  of 

Farmers  Bank  v.  Beaston,  7  G.  &  J.,  Woodland  v.  Herow,  120  Cal.,  614, 

421;  Defries  v.  Creed,  34  L.  J.,  N.  52  Pac.,   1006,  as  to  mere  appoint- 

S.   Eq.,  607;   Edwards  v.   Edwards,  ment,   ipso    facto,   constituting   pos- 

2  Ch.  D.,  291,  reversing  S.  C,  1  Ch.  session. 

D.,  454.  16  Steele  v.    Sturges,   5   Ab.    Pr., 

i4Rutter  V.  Tallis,  5  Sandf.,  610.  442;  Maynard  v.  Bond,  67  Mo.,  315. 

15  Clinkscales    v.    Pendleton     M.  17  Temple   v.   Glasgow,  25   C.   C. 


158  RECEIVERS.  [chap.  VI. 

ginning  the  action  in  which  he  was  appointed,  so  as  to  defeat 
a  levy  by  the  sheriff  under  a  judgment  recovered  against  the 
defendant  prior  to  the  receiver's  appointment. ^^  So  an  attach- 
ment Hen  obtained  pending  an  apphcation  for  the  appointment 
of  a  receiver  but  before  he  is  actually  appointed  is  not  invali- 
dated by  his  subsequent  appointment.^^  And  where  a  bill  is 
filed  by  stockholders  of  a  railway  company,  not  for  the  purpose 
of  asserting  a  lien  or  enforcing  any  debt,  but  merely  for  the 
appointment  of  a  receiver  to  manage  the  property  until  arrange- 
ments may  be  made  for  discharging  its  debts,  the  filing  of 
the  bill  and  the  service  of  summons  will  not  bring  the  property 
of  the  company  under  the  control  of  the  court  so  as  to  prevent 
the  company,  prior  to  the  appointment  of  the  receiver,  from 
surrendering  certain  property  and  supplies  to  the  person  from 
whom  they  were  purchased  in  partial  payment  of  the  purchase 
price. 2*^  And  when  the  order  appointing  a  receiver  requires 
him  to  give  a  bond  before  proceeding  to  act  as  receiver,  until 
such  bond  is  given  he  can  not  maintain  an  action  to  recover 
possession  of  the  property  over  which  he  is  appointed. ^1  And 
when  the  order  appointing  him  is  stayed  by  an  appeal  and 
supersedeas,  the  property  will  not  be  deemed  in  the  custody 
of  the  law  until  actually  reduced  to  possession  by  the  receiver 
after  the  affirmance  of  his  appointment  upon  the  appeal,  until 
which  time  it  remains  in  the  custody  of  the  original  defendant, 
who  is  authorized  to  make  necessary  contracts  for  its  preser- 
vation and  for  the  protection  of  his  rights.22 

§  137.  The  doctrine  in  Maryland.  In  Maryland  it  is 
held  that  the  appointment  of  receivers,  and  executing  bonds 
for  the  faithful  performance  of  their  duties,  will  not  operate 
to  sequestrate  the  property  of  defendant,  or  debts  due  to  him, 

A.,  540,  80  Fed.,  441,  42  U.  S.  App.,  15  C.  C.  A.,  556,  68  Fed.,  515,  30 

417,  affirming  S.  C,  73  Fed.,  709.  U.  S.  App.,  358. 

IS  Artisans    Bank    v.    Treadwell,  21  Phillips   v.    Smoot,    1    Mackey, 

34  Barb.,  553.  478. 

19  Smith  V.  Nursery  &  S.  Co.,  109  22  Cook  v.   Cole,  55   Iowa,   70,  7 
Iowa,  51,  79  N.  W.,  457.  N.  W.,  419. 

20  Illinois    Steel    Co.    v.    Putnam, 


CHAP.  VI.]  POSSESSION.  159 

until  actually  reduced  to  the  receiver's  possession.  And  an 
indebtedness  due  to  a  person  over  whose  affairs  receivers  have 
been  appointed,  but  who  have  not  taken  possession,  may  be 
garnished,  notwithstanding  such  appointment.  The  reason  for 
the  rule  is  said  to  be,  that  the  defendant's  effects  not  being  in 
possession  of  the  court  until  taken  into  the  receiver's  custody, 
the  court  can  not  interpose  its  summary  jurisdiction  to  punish 
any  interference  with  the  possession.  And  it  is  held  that  the 
period  when  the  effects  of  the  defendant  are  to  be  considered 
as  under  protection  of  the  court,  so  as  to  preserve  them  from 
attachment,  is  the  time  when  the  court  may  interpose  an  attach- 
ment to  punish  a  disturbance  or  interference  with  the  receiver's 
possession.23 

§  138.  Receiver  acquires  possession  subject  to  existing 
liens;  liens  for  taxes;  unrecorded  mortgage;  no  liens  ac- 
quired after  appointment.  It  is  important  to  observe  that 
the  receiver's  possession  is  subject  to  all  valid  and  existing 
liens  upon  the  property  at  the  time  of  his  appointment,  and 
does  not  divest  a  lien  previously  acquired  in  good  faith. 2^    And 

23  Farmers  Bank  v.  Beaston,  7  G.  Her,  63  Kan.,  579,  66  Pac,  617; 
&  J.,  421.  Graham  v.  Mutual  Aid  Society,  161 

24  Gere  v.  Dibble,  17  How.  Pr.,  Mass..  357,  37  N.  E.,  447;  Kit- 
31 ;  In  re  North  American  Gutta  tredge  v.  Osgood,  161  ]\Iass.,  384,  37 
Percha  Co.,  17  How.  Pr.,  549,  9  N.  E.,  369;  Arnold  v.  Weimer,  40 
Ab.  Pr.,  79;  Rich  v.  Loutrel,  18  Neb.,  216,  58  N.  W.,  709;  Battery 
How.  Pr.,  121 ;  Talladega  Mercan-  Park  Bank  v.  Western  C.  Bank, 
tile  Co.  V.  Jenifer  Iron  Co.,  102  127  N.  C,  432,  37  S.  E.,  461 ;  Ard- 
Ala.,  259,  14  So.,  743 ;  Bories  v.  more  National  Bank  v.  Briggs  M.  & 
Union  B.  &  L.  Assn.,  141  Cal.,  74,  S.  Co.,  20  Okla.,  427,  94  Pac,  533; 
74  Pac,  552;  Mulcahey  v.  Strauss,  Baldwin  v.  Spear,  79  Vt.,  43,  64 
151  111.,  70,  37  N.  E.,  702;  Chicago  Atl.,  235;  First  National  Bank  v. 
Title  &  Trust  Co.  v.  Smith,  158  111.,  Cook,  12  Wyo.,  492,  76  Pac,  674,  78 
417,  41  N.  E.,  1076;  Totten  &  Hogg  Pac,  1083;  Cohen  v.  Gold  Creek  M. 
I.  &  S.  F.  Co.  V.  Muncie  Nail  Co.,  Co.,  95  Fed.,  580.  And  see,  post, 
148  Ind.,  372,  47  N.  E.,  703 ;  Amer-  §  440.  And  see  Bowling  Green 
ican  Trust  &  Savings  Bank  v.  Mc-  Savings  Bank  v.  Todd,  64  Barb., 
Gettigan,  152  Ind.,  582.  52  N.  E.,  146;  Lorch  v.  Aultman,  75  Ind., 
793,  71  Am.  St.  Rep.,  345,  and  note ;  162.  And  see  Von  Roun  v.  Supe- 
Smith    V.    Nursery    &    S.    Co.,    109  rior  Court,  58  Cal.,  358. 

Iowa,  51,  79  N.  W..  457;  Cramer  v. 


160  RECEIVERS.  £CH.AP.  VI. 

when  creditors  have  obtained  judgments  against  tlicir  debtor, 
which  are  a  lien  upon  his  real  estate,  prior  to  the  appointment 
of  a  receiver  of  the  debtor's  property  and  estate,  the  receiver 
is  seized  of  the  land  subject  to  the  lien  of  the  judgments.25 
So  where  creditors  obtain  judgment  and  levy  upon  the  prop- 
erty of  the  debtor,  and  a  receiver  is  afterward  appointed, 
who  takes  possession  of  the  property  and  sells  it,  the  sheriff 
who  made  the  levy  is  entitled  to  the  proceeds  of  such  sale.^^ 
So  a  receiver  can  not  maintain  replevin  for  property  which 
has  been  levied  upon  and  reduced  to  possession  by  credit- 
ors having  a  paramount  lien. 27  And  the  appointment  of  a 
receiver  over  property  which  is  subject  to.  taxation  in  no 
manner  affects  or  impairs  a  lien  upon  the  property  for  taxes.28 
So  where  personal  property  comes  into  the  possession  of  a 
receiver  subject  to  the  lien  of  taxes  previously  assessed,  he  takes 
it  subject  to  such  lien,  and  the  municipality  to  which  the  tax 
is  due  may  intervene  in  the  receivership  proceeding  and  estab- 
lish the  claim  as  one  entitled  to  a  preference.^^  The  principle 
extends,  also,  to  choses  in  action  of  the  defendant  which  pass 
to  a  receiver  by  virtue  of  his  appointment,  and  he  takes  them 
subject  to  existing  liens  thereon.  For  example,  where  attor- 
neys of  a  bank  are  employed  to  foreclose  a  mortgage,  and  pend- 
ing the  foreclosure  a  receiver  is  appointed  of  the  affairs  of  the 
bank,  the  receiver  takes  title  to  the  mortgage  or  its  proceeds, 
subject  to  the  lien  of  the  attorneys  for  their  services,  although 
buch  services  can  not  be  urged  by  way  of  set-off.  The  right 
of  the  attorneys  in  such  case  is  dependent  upon  the  common- 
law  lien  which  an  attorney  has  for  his  fees  upon  the  papers  of 
his  client,  as  well  as  upon  the  proceeds  of  the  litigation,  and 
the  attorneys  will  be  required  to  pay  to  the  receiver  only  the 
balance  of  the  proceeds,  after  deducting  their  fees.     But  an 

25  Gere  v.   Dibble,   17  How.   Pr.,  27  Conley  v.  Deere,  11  Lea,  274. 
31.  28  Union  Trust  Co.  v.  Weber,  96 

26  In   re   North    American   Gutta      III.,  346. 

Percha   Co.,   17  How.   Pr.,   549;    S.  29  Duryee  v.  United  States  C.  S. 

C,  9  Ab.  Pr.,  79;  Rich  v.  Loutrel,  Co.,  55  N.  J.  Eq.,  311,  37  Atl.,  155. 
18  How.  Pr.,  121. 


CHAP.  VI.]  POSSESSION.  161 

individual  member  of  the  firm  of  attorneys  can  not,  in  such 
a  case,  be  allowed  any  lien  upon  the  proceeds  of  the  foreclosure 
suit,  as  against  the  receiver,  for  an  amount  due  him  for  services 
rendered  the  bank  by  him  individually.^^  And  where  property 
comes  into  the  possession  of  a  receiver  subject  to  pre-existing 
liens,  it  is  as  much  his  duty  to  preserve  and  protect  such  liens 
in  favor  of  the  holders  thereof  as  it  is  to  make  a  just  distribu- 
tion of  the  assets  among  the  unsecured  creditors.^^  But  where 
a  mortgage  of  real  estate  has  been  executed  before  the  appoint- 
ment of  a  receiver  but  has  not  been  placed  upon  record  until 
after  his  appointment,  such  mortgage  does  not  constitute  a 
valid  lien  as  against  the  receiver  and  the  latter  is  entitled  to 
the  proceeds  of  the  sale  for  the  benefit  of  the  general  creditors 
as  against  the  mortgagee.^2  And  where  a  receiver  has  been  ap- 
pointed and  has  taken  possession  of  property,  no  liens  can  be 
obtained  nor  preferences  acquired  without  the  consent  of  the 
court  appointing  the  receiver.^^ 

§  139.  Person  asserting  claim  to  property  must  apply 
to  court.  The  possession  of  the  receiver  being,  as  already 
shown,  regarded  as  the  exclusive  possession  of  the  court  from 
which  he  derives  his  appointment,  the  courts  are  exceedingly 
averse  to  allowing  any  unauthorized  interference  therewith,  and 
will  not  tolerate  any  attempt  to  disturb  him  in  his  rightful  pos- 
session, without  leave  of  court  being  first  obtained  for  that 
purpose.^*     And  when  a  person  claiming  any  interest  in  the 

30  Bowling  Green  Savings  Bank  &  G.,  104;  Ames  v.  Trustees  of 
V.  Todd,  64  Barb.,  146.  Birkenhead    Docks,   20   Beav.,   332; 

31  American  Trust  &  Savings  Brooks  v.  Greathed,  1  Jac.  &  W., 
Bank  v.  McGettigan,  152  Ind.,  582,  176;  DeWinton  v.  Mayor  of  Brecon, 
52  N.  E.,  793,  71  Am.  St.  Rep.,  345,  28  Beav.,  200;  Spinning  v.  Ohio 
and  note.  Life    Insurance  -and    Trust    Co.,    2 

32  Cheney  v.  Maumee  Cycle  Co.,  Disney,  368;  Vermont  &  Canada 
64  Ohio  St.,  205,  60  N.  E.,  207.  R.  Co.  v.  Vermont  Central  R.  Co., 

33  Cramer  v.  Her,  63  Kan.,  579,  46  Vt.,  792;  Ex  parte  Cochrane,  L. 
66  Pac,  617.  R.,     20     Eq.,     282;     Mulcahey     v. 

34  Evelyn  v.  Lewis,  3  Hare,  472;  Strauss,  151  III,  70.  2,7  N.  E.,  702; 
Angel  V.  Smith,  9  Ves.,  335;  Rus-  St.  Louis,  A.  &  S.  R.  Co.  v.  Ham- 
sell  V.  East  Anglian  R.  Co.,  3  Mac.  ilton,   158  111.,  366,  41   N.   E.,  777. 

Receivers — 11. 


162  RECEIVERS.  [chap.  VI. 

subject-matter  of  the  litigation  is  prejudiced  by  the  appoint- 
ment of  a  receiver,  or  desires  to  assert  his  rights,  the  proper 
course  is  for  the  court  either  to  give  him  leave  to  bring  an 
action,  or  to  permit  him  to  be  examined  pro  intcresse  suo,  the 
latter  being  generally  regarded  as  the  most  convenient  and 
desirable  practice.^^  Thus,  the  court  will  not  permit  a  claimant 
of  real  estate  which  is  in  possession  of  its  receiver  to  bring  an 
action  of  ejectment  without  first  obtaining  leave  for  that  pur- 
pose.^^  So  an  independent  suit  can  not  be  maintained  against 
a  receiver  to  foreclose  a  mortgage  upon  property  in  his  pos- 
session, although  leave  will  be  given  to  file  such  foreclosure 
bill  in  the  receivership  cause.^*^  And  ordinarily,  when  real  es- 
tate is  in  the  actual  possession  of  a  receiver,  an  action  of  eject- 
ment can  not  be  maintained  against  him  in  another  court,  but 
the  claimant  will  be  permitted  to  pursue  his  remedy  against 
the  receiver  in  the  action  in  which  he  was  appointed. ^^  And 
if  property  or  funds  in  the  receiver's  possession  are  claimed 
by  third  persons  not  parties  to  the  action  in  which  he  was  ap- 
pointed, a  petition  or  motion  may  be  presented  to  the  court  for 
an  order  on  the  receiver  to  deliver  over  the  fund  or  property 
to  the  claimant. ^^  The  remedy  of  a  person  claiming  title  to 
the  property  is  not  to  regain  it  by  an  act  of  trespass,  but  to 
apply  to  the  court  for  redress  or  for  leave  to  sue  the  receiver."*^ 
And  in  thus  restricting  claimants  or  third  parties  from  inter- 
fering with  the  receiver's  possession  without  leave,  the  rule  is 

And  see  Baltimore  &  O.  R.  Co.  v.  St.  Louis,  A.  &  S.  R.  Co.  v.  Hamil- 

Flaherty,  87  Md.,  102.  39  Atl.,  524,  ton,  158  111.,  366,  41  N.  E.,  777. 

1076;  Read  v.  Brayton,  143  N.  Y.,  37  American  Loan  &  Trust  Co.  v. 

342,  38  N.  E.,  261.  Central  V.  R.  Co.,  86  Fed.,  390. 

35  Brooks  V.  Greathed,  1  Jac.  &  38  Fort  Wayne,  M.  &  C.  R.  Co. 
W.,  176;  Brien  v.  Paul,  3  Tenn.  Ch.,  v.  Mellett,  92  Ind.,  535.  And  see 
357;  Strain  v.  Palmer,  86  C.  C.  A.,  Potter  v.  Spa  Spring  Brick  Co.,  47 
618,  159  Fed.,  628.     See,  also,  Skin-  N.  J.  Eq.,  442,  20  At!.,  852. 

ner    v.    Maxwell,    68    N.    C,    400;  39  Rjggg  v.  Whitney,  IS  Ab.   Pr., 

Jacobson  v.  Landolt,  73  Wis.,   142,  388. 

40  N.  W.,  636;   Colburn  v.  Yantis,  40 /„  re  Day,  34  Wis.,  638;   Ex 

176  Mo.,  670,  75  S.  W.,  653.  parte  Cochrane,  L.  R.,  20  Eq.,  282. 

36  Angel   v.   Smith,  9   Ves.,  335; 


CHAP.  VI.]  POSSESSION.  163 

applied  regardless  of  whether  such  persons  claim  paramount 
to  or  under  the  right  which  the  receiver  was  appointed  to  pro- 
tect.41 

§   140.  Receiver's  possession  protected  by  injunction; 
illustrations;  may  proceed  by  petition  in  receivership  suit. 

This  exclusive  possession  of  the  receiver  may  be  and  frequently 
is  protected  by  the  aid  of  an  injunction  restraining  any  unau- 
thorized interference  with  the  property  or  the  unauthorized 
prosecution  of  suits  against  the  receiver  for  its  recovery,  the 
granting  of  an  injunction  in  such  cases  being  a  necessary  in- 
cident to  the  power  of  appointing  a  receiver.^^  Thus,  when  a 
receiver  is  appointed  over  real  property  which  is  the  subject- 
matter  of  the  litigation,  it  is  proper  to  enjoin  one  of  the  parties 
to  the  cause  from  distraining  for  rent  against  the  other,  as 
well  as  to  restrain  him  generally  from  all  interference  with 
the  property  in  the  receiver's  possession.^3  And  when  a  claim- 
ant is  asserting  his  title  by  an  action  at  law  to  property  held 
by  a  receiver,  without  having  obtained  leave  of  the  court  to 
institute  such  action,  he  may  be  enjoined,  on  the  application  of 
the  receiver,  from  proceeding  with  his  action,  regardless  of 

41  Evelyn  v.  Lewis,  3  Hare,  472.  to  the  right  of  a  receiver  of  an  in- 

42  Tink  V.  Rundle,  10  Beav.,  318;  solvent  corporation  appointed  in 
Attorney-General  v.  St.  Cross  Hos-  one  state  to  enjoin  in  that  jurisdic- 
pital,  18  Beav.,  601 ;  Evelyn  v.  tion  proceedings  under  attachments 
Lewis,  3  Hare,  472;  Johnes  v.  or  judgments  against  the  corpora- 
Claughton,  Jac,  573;  Woerishoflfer  tion  in  another  state,  see  Schindel- 
V.  North  River  C.  Co.,  99  N.  Y.,  holz  v.  Cullum,  5  C.  C.  A.,  293,  55 
398,  2  N.  E.,  47;  In  re  Christian  Fed.,  885,  12  U.  S.  App.,  242.  Un- 
Jensen  Co.,  128  N.  Y.,  550,  28  N.  E.,  der  a  statute  requiring  the  giving 
665;  Marshall  v.  Lockett,  76  Ga.,  of  an  injunction  bond,  it  is  held 
289;  Woodburn  v.  Smith,  96  Ga.,  that  a  receiver  seeking  the  aid  of 
241,  22  S.  E.,  964;  Vestel  v.  Tasker,  an  injunction  against  a  stranger  to 
123  Ga.,  213,  51  S.  E.,  300;  Gard-  the  cause  must  file  the  necessary 
ner  v.  Caldwell,  16  Mont.,  221,  40  bond  and  that  he  is  not  exempt  by 
Pac,  590;  Sevems  v.  English,  19  reason  of  his  office.  Cherry  v.  W. 
Okla.,  567,  101  Pac,  750;  Bibber-  W.  I.  E.  Co.,  11  Wash.,  586,  40  Pac, 
White    Co.   V.   White   River    V.    E.  136. 

R.    Co.,    107    Fed.,    176;    Hampton  43  Marshall    v.    Lockett,    76    Ga., 

Roads    R.    &    E.    Co.    v.    Newport      289. 
News  etc.,  Co.,  131   Fed.,  534.     As 


164  RECEIVERS.  [chap.  VI. 

however  clear  his  right  may  be,  or  of  whether  he  was  apprised 
of  the  receiver's  appointment  when  he  brought  his  action  at 
law ;  '*'*  since  the  claimant,  although  he  may  have  a  clear  legal 
right  to  the  property,  will  not  be  allowed  to  disturb  the  re- 
ceiver's possession  until  he  has  established  his  right  by  proper 
proceedings  for  that  purpose.  Thus,  when  a  receiver  is  ap- 
pointed over  certain  church  property,  and  a  churchwarden, 
claiming  to  be  legally  entitled  thereto,  takes  possession  by  force 
and  prevents  the  minister  from  holding  religious  services,  an 
injunction  may  be  granted  to  restrain  such  unauthorized  inter- 
ference with  the  receiver's  possession. ^^  And  it  is  held  that  the 
receiver  of  a  bank  may  enjoin  a  defendant  from  prosecuting 
an  action  against  the  bank  in  another  state,  where  such  action 
results  in  preventing  or  interfering  with  the  collection  of  the 
assets  of  the  bank  to  the  possession  of  which  the  receiver  is 
entitled. "^^  And  an  injunction  is  sometimes  granted,  althougii 
the  party  enjoined  is  proceeding  in  the  exercise  of  a  right  given 
by  statute.  Thus,  where  real  estate  is  in  possession  of  a  re- 
ceiver, and  a  railway  company,  desiring  a  portion  of  it  for  the 
construction  of  its  road,  institutes  proceedings  for  condemna- 
tion in  accordance  with  statute,  but  without  obtaining  leave  of 
the  court  before  interfering  with  the  receiver's  possession,  an 
injunction  may  be  granted  restraining  the  company  from  pro- 
ceeding until  further  order  of  court."*"^  And  a  receiver  is  en- 
titled to  an  injunction  to  restrain  unauthorized  interference 
with  the  property  in  his  possession  even  as  against  strangers 
who  are  not  parties  to  the  receivership  proceeding ;  and  in  such 
case  the  court  may  properly  allow  him  to  proceed  by  petition  in 
the  receivership  suit  and  need  not  require  him  to  resort  to  an 
independent  action  in  equity.'*^ 

44  Evelyn  v.  Lewis,  3  Hare,  472.  Felton,  43  C.  C.  A.,  189,  103  Fed., 

45  Attorney-General   v.   St.   Cross  227;    Horn    v.    Pare    Marquette    R. 
Hospital,  18  Beav.,  601.  Co.,    151    Fed.,    626;    Bibber-White 

46  Davis  V.   Butters  Lumber  Co.,  Co.  v.  White  River  V.  E.   R.   Co., 
132  N.  C,  233,  43  S.  E..  650.  107  Fed.,  176;  Virginia,  T.  &  C.  S. 

47Tink  V.  Rundle,  10  Beav.,  318.      &   I.    Co.    v.    Bristol   Land    Co..   88 
48  Lake  Shore  &  M.  S.  R.  Co.  v.      Fed.,  134.     And  see,  post,  §  747. 


CHAP.  VI.] 


POSSESSION. 


165 


§  140a.  Property  in  receiver's  hands  not  subject  to  sei- 
zure for  taxes.  As  still  further  illustrating  the  exclusive 
character  of  the  receiver's  possession  and  the  jealousy  with 
which  it  is  guarded  by  the  courts,  it  is  held  that  property  in 
the  possession  of  a  receiver  appointed  by  a  federal  court,  as  in 
the  case  of  a  receivership  over  a  railway,  while  subject  to  taxa- 
tion under  the  laws  of  the  state  in  which  it  is  situated,  can  not 
be  levied  upon  and  sold  by  an  officer  of  the  state  in  satisfaction 
of  unpaid  taxes.  The  remedy  of  the  officer  in  such  case  should 
be  sought  by  intervention  in  the  suit  in  which  the  receiver  was 
appointed,  and  that  court  may  properly  enjoin  him  from  levying 
upon  the  property,  and  has  undoubted  jurisdiction  to  punish 
him  for  contempt  in  violating  such  injunction.'*^    And  in  such 


49  In  re  Tyler,  149  U.  S.,  164,  13 
Sup.  Ct.  Rep.,  785 ;  King  v.  Wooten, 
4  C.  C.  A.,  519,  54  Fed.,  612,  2  U. 
S.  App.,  651;  Oakes  v.  Myers,  68 
Fed.,  807;  Burleigh  v.  Chehalis 
County,  75  Fed.,  873,  34  L.  R.  A., 
393;  Virginia,  T.  &  C.  S.  &  I.  Co. 
V.  Bristol  Land  Co.,  88  Fed.,  134. 
And  see  McLeod  v.  City  of  New 
Albany,  13  C  C.  A.,  525,  66  Fed., 
378,  24  U.  S.  App.,  601.  But  see, 
contra,  Central  Trust  Co.  v.  Wa- 
bash, St.  L.  &  P.  R.  Co.,  26  Fed., 
11.  The  doctrine  of  the  text  deny- 
ing the  right  of  taxing  officers  to 
interfere  with  property  in  the  pos- 
session of  receivers  is  clearly  set 
forth  in  the  opinion  of  Fuller,  C.  J., 
In  re  Tyler,  149  U.  S.,  164,  13  Sup. 
Ct.  Rep.,  785,  as  follows,  p.  182: 
"The  general  doctrine  that  property 
in  the  possession  of  a  receiver  ap- 
pointed by  a  court  is  in  custodia 
legis,  and  that  unauthorized  inter- 
ference with  such  possession  is 
punishable  as  a  contempt,  is  con- 
ceded; but  it  is  contended  that  the 
salutary  rule  has  no  application  to 
the  collection  of  taxes.     Undoubt- 


edly property  so  situated  is  not 
thereby  rendered  exempt  from  the 
imposition  of  taxes  by  the  govern- 
ment within  whose  jurisdiction  the 
property  is,  and  the  lien  for  taxes 
is  superior  to  all  other  liens  what- 
soever, except  judicial  costs,  when 
the  property  is  rightfully  in  the 
custody  of  the  law;  but  this  does 
not  justify  a  physical  invasion  of 
such  custody  and  a  wanton  disre- 
gard of  the  orders  of  the  court  in 
respect  of  it.  The  maintenance  of 
the  system  of  checks  and  balances 
characteristic  of  republican  institu- 
tions requires  the  co-ordinate  de- 
partments of  government,  whether 
federal  or  state,  to  refrain  from  any 
infringement  of  the  independence 
of  each  other,  and  the  possession  of 
property  by  the  judicial  department 
can  not  be  arbitrarily  encroached 
upon,  save  in  violation  of  this  fun- 
damental principle.  The  levy  of  a 
tax  warrant,  like  the  levy  of  an  or- 
dinary £eri  facias,  sequestrates  the 
property  to  answer  the  exigency  of 
the  writ;  but  property  in  the  pos- 
session of  the  receiver  is  already  in 


166 


RECEIVERS. 


[CIIAP.  VI. 


case  a  receiver  may  have  an  injunction  to  restrain  the  collection 
of  a  tax,  although  tiiere  are  present  none  of  the  grounds  of 
equitable  jurisdiction,  as  where  the  property  seized  is  per- 
sonalty and  could  accordingly  be  recovered  in  an  action  at 
law. 5^  And  the  rule  under  discussion  is  not  confined  in  its 
application  to  the  federal  courts  but  has  been  recognized  and 
followed  by  the  state  courts.^^ 


sequestration,  already  held  in  equi- 
table execution;  and  while  the  lien 
for  taxes  must  be  recognized  and 
enforced,  the  orderly  administra- 
tion of  justice  requires  this  to  be 
done  by  and  under  the  sanction  of 
the  court.  It  is  the  duty  of  the 
court  to  see  to  it  that  this  is  done; 
and  a  seizure  of  the  property 
against  its  will  can  only  be  predi- 
cated upon  the  assumption  that  the 
court  will  fail  in  the  discharge  of  its 
duty,  an  assumption  carrying  a  con- 
tempt upon  its  face." 

50  Ledoux  V.  La  Bee,  83  Fed., 
761. 

51  Cleveland  v.  McCravy,  46  S. 
C,  252,  24  S.  E.,  175;  Palmer  v. 
Peftingill,  6  Idaho,  346,  55  Pac, 
653.  And  see  Spokane  County  v. 
/\nnis,  43  Wash.,  655,  86  Pac, 
1066.  And  it  is  held  that  the  right 
of  the  state  to  the  payment  of  taxes 
upon  property  in  the  hands  of  a  re- 
ceiver is  paramount  to  the  rights 
of  creditors,  and  the  receiver  will 
be  directed  to  pay  such  taxes  be- 
fore distribution  of  the  funds  in 
his  hands  among  creditors.  Gree- 
ley V.  Provident  Savings  Bank,  98 
Mo.,  458,  11  S.  W.,  980;  Gehr  v. 
Mont  Alto  Iron  Co.,  174  Pa.  St., 
430,  34  Atl.,  638;  Spokane  County 
V.  Annis,  43  Wash.,  655,  86  Pac, 
1066.       And     receiver's     certificates 

•may    properly    be    issued    for    such 
taxes   and  given  a  preference  over 


prior  liens.  Hanna  v.  State  Trust 
Co.,  16  C.  C.  A.,  586,  70  Fed.,  2,  36 
U.  S.  App.,  61,  30  L.  R.  A.,  201. 
But  in  Massachusetts  it  is  held  that 
the  receiver  of  a  corporation  is  not 
taxable  for  personal  property  of  the 
corporation  in  his  hands.  City  Na- 
tional Bank  v.  Charles  Baker  Co., 
180  Mass.,  40,  61  N.  E.,  223.  And  it 
has  been  held  that  a  foreign  state 
is  not  entitled  to  a  preference  over 
local  creditors  on  account  of  an  un- 
paid franchise  tax  due  to  the  state 
from  an  insolvent  corporation  of 
that  state,  over  which  the  receiver 
has  been  appointed  in  the  local  pro- 
ceedings. Holshouser  v.  Copper 
Co.,  138  N.  C,  248,  50  S.  E.  650. 
See,  further,  as  to  the  liability  to 
taxation  of  funds  or  property  in 
the  hands  of  receivers,  Howard  Co. 
V.  Strother,  71  Iowa,  683,  33  N.  W., 
238;  Brooks  v.  Town  of  Hartford, 
61  Conn.,  112,  23  Atl.,  697;  Spald- 
ing V.  Commonwealth.  88  Ky.,  135, 
10  S.  W.,  420.  In  Wise  v.  Wise  Co., 
153  N.  Y.,  507,  47  N.  E.,  788,  it  was 
held  that  a  specific  lien  by  attach- 
ment process  upon  personal  prop- 
erty prior  to  the  appointment  of  a 
receiver  and  the  delivery  of  certain 
property  to  him  would  not  be  dis- 
placed in  favor  of  a  subsequent 
claim  for  taxes  upon  the  same  prop- 
erty where  no  specific  lien  had  ever 
been  obtained  by  warrant  or  other 
legal  process.    As  to  the  right  of  the 


CHAP.  VI.] 


POSSESSION. 


167 


§  141.  Property  not  allowed  to  be  sold  under  execution ; 
not  subject  to  process  of  another  court.  So  extremely 
jealous  are  courts  of  equity  of  any  interference,  pendente  lite, 
with  the  possession  of  their  receivers,  that  they  will  not  ordi- 
narily permit  property  which  is  the  subject  of  the  receivership 
to  be  sold  on  execution.^^  p^^^^  while  the  appointment  of  a 
receiver  does  not  destroy  existing  liens  upon  the  property,  it 
prevents  their  enforcement  by  the  ordinary  legal  process  and 
compels  the  persons  asserting  such  liens  to  seek  their  remedy 
in  the  cause  in  which  the  receiver  is  appointed. ^^  Even  though 
an  execution  has  been  levied  upon  the  property  before  the  ap- 
pointment of  the  receiver,  it  is  held  that  there  can  not  be  a  law- 


purchaser  at  a  tax  sale  of  vacant 
land  forming  part  of  the  estate  of 
a  receiver  to  take  possession  under 
his  tax  deed,  see  Metcalfe  v.  Com- 
monwealth L.  &  L.  Co.'s  Receiver, 
113  Ky.,  751,  68  S.  W.,  1100.  In 
Stoner  v.  Bitters,  151  Ind.,  575,  52 
N.  E.,  149,  it  was  held,  under  a 
statute  providing  that  it  should  be 
the  duty  of  the  receiver  of  any  cor- 
poration to  pay  the  taxes  due  upon 
its  pro^rty,  and  where  he  neglected 
to  do  so,  the  county  treasurer  might 
file  in  the  court  a  statement  show- 
ing the  delinquency  and  the  court 
should  thereupon  issue  an  order  di- 
recting the  receiver  to  show  cause 
why  the  taxes  with  penalty  should 
not  be  paid  and,  upon  his  failure  to 
show  good  and  sufficient  cause,  the 
court  should  direct  them  to  be  paid, 
that  the  prior  sale  by  the  receiver 
of  the  property  of  the  corporation 
subject  to  liens  was  a  good  and  suf- 
ficient cause  under  the  statute.  As 
to  the  liability  of  the  receiver  of  an 
insolvent  corporation  for  a  fran- 
chise tax  incurred  in  carrying  on 
the  business  of  the  corporation,  see 
In  re  George  Mather's  Sons'  Co., 
52    N.    J.    Eq.,    607,    30    Atl.,    321; 


Crews  V.  United  States  Car  Co.,  57 
N.  J.  Eq.,  357,  42  Atl.,  272. 

52  Robinson  v.  Atlantic  &  Great 
Western  R.  Co.,  66  Pa.  St.,  160; 
Thompson  v.  McCleary,  159  Pa.  St., 
189,  28  Atl.,  254;  Skinner  v.  Max- 
well, 68  N.  C,  400;  Wiswall  v. 
Sampson,  14  How.,  52;  Edwards  v. 
Norton,  55  Tex.,  405;  Ellis  v.  Ver- 
non I.,  L.  &  W.  Co.,  86  Tex.,  109, 
23  S.  W.,  858;  Walling  v.  Miller, 
108  N.  Y.,  173,  15  N.  E.,  65 ;  Chal- 
mers V.  Littlefield,  103  Me.,  271,  69 
Atl.,  100;  Campau  v.  Detroit  Driv- 
ing Club,  130  Mich.,  417,  90  N.  W., 
49;  Gardner  v.  Caldwell,  16  Mont, 
221,  40  Pac,  590;  Jones  v.  Moore, 
106  Tenn.,  188,  61  S.  W.,  81,  (re- 
plevin) ;  Grosscup  z/*  German  S.  & 
L.  Society,  162  Fed.,  947.  See,  also, 
Russell  V.  Texas  &  P.  R.  Co.,  68 
Tex.,  646,  5  S.  W.,  686;  State  v. 
Judge  of  Civil  District  Court,  45 
La.  An.,  1418,  14  So.,  308;  McDon- 
ald V.  Railroad,  93  Tenn.,  281,  24 
S.  W.,  252. 

•"13  Walling  V.  Miller,  108  N.  Y., 
173,  15  N.  E.,  65;  Ellis  v.  Vernon 
I.,  L.  &  W.  Co.,  86  Tex.,  109,  23  S. 
W.,  858. 


168 


RECEIVERS. 


[chap.  VI. 


fill  sale  under  such  execution  without  leave  of  the  court  ap- 
pointing the  receiver. ^^  And  when  the  property  of  an  insolvent 
corporation  passes  into  the  custody  of  a  receiver  in  an  action 
to  wind  up  its  affairs,  it  is  held  that  a  sale  of  real  estate  of  the 
corporation  made  after,  although  under  an  execution  levied 
before  the  receivership  will  pass  no  title  to  the  property  sold.^^ 
And  the  sale  under  execution  of  the  equity  of  redemption  of 
premises  which  are  in  the  possession  of  a  receiver  pending  a 
foreclosure  suit  is  void  and  no  title  thereunder  passes  to  the 
purchaser.^6  And  when  a  sheriff  has  levied  upon  property  in 
the  hands  of  a  receiver,  equity  will  not  interpose  by  an  injunc- 
tion in  behalf  of  the  sheriff,  to  restrain  an  action  at  law  against 


54  Walling  v.  Miller,  108  N.  Y., 
173,  IS  N.  E.,  65 ;  Campau  v.  De- 
troit Driving  Club,  130  Mich.,  417, 
90  N.  W.,  49.  But  in  such  case  the 
court  appointing  the  receiver  may 
allow  a  creditor  to  proceed  and  sell 
under  a  prior  execution.  Cass  v. 
Sutherland,  98  Wis.,  551,  74  N.  W., 
337. 

55  Ellis  V.  Vernon  I.,  L.  &  W. 
Co.,  86  Tex.,  109,  23  S.  W.,  858. 
The  cases  of  Walling  v.  Miller,  108 
N.  Y.,  173,  15  N.  E.,  65,  Ellis  v. 
Vei-non  I.,  L.  &  W.  Co.,  86  Tex., 
109,  23  S.  W.,  858,  and  Campau  v. 
Detroit  Driving  Club,  130  Mich., 
417,  90  N.  W.,  49,  may  be  regarded 
as  extending  the  doctrine  of  non- 
interference with  the  receiver's  pos- 
session to  its  extreme  limits,  since 
the  lien  of  the  judgment  creditor 
having  been  perfected  by  levying  his 
execution  before  the  appointment  of 
the  receiver,  it  would  seem,  upon 
principle,  to  be  the  better  doctrine 
that  the  rights  thus  acquired  are 
paramount  to  the  receivership,  and 
that  the  judgment  creditor  should 
be  permitted  to  proceed  with  his 
levy  and  sale,  without  being  re- 
quired to  seek  relief  in  the  cause  in 


which  the  receiver  is  appointed. 
And  in  Cole  v.  Oil-Well  Supply  Co., 
57  Fed.,  534,  where,  prior  to  the  re- 
ceivership in  a  federal  court,  proper- 
ty of  the  defendant  had  been  seized 
by  a  sheriff  under  attachment  from 
a  state  court  in  an  action  against 
the  defendant,  a  foreign  corpora.- 
tion,  which  action  resulted  in  judg- 
ment against  the  defendant  and  the 
levy  of  execution  upon  the  property 
so  attached,  the  federal  court  re- 
fused upon  petition  of  the  receiver 
to  order  the  surrender  of  the  prop- 
erty by  the  sheriff.  And  the  doc- 
trine of  non-interference  is  confined 
to  property  which  is  actually  em- 
braced in  the  receivership,  and  does 
not  extend  to  property  of  which  the 
receiver  may  have  taken  possession 
but  to  which  he  is  not  entitled. 
Such  property,  not  being  within  the 
scope  of  the  receivership,  is  not 
property  in  custodia  legis,  and  it 
may,  therefore,  be  sold  under  exe- 
cution. St.  Louis,  A.  &  T.  R.  Co. 
V.  Whitaker,  68  Tex.,  630,  5  S.  W., 
448. 

56  Grosscup   V.   German    S.   &   L, 
Society,  162  Fed.,  947. 


CHAP.  VI.]  POSSESSION.  169 

him  for  such  interference.^''^  The  proper  remedy  for  a  judg- 
ment creditor,  who  desires  to  question  the  receiver's  right  to 
the  property,  is  to  apply  to  the  court  appointing  him,  to  have 
the  property  released  from  the  receiver's  custody,  in  order 
that  he  may  proceed  against  it  under  his  judgment  ;^^  since 
to  permit  the  property,  while  in  custody  of  the  receiver,  to  be 
levied  upon  and  sold  under  the  process  of  another  court,  would 
at  once  give  rise  to  a  conflict  of  jurisdiction  and  would  seriously 
interfere  with  and  impair  the  receiver's  right  to  the  manage- 
ment of  the  property. ^^  So  when  real  estate  is  in  the  actual 
possession  of  a  receiver,  pending  litigation  as  to  the  title,  it  is 
not  subject  to  levy  and  sale  under  execution  to  satisfy  a  judg- 
ment rendered  subsequent  to  the  receiver's  appointment.^^ 
And  when  the  judgment  was  obtained  before  the  appointment, 
but  the  lien  was  not  acquired  by  placing  an  execution  in  the 
hands  of  the  sheriff  until  afterward,  it  was  held  that  a  pur- 
chaser under  the  execution  sale,  the  real  estate  being  then  in 
the  receiver's  possession,  and  the  sale  being  made  without  leave 
of  court,  acquired  no  title,  and  the  court  refused  to  put  him  into 
possession. ^1  And  while  the  principle,  as  above  stated,  is  not 
understood  as  prohibiting  absolutely  the  acquisition  of  new 
rights  to  the  fund  or  property  in  controversy,  pending  the  re- 
ceiver's possession,  it  yet  prevents  the  person  so  acquiring 
rights  from  asserting  them  by  the  process  of  another  court, 
thus  compelling  him  to  apply  to  the  court  having  jurisdiction 
over  the  property  and  the  receiver  for  a  determination 
of  his  rights.  And  it  matters  not,  in  such  case,  that 
the  receiver  has  declined  to  act,  since  the  property  is 
still  in  the  custody  of  the  law.^^     go  a  vessel  in  the  posses- 

57  Try  V.  Try,  13  Beav.,  422.  60  Edwards   v.    Norton,   55   Tex., 

58  Robinson  v.  Atlantic  &  Great      405. 

Western   R.   Co.,   66    Pa.    St.,    160;  Gl  Dugger  v.  Collins,  69  Ala.,  324. 

Thompson  v.  McCleary,  159  Pa.  St.,  62  Skinner  v.  Maxwell,  68  N.  C, 

189,  28  Atl.,  254;  Dugger  t'.  Collins,  400.     The   court,   Rodman,   J.,   say, 

69  Ala.,  324.    See  Wiswall  v.  Samp-  p.  404 :     "When   a   court   of   equity 

son,  14  How.,  52.  has   undertaken  to   adjudicate   upon 

59  Robinson   v.    Atlantic   &   Great  and    distribute    a    fund    among    the 
Western  R.  Co.,  66  Pa.  St.,  160.  parties   entitled   to   it,   it  would  be 


170  RECEIVERS.  [chap.  VI. 

sion  of  receivers  appointed  by  the  United  States  circuit  court 
is  not  subject  to  seizure  under  admiralty  proceedings  brought 
to  enforce  a  claim  for  the  wages  of  seamen,  and,  upon  petition 
presented  to  the  admiralty  court  by  the  receivers,  that  court 
will  order  the  release  of  the  vessel. ^^  And  where  a  court  which 
has  appointed  a  receiver,  who  has  property  in  his  possession, 
permits  him  to  be  made  a  party  defendant  to  an  action  insti- 
tuted in  anotlier  court  for  the  purpose  of  asserting  liens  or 
other  claims  against  the  property  which  existed  before  his  ap- 
pointment, such  permission  is  to  be  construed  as  allowing  the 
prosecution  of  the  action  merely  for  the  purpose  of  determin- 
ing and  establishing  such  liens  and  can  not  be  held  to  go  to  the 
extent  of  authorizing  the  property  to  be  taken  from  the  pos- 
session of  the  receiver  and  applied  by  the  other  court  to  the 
satisfaction  of  the  claims  if  they  are  established.^^ 

§  142.  Receiver  can  pay  money  only  by  order  of  court. 
As  still  further  illustrating  the  aversion  entertained  by  courts 
of  equity  toward  any  interference  with  the  possession  of  their 
receivers,  it  is  held  that  a  receiver  is  not  justified  in  paying 
out  money  in  any  other  manner  than  upon  the  order  of  the 

inconvenient   for  the  court   of  law,  no   right   to   it   can   be   acquired  by 

or  any  other  court,   by  its  process,  sale  under  execution.    And  it  makes 

to    interrupt    the    adjudication    and  no   difference   that   the   receiver  ap- 

create    new    rights    in   the   property  pointed   declined   to   act;   the   prop- 

itself      This  rule  is  not  understood  erty  was  nevertheless  in  the  custody 

as  absolutely  preventing  the  acqui-  of  the  law." 

sition  of  new  rights  to  the  fund  in  63  The  Jonas  H.  French,  119  Fed., 
controversy  after  the  commence-  462.  The  order  entered  in  this  case 
ment  of  the  proceedings.  Any  per-  was  that  the  petition  of  the  re- 
son  claiming  to  have  acquired  such  ceivers  should  be  granted  as  to  the 
an  interest  pendente  lite,  while  he  release  of  the  vessel  but  that  the 
cannot  interfere  under  the  process  order  of  restoration  should  not  is- 
of  another  court,  may  apply  to  the  sue  for  three  days  in  order  that  the 
court  which  has  jurisdiction  of  the  libelants  might  apply  to  the  circuit 
fund,  pro  interesse  suo,  and  his  court  for  leave  to  proceed  with  their 
claim  will  be  heard.     The  limits  of  libel. 

this  principle  are  somewhat  uncer-  64  Premier    Steel    Co.    v.    McEI- 

tain,  but  it  is  sufficient  for  the  pres-  waine-Richards   Co.,   144   Ind.,   614, 

ent  case  to  say  that,  while  the  prop-  43  N.  E.,  876. 
erty  is  in  the  hands  of  a  receiver, 


CHAP.  VI.]  POSSESSION.  171 

court  appointing  him,  and  that  this  court  will  not  sanction  a 
payment  made  by  him,  even  upon  the  compulsory  process  of 
another  court.  And  when  a  judgment  creditor  has  attached 
money  in  the  hands  of  a  receiver,  under  proceedings  instituted 
in  a  court  of  law,  and  has  obtained  an  order  therein  for  pay- 
ment of  the  money  attached,  which  order  is  obeyed  by  the  re- 
ceiver, such  payment  will  not  be  allowed  by  the  court  in  pass- 
ing his  accounts.^^ 

§  143.  Interference  with  receiver's  possession  not  jus- 
tified because  appointment  was  improper.  Courts  of  equi- 
ty will  not  permit  any  unauthorized  interference  with  the  pos- 
session of  their  receivers  to  be  justified  upon  the  ground  that 
the  appointment  was  ill-advised  or  illegal,  and  that  the  parties 
interfering  were,  therefore,  not  bound  to  regard  it.  It  is  suffi- 
cient that  there  is  a  subsisting  order  of  the  court  appointing 
a  receiver;  and  parties  dissatisfied  therewith,  or  deeming  such 
order  erroneous,  must  take  the  proper  course  to  question  its 
validity  by  application  to  the  court  itself,  and  it  is  not  com- 
petent for  any  person  to  interfere  with  the  receiver's  posses- 
sion upon  the  ground  that  his  appointment  was  improvidently 
made.^^  The  appropriate  course  in  all  cases,  where  parties 
are  desirous  of  obtaining  possession  of  property  which  has 

65  De  Winton  z/.  Mayor  of  Brecon,  matter,  and  to  do  that  which  is  just 
28  Beav.,  200.  Lord  Romilly,  Mas-  in  the  cause  between  the  parties, 
ter  of  the  Rolls,  observes,  p.  202:  It  is  always  to  be  remembered  that 
"...  I  apprehend  this  is  clear,  the  receiver  in  this  case  would  not 
that  the  court  never  allows  any  per-  have  got  a  penny,  except  by  the  or- 
son  to  interfere,  either  with  money  der  of  the  court  enabling  him  to 
or  property  in  the  hands  of  its  re-  receive  it,  and  entitling  him  to  give 
ceiver,  without  its  leave ;  whether  it  a  good  discharge  to  the  person  who 
is  done  by  the  consent  or  submis-  paid  it;  and,  consequently,  it  is 
sion  of  the  receiver,  or  by  compul-  strictly  money  belonging  to  the 
sory  process  against  him.  The  court  of  chancery,  and  the  receiver 
court  is  obliged  to  keep  a  strict  can  only  discharge  himself  by  pay- 
hand  over  property  in  the  hands  of  ing  it  in  obedience  to  the  direction 
a  receiver,  or  which,  by  virtue  of  and  order  of  that  court." 
the  order  of  the  court,  may  come  66  Russell  v.  East  Anglian  R.  Co., 
into  his  hands,  in  order  to  preserve  3  Mac.  &  G.,  104;  Ames  v.  Trustees 
entire  jurisdiction   over   the   whole  of  Birkenhead  Docks,  20  Beav.,  332; 


172 


RECEIVERS. 


[CIIAP.  VI. 


come  into  the  hands  of  a  receiver,  is  to  apply  to  the  court  from 
which  he  derives  his  appointment;  and  the  rule  is  not  limited 
to  property  actually  in  the  receiver's  possession,  but  extends 
also  to  property  which  he  has  been  appointed  to  receive,  but 
which  he  has  not  yet  reduced  to  possession. ^'^ 

§  144.  Receiver  entitled  to  aid  of  court  to  obtain  pos- 
session. The  receiver,  being  the  ofticer  or  agent  of  the 
court,  is  entitled  to  its  assistance  in  obtaining  possession  of 
property  which  is  the  subject-matter  of  his  receivership,  and 
may  have  an  order  of  court  to  procure  possession  of  such  prop- 
erty, not  only  against  defendant  in  the  action,  but  in  a  proper 
case  against  his  agents  and  employees,  although  not  parties  to 
the  record,  requiring  them  to  deliver  up  the  specific  property.^^ 
So  the  receiver  of  an  insolvent  corporation  may,  by  petition 
in  the  cause  in  which  he  was  appointed  and  without  the  nec- 
essity of  an  independent  suit,  procure  the  transfer  and  delivery 
of  a  note  held  by  officers  of  the  corporation  as  a  part  of  its 


Cook  V.  Citizens  National  Bank,  7Z 
Ind.,  256;  Missouri  Pac.  R.  Co.  v. 
Love,  61  Kan.,  433,  59  Pac,  1072; 
Williamson  v.  Pender,  127  N.  C, 
481,  37  S.  E.,  495.  And  see,  post, 
%  165. 

6"  Ames  V.  Trustees  of  Birken- 
head Docks,  20  Beav.,  332.  "There 
is  no  question,"  says  Lord  Romilly, 
Master  of  the  Rolls,  p.  353,  "but 
that  this  court  will  not  permit  a 
receiver,  appointed  by  its  authority, 
and  who  is,  therefore,  its  officer,  to 
be  interfered  with  or  dispossessed 
of  the  property  he  is  directed  to  re- 
ceive, by  any  one,  although  the  or- 
der appointing  him  may  be  perfectly 
erroneous ;  this  court  requires  and 
insists  that  application  should  be 
made  to  the  court  for  permission  to 
take  possession  of  any  property  of 
which  the  receiver  either  has  taken 
or    is    directed    to    take    possession, 


and  it  is  an  idle  distinction  (which 
could  not  be  maintained  if  it  were 
attempted,  which  it  is  not  by  coun- 
sel at  the  bar,  though  suggested  by 
the  affidavits),  that  this  rule  only 
applies  to  property  actually  in  the 
hands  of  the  receiver.  If  a  receiver 
be  appointed  to  receive  debts,  rents 
or  tolls,  the  rule  applies  equally  to 
all  these  cases,  and  no  person  will 
be  permitted,  without  the  sanction 
or  authority  of  the  court,  to  inter- 
cept or  prevent  payment  to  the  re- 
ceiver of  the  debts,  rents  or  the 
tolls,  which  he  has  not  actually  re- 
ceived, but  which  he  is  appointed  to 
receive." 

68 /n  re  Cohen,  5  Cal..  494.  See, 
also,  Geisse  v.  Beall,  5  Wis.,  224; 
Green  v.  Green,  2  Sim.,  430;  JMiller 
V.  Jones,  39  111.,  54;  Sullivan  v. 
Colby,  18  C.  C.  A.,  193,  71  Fed., 
460,  34  U.  S.  App.,  432. 


CHAP.  VI.]  POSSESSION.  173 

assets,  even  though  such  officers  are  not  parties  to  the  cause. ^^ 
And  when  a  receiver  is  appointed  over  real  property,  of  which 
the  owner  is  in  possession,  the  proper  course  is  to  apply  to  the 
court  to  have  the  owner  deliver  possession  to  the  receiver,  since 
the  latter  can  not  distrain  upon  the  owner  in  possession,  as  he 
is  not  a  tenant  of  the  receiver. "^^^  Such  procedure  does  not  con- 
flict with  the  principle  that  no  man  shall  be  deprived  of  his 
property  without  due  process  of  law,  since  the  surrender  to 
the  receiver  does  not  affect  the  ultimate  question  of  the  right 
to  the  property,  any  more  than  does  the  levy  of  an  attach- 
ment ;  the  purpose  being  merely  to  secure  the  property  by  get- 
ting it  into  the  receiver's  possession,  so  that  it  may  be  safely 
delivered  to  the  party  who  shall  be  finally  determined  to  be 
entitled  thereto.'^!  And  the  order  for  the  surrender  of  prop- 
erty to  the  receiver  may,  if  necessary,  be  enforced  by  process 
of  attachment J2  And  when  a  receiver  has  been  appointed  to 
take  charge  of  certain  trust  funds  held  by  defendant,  the  court 
may  require  defendant's  attorney  to  appear  before  the  receiver, 
and  to  deliver  to  him  all  the  trust  property  which  may  have 
come  to  his  hands  since  the  suit  was  instituted,  and  to  compel 
him  to  render  an  account  and  inventory  of  such  property,  and 
to  verify  it  under  oath,'^^  go  when  a  party  to  the  cause  exe- 
cutes a  lease  of  real  property  to  a  third  person,  both  lessor  and 
lessee  having  full  knowledge  that  a  receiver  has  been  appointed 
over  the  property,  however  valid  such  lease  may  be  as  between 
the  parties,  it  confers  no  right  as  against  the  receiver,  and  he 
is  entitled  to  a  writ  of  possession  as  against  the  lesseeJ*  So 
a  receiver  of  an  insolvent  corporation  is  entitled  to  an  order 
requiring  a  banking  company  to  turn  over  certain  securities 
owned  by  the  insolvent  corporation. "^5 

69  Brandt  v.   Allen,   76  Iowa,  50,  72  Miller  v.  Jones,  39  111.,  54. 
40  N.  W.,  82.  73  Geisse  v.  Beall,  5  Wis.,  224. 

70  Griffith  V.  Griffith.  2  Ves.,  400.  74  Thornton  v.  Washington  Sav- 

71  In  re  Cohen,  5  Cal.,  494;  Miles  ings  Bank,  76  Va.,  432. 

V.    New    South   B.   &  L.   Assn.,  95  75  Miles  v.   New   South   B.  &  L. 

Fed.,  919.  Assn.,  95  Fed..  919. 


174  RECEIVERS.  [chap.  VI. 

§  145.  Courts  reluctant  to  interfere  by  receiver  with 
property  of  third  persons ;  receiver  should  assert  claim  by 
independent  action.  It  is  to  be  borne  in  mind,  however, 
in  considering  the  extent  to  which  a  court  of  equity  will  aid 
its  receiver  in  obtaining  possession,  that  the  court  is  always 
reluctant  to  interfere  with  the  right  of  possession  by  par- 
ties claiming  a  legal  title  in  the  property."^^  And  while  it  is 
competent  for  the  court,  by  an  interlocutory  order,  to  take  pos- 
session of  property  by  its  receiver  pending  litigation  concern- 
ing the  rights  of  the  parties,  yet  when  the  rights  of  third  per- 
sons have  intervened  who  are  not  parties  to  the  record,  as  in 
the  case  of  purchasers  in  good  faith  of  the  property  in  contest, 
the  court  will  decline  to  take  possession  by  its  receiver.  The 
interference  is  withheld  under  such  circumstances,  upon  the 
ground  that  the  rights  of  purchasers  in  good  faith  are  not  to 
be  adjudicated  and  determined  by  the  summary  method  of  an 
order  to  surrender  possession  to  a  receiver.'^'^  And  when  the 
plaintiff  seeks  to  have  an  actual  delivery  of  defendant's  prop- 
erty to  the  receiver,  some  of  which  is  claimed  by  a  third  person 
under  an  assignment  from  defendant,  the  question  as  to  what 
property  is  under  defendant's  control  must  first  be  determined, 
before  he  will  be  directed  to  deliver  it  to  the  receiver.'^^  So 
when  a  banker,  holding  a  specific  fund  in  his  possession,  makes 
an  assignment  for  the  benefit  of  his  creditors,  and  a  receiver 
is  afterward  appointed  over  the  fund  in  question,  the  court 
will  not,  upon  summary  motion,  compel  the  assignees  to  pay 
the  money  to  the  receiver.'''^  And  the  court  will  not,  upon  a 
summary  application,  compel  a  delivery  to  the  receiver  of  prop- 
erty purchased  at  a  sheriff's  sale,  under  execution  against  the 

''^  Cassilear   v.    Simons,   8   Paige,  cause    in    which    he    was    appointed 

273 ;     McCombs    v.     Alerryhew,    40  and  without  an  independent  action. 

Mich.,  721.  United    States   v.    Church,    5   Utah^ 

77  Levi  V.  Karrick,  13  Iowa,  344.  538,  18  Pac,  35. 

But  in  the  case  of  a  merely  color-  78  Cassilear  v.    Simons,   8   Paige, 

able  or  fraudulent  transfer  to  third  273.     And  see  Parker  v.  Browning, 

persons,   it  has  been  held  that   the  8  Paige,  389. 

receiver  might  compel  the  delivery  79  Coleman  v.   Salisbury,  52  Ga., 

of  the   property  by   petition   in   the  470. 


CHAP.  VI.]  POSSESSION.  175 

defendant,  when  the  purchaser's  agent  is  shown  to  be  exercis- 
ing control  over  the  property,  with  the  power  of  reducing  it 
at  any  time  to  actual  possession.  Under  such  circumstances, 
the  court  will  first  require  the  purchaser  to  be  made  a  party 
to  the  litigation,  that  he  may  have  an  opportunity  to  defend 
his  title  and  right  of  possession.^^  And  where  personal  property 
is  in  the  possession  of  a  third  person,  not  a  party  to  the  receiver- 
ship proceeding,  under  a  claim  of  title,  it  is  improper  for  the 
court  which  appointed  the  receiver  to  order  him  to  take  posses- 
sion of  such  property,  but  he  should  be  instructed  to  institute 
a  separate  action  at  law  for  its  recovery ;  and  the  enforcement 
of  such  order  is  properly  restrained  by  writ  of  prohibition.^^ 
And  where  a  receiver  seeks  to  set  aside  a  certificate  of  sale  of 
real  estate  which  was  sold  subsequent  to  the  appointment  of 
the  receiver  under  an  attachment  lien  which  was  obtained 
prior  to  his  appointment,  it  appearing  that  the  attaching  credit- 
or is  a  stranger  to  the  receivership  proceeding  and  is  in  no 
way  interfering  with  the  possession  of  the  receiver,  the  latter 
should  proceed  by  independent  action  and  not  by  petition  in 
the  receivership  proceeding.^2 

§  146.  Third  persons  permitted  to  come  in  and  be  heard. 
When  a  receiver  is  in  possession  of  real  estate  pendente  lite, 
although  the  court  will  not  permit  his  possession  to  be  inter- 
fered with  by  third  persons  without  its  consent,  such  persons 
will  be  permitted  to  come  in  and  be  heard  with  reference  to 
their  interests,  and  such  orders  will  be  made  as  are  necessary 
to  protect  their  rights  in  the  subject-matter  of  the  litigation, 
until  they  may  be  finally  determined.  For  example,  when  a 
receiver  is  appointed  over  the  premises  in  controversy,  and  a 
third  party  is  entitled  to  a  portion  of  the  premises  in  right  of 
his  wife,  but  a  proceeding  for  divorce  is  pending  on  the  part 
of  the  wife  against  the  husband,  in  which  she  claims  the  entire 

80  Robeson  v.  Ford,  3  Edw.  Ch.,  82  Cherry  v.  W.  W.  I.  E.  Co.,  11 
441.                                                            Wash.,  586,  40  Pac,  136. 

81  Stnparich  Mfg.  Co.  v.  Superior 
Court,  123  Cal.,  290,  55  Pac,  985. 
And  see,  post,  §  457. 


176  RECEIVERS.  [chap.  VI. 

rents  and  profits,  while  the  court  will  not  determine  the  relative 
rights  of  the  husband  and  wife  upon  an  application  for  payment 
of  the  money  to  the  former,  it  will  direct  the  receiver  to  pay 
that  portion  of  the  rents  into  court,  to  await  the  result  of  the 
litigation  between  husband  and  wife.^^  And  when  a  receiver 
had  been  appointed  of  the  rents  and  profits  of  real  estate  in  be- 
half of  a  person  having  a  life  estate  therein,  and  directed  to 
pay  the  rents  to  such  person,  and  in  another  action  an  order 
for  costs  had  been  made  against  the  same  tenant  for  life,  the 
court  gave  the  successful  party  leave  to  prosecute  proceedings 
for  costs  against  the  life  estate,  notwithstanding  the  appoint- 
ment and  possession  of  the  receiver.^* 

§  147.  Practice  of  English  Chancery  to  compel  defend- 
ant to  deliver  lands  to  receiver.  Under  the  practice  of  the 
English  Court  of  Chancery,  when  it  was  sought  to* compel  a 
defendant  to  deliver  up  possession  of  lands  to  a  receiver  ap- 
pointed in  the  cause,  an  order  was  first  obtained  to  deliver  pos- 
session, and  a  writ  of  execution  of  such  order  was  then  served 
upon  defendant.  And  until  this  was  done  no  further  order 
would  be  made  by  the  court.^^ 

§  148.  New  York  practice  as  to  receiver  obtaining  pos- 
session. Under  the  former  chancery  practice  in  New 
York,  when  a  receiver  was  appointed  and  invested  under  decree 
of  the  court  with  the  title  to  real  and  personal  property  in 
controversy,  and  defendants  were  required  by  the  decree  to 
deliver  the  property  to  the  receiver,  it  w^as  held  that  he  himself 
might  take  the  necessary  steps  to  obtain  possession  and  control 
of  the  property,  and  that  he  need  not  wait  for  the  parties  to 
the  litigation  to  move  in  the  matter,  it  being  his  duty  to  pro- 
tect and  preserve  the  property  for  the  interests  of  all  parties 
concerned. ^^ 

83  Vincent  v.  Parker,  7  Paige,  65.  417.    And  see  this  case  for  a  review 

84  Gooch  V.  Haworth,  3  Beav.,  428.  of     the     authorities,     English     and 

85  Green  v.  Green,  2  Sim..  430.  American,  upon  the  right  of  the  re- 
See,  also,  Griffith  v.  Griffith,  2  Ves.,  ceiver  to  initiate  any  action  con- 
400.  cerning  his  receivership. 

86  Iddings  v.  Bruen,  4  Sandf.  Ch., 


CHAP.  VI.]  POSSESSION.  177 

§  149.  Writ  of  assistance ;  when  right  of  possession  not 
determined  on  motion;  state  and  federal  courts.  While  a 
court  of  equity  will,  in  a  proper  case,  freely  extend  its  aid  by 
a  writ  of  assistance,  to  enable  its  receiver  to  obtain  possession 
of  property  to  which  he  is  entitled,  it  will  not  thus  interfere 
upon  mere  motion,  as  against  the  possession  of  a  stranger  to 
the  action,  claiming  a  superior  title  under  which  he  holds  pos- 
session, but  will  leave  the  disputed  question  of  title  to  be  deter- 
mined by  an  action  for  that  purpose.  For  example,  when  a 
receiver  is  in  possession. of  property  under  appointment  from 
a  United  States  court,  the  state  courts  will  not  grant  a  writ 
of  assistance  to  a  subsequently  appointed  receiver  in  the  state 
tribunal,  to  enable  him  to  get  possession  of  the  same  property. 
The  possession  of  the  receiver  appointed  by  the  federal  court, 
in  such  a  case,  is  regarded  as  the  possession  of  a  stranger,  whose 
rights  can  not  be  determined  arbitrarily  and  upon  a  mere  mo- 
tion, but  only  by  a  regular  action  at  law.  And  it  can  make  no 
difference  that  the  jurisdiction  of  the  federal  court,  to  enter- 
tain the  action  in  which  its  receiver  was  appointed,  is  assailed 
and  denied,  since  that  is  a  question  of  too  great  importance 
to  be  disposed  .of  merely  by  a  motion  in  the  state  court.^'^    So 

87  Gelpeke  v.  Milwaukee  &  Hori-  cuted  by  the  corporation  defendant, 
con  R.  Co.,  11  Wis.,  454.  "I  know  When  this  was  made  to  appear,  he 
of  no  case,"  says  Dixon,  C.  J.,  page  should  have  arrested  the  proceed- 
457,  "where  it  has  been  adjudged  ing,  and  turned  the  parties  over  to 
that  the  possession  of  a  stranger,  their  appropriate  remedy  by  action. 
who  sets  up  a  superior  title,  in  pur-  His  attempt  to  adjudicate  upon  and 
suance  of  which  he  claims  to  have  settle  the  rights  of  Mr.  Ward,  upon 
entered  and  to  hold,  might  be  thus  a  mere  motion,  supported  by  affi- 
disturbed.  In  such  cases  it  has  been  davits,  was  unauthorized.  Such 
the  uniform  rule  to  leave  the  par-  was  not  the  proper  mode  of  pro- 
ties  to  their  remedies  by  action.  cecding  by  which  to  determine  his 
And  in  this  case  I  think  that  the  rights.  It  is  only  adapted  to  those 
circuit  judge  erred  in  proceeding  cases  where  the  court  can  say, 
to  award  the  writ  as  against  Mr.  clearly  and  unhesitatingly,  that  the 
Ward,  when  it  appeared  that  he  was  possession  is  subsequent  to  the  com- 
in  possession  by  virtue  of  the  order  mcncement  of  the  action,  and  sub- 
of  the  district  court,  made  in  a  ject  to  the  decree  or  order  which 
proceeding  to  foreclose  a  mortgage  has  been  made,  or  that  the  person 
which  had  been  previously  exe-  holding  the  same  has  no  legal  right. 
Receivers — 12. 


178  RECEIVERS.  [chap.  VI. 

a  receiver  is  not  entitled  to  a  writ  of  assistance  to  recover  prop- 
erty in  the  possession  of  persons  who  are  not  parties  to  the 
receivership  proceeding  and  who  in  good  faith  deny  the  right 
of  the  receiver  to  the  possession  of  the  property  in  question.^^ 
§  150.  Third  person  forcibly  dispossessed  by  receiver; 
how  redressed.  While  it  is  true,  when  property  is  legally 
and  properly  in  possession  of  a  receiver,  that  it  is  the  duty  of 
the  court  to  protect  that  possession,  not  only  as  against  acts  of 
violence,  but  in  some  instances  even  against  actions  at  law,  so 
that  a  third  person  claiming  the  property  may  be  compelled 
to  come  in  and  be  examined  pro  intercssc  suo  in  the  original 
action ;  yet  the  case  is  different  if  the  property  is  in  possession 
of  a  third  person,  under  claim  of  right,  and  is  forcibly  taken 
from  his  possession  by  the  receiver  without  any  order  of  court. 
Under  such  circumstances,  neither  the  order  of  court  appoint- 
ing the  receiver,  nor  the  construction  of  its  order,  being  in 
question,  and  a  complaint  being  made  of  misconduct  on  the 
part  of  an  officer  of  the  court,  acting  under  color  of  authority 
merely,  the  court  may,  in  its  discretion,  either  take  cognizance 

And  it  could  make  no  difference  son  I  was  opposed  to  and  refused 
that  the  jurisdiction  of  the  district  to  hear  its  discussi&n  in  this  court 
court  (of  the  United  States)  to  en-  upon  the  present  motion.  Courts 
tertain  those  actions  was  assailed  can  only  act,  in  such  cases,  where 
and  denied.  That,  too,  was  a  ques-  the  rights  of  the  parties  are  obvious, 
tion  of  great  gravity  and  impor-  and  not  the  subjects  of  doubts  or 
tance,  and  not  to  be  disposed  of  serious  controversy.  It  was  urged 
with  the  same  speed  and  facility  that  unless  the  question  involved 
that  we  would  strike  out  an  ob-  could  be  determined  in  this  pre- 
viously frivolous  answer  or  demur-  ceeding.  that  then  the  receiver  was 
rer.  It  was  one  which  admitted  of,  remediless,  and  there  was  no  form 
at  least,  some  doubt,  and  upon  ei-  of  action  in  which  Mr.  Ward,  ad- 
ther  side  of  which  the  most  learned  mitting  his  possession  to  be  without 
counsel  would  not  think  it  unbe-  warrant  of  law,  could  be  deposed, 
coming  or  improper  to  spend  many  I  can  not  agree  to  this  proposition, 
hours  or  days  in  earnest  argument,  I  think  it  may  be  done  by  some  one 
before  any  court  where  it  should  be  of  the  forms  of  action  now  in  use." 
raised.  And  the  very  fact  that  it  See,  also,  Andrews  v.  Paschen,  67 
would  admit  of  such  doubt  or  argu-  Wis.,  413,  30  N.  W.,  712. 
ment  was  sufficient  to  exclude  it  88  Musgrove  v.  Gray,  123  Ala., 
from  the  consideration  of  the  court,  376,  26  So.,  643,  82  Am.  St.  Rep., 
upon  such  a  motion.     For  that  rea-  124. 


CHAP.  VI.] 


POSSESSION. 


179 


of  the  complaint  and  do  justice  between  its  officer  and  the  party 
aggrieved,  or  it  may  permit  the  latter  to  bring  an  action  at  law 
for  his  alleged  injury.  And  the  latter  course  would  seem  to 
be  preferable,  in  order  that  the  benefit  of  a  trial  by  jury  may 
be  had.^^    But  where  a  receiver  has  made  a  demand  for  goods 


89  Parker  v.  Browning,  8  Paige, 
388.  This  was  an  appeal  by  a  re- 
ceiver from  an  order  allowing  cer- 
tain petitioners  to  bring  an  action 
against  the  receiver,  and  other  per- 
sons acting  under  him,  for  an  al- 
leged trespass  in  forcibly  entering 
a  store  which  petitioners  claimed  to 
belong  to  them  and  to  be  in  their 
possession,  and  taking  the  goods 
therefrom.  Walworth,  Chancellor, 
says,  p.  389 :  "There  is  certainly 
room  for  doubt  in  this  case,  whether 
the  defendant  Browning  had  not 
some  interest  in  the  store  of  goods. 
And  if  the  receiver  had  taken  pos- 
session thereof  under  the  express 
directions  of  the  court,  or  if  the 
master  had  decided  that  the  goods 
were  in  the  possession  and  under 
the  power  and  control  of  the  de- 
fendant, and  had  directed  him  to 
deliver  the  possession  thereof  to  the 
receiver,  this  court  ought  to  have 
assumed  the  exclusive  jurisdiction 
over  the  subject  of  complaint,  in- 
stead of  suffering  its  officer  to  be 
harassed  in  a  suit  at  law  for  obey- 
ing its  order.  But  as  I  understand 
the  case,  the  validity  of  the  order 
appointing  the  receiver  is  not  in 
controversy  here,  nor  is  his  right 
to  take  the  property  of  the  defend- 
ant Browning,  as  such  receiver,  in- 
tended to  be  questioned.  The  peti- 
tioners, on  the  contrary,  claim  that 
the  receiver,  without  any  direction 
to  that  effect  from  the  court,  has 
forcibly  taken  goods  which  belong 
to    them    exclusively,    out    of    their 


possession,  under  the  pretense  that 
such  goods  were  the  property  of  the 
defendant  Browning.  Where  the 
authority  of  the  court  or  the  con- 
struction of  its  order  is  not  in  ques- 
tion, but  the  complaint  is  made 
against  the  misconduct  of  its  officer, 
acting  under  color  of  authority 
merely,  this  court  may,  in  its  dis- 
cretion, either  take  to  itself  the  cog- 
nizance of  the  complaint  and  do 
justice  between  its  officers  and  the 
parties  aggrieved,  or  it  may  permit 
the  latter  to  bring  a  suit  at  law  for 
the  alleged  injury.  And  in  cases  of 
this  description  it  is  more  in  ac- 
cordance with  the  spirit  of  our  in- 
stitutions to  permit  the  parties  com- 
plaining to  proceed  at  law,  where 
they  may  have  the  benefit  of  a  jury 
trial,  than  to  attempt  to  settle  their 
rights  by  a  reference  to  a  master. 
It  is  not  necessary  in  any  case  for 
the  receiver  to  put  himself  in  a 
situation  where  he  is  not  entitled  to 
the  full  protection  of  this  court;  as 
he  is  under  no  obligation  to  attempt 
to  take  property  out  of  the  posses- 
sion of  a  third  person,  or  even  out 
of  the  possession  of  the  defendant 
himself,  by  force,  and  without  an 
express  order  of  the  court  directing 
him  to  do  so.  The  proper  course, 
as  this  court  has  repeatedly  decided, 
where  the  defendant  is  directed  to 
deliver  over  his  property  to  the  re- 
ceiver under  the  direction  of  a 
master,  is  for  the  receiver,  or  the 
party  who  wishes  for  an  actual  de- 
livery  of   the    property   in    addition 


180 


RECEIVERS. 


[CIIAP.  VI. 


transferred  by  an  insolvent  in  fraud  of  his  creditors  to  a  third 
person  who  thereupon  voluntarily  surrenders  them  to  the  re- 
ceiver, the  latter  is  bound  to  accept  the  goods  and  an  action 
of  trespass  wiU  not  He  against  him  for  so  doing.^^ 

§  151.  Receiver  not  subject  to  attachment  or  garnish- 
ment as  to  funds  in  his  possession;  exceptions;  may  be 
garnished  by  leave  of  court.  The  receiver's  possession 
being  the  possession  of  the  court  from  which  he  derives  his 
appointment,  he  is  not  subject  to  process  of  attachment  or  gar- 
nishment as  to  funds  in  his  hands  or  subject  to  his  control,  and 
such  process  will  be  regarded  as  a  nullity  when  directed  against 
him.^^     And  when  a  receiver  is  duly  appointed  of  the  effects 


to  the  legal  assignment  thereof,  to 
call  upon  the  master  to  decide, 
upon  the  examination  of  the  de- 
fendant, and  on  the  evidence  before 
him,  what  property  legally  or  equi- 
tably belonging  to  the  defendant, 
and  to  which  the  receiver  is  entitled 
under  the  order  of  the  court,  is  in 
the  possession  of  the  defendant  or 
imder  his  power  and  control.  And 
it  is  the  duty  of  the  master  to  direct 
the  defendant  to  deliver  over  to  the 
receiver  the  actual  possession  of  all 
such  property,  in  such  manner  and 
within  such  time  as  the  master  may 
think  reasonable.  Where  such  a  di- 
rection is  given,  the  defendant,  if  he 
is  dissatisfied  with  the  decision  of 
the  master,  must  apply  to  the  court 
to  review  the  same,  or  he  will  be 
compelled  by  process  of  contempt 
to  comply  with  that  decision.  And 
if  the  property  is  in  the  possession 
of  a  third  person  who  claims  the 
right  to  retain  it,  the  receiver  must 
either  proceed  by  suit,  in  the  ordi- 
nary way,  to  try  his  right  to  it,  or 
the  complainant  should  make  such 
third  person  a  party  to  the  suit, 
and  apply  to  have  the  receivership 
extended    to    the    property    in    his 


hands,  so  that  an  order  for  the  de- 
livery of  the  property  may  be  made 
which  will  be  binding  upon  him, 
and  which  may  be  enforced  by 
process  of  contempt,  if  it  is  not 
obeyed.  Where  the  property  is 
legally  and  properly  in  the  posses- 
sion of  the  receiver,  it  is  the  duty 
of  the  court  to  protect  that  posses- 
sion, not  only  against  acts  of  vio- 
lence but  also  against  suits  at  law; 
so  that  a  third  person,  claiming  the 
same,  may  be  compelled  to  come  ii\ 
and  ask  to  be  examined  pro  inter- 
esse  suo,  if  he  wishes  to  test  the 
justice  of  such  claim.  But  where 
the  property  is  in  the  possession  of 
a  third  person,  under  a  claim  of 
title,  the  court  will  not  protect  the 
officer  who  attempts  by  violence  to 
obtain  possession,  any  further  than 
the  law  will  protect  him ;  his  right 
to  take  possession  of  property  of 
which  he  has  been  appointed  re- 
ceiver being  unquestioned." 

90  Tapscott  V.  Lyon,  103  Cal.,  297, 
37  Pac,  225. 

91  Field  V.  Jones,  11  Ga.,  413; 
Taylor  v.  Gillean,  23  Tex..  508; 
Kriesle  v.  Campbell,  89  Tex.,  104, 
33  S.  W.,  852;  Richards  v.  People, 


CHAP.  VI.] 


POSSESSION 


181 


of  a  copartnership,  in  an  action  brought  by  a  creditor  of  the 
firm,  he  can  not  be  garnished  by  judgment  creditors  of  the  firm, 
as  to  partnership  assets  in  his  hands,  such  assets  not  being  sub- 
ject to  garnishee  process.^^  Sq  where  receivers  are  appointed 
over  an  insolvent  corporation,  they  are  not  Hable  to  garnishee 
process,  since  the  property  which  they  hold  is  intrusted  to  them, 
not  by  act  of  the  party,  but  by  operation  of  law.^^  The  court 
of  equity  being  the  actual  custodian  of  the  property  or  fund  in 
litigation,  it  will  not  yield  its  jurisdiction  to  a  court  of  law  and 
permit  the  right  to  the  property  to  be  there  tried.  In  other 
words,  since  the  receiver's  possession  is  that  of  the  court,  it 
will  not  permit  itself  to  become  a  suitor  in  another  forum  con- 
cerning the  property  in  question.  And  an  additional  reason 
for  holding  the  receiver  not  subject  to  process  of  garnishment 


81  111.,  551;  Blake  Crusher  Co.  v. 
New  Haven,  46  Conn.,  473;  Cooke 
V.  Town  of  Orange,  48  Conn.,  401 ; 
Longstaff  v.  Hard,  66  Conn.,  350, 
34  Atl.,  911;  Citizens'  Commercial 
&  Savings  Bank  v.  Bay  Circuit 
Judge,  110  Mich.,  633,  68  N.  W., 
649;  Walker  v.  George  Taylor  C. 
Co.,  56  Ark.,  1,  18  S.  W.,  1056,  19 
S.  W.,  601 ;  McGowan  v.  Myers,  66 
Iowa,  99,  23  N.  W.,  282;  Veith  v. 
Ress,  60  Neb.,  52,  82  N.  W.,  116; 
Commonwealth  v.  Hide  &  Leather 
Insurance  Co.,  119  Mass.,  155;  Blum 
V.  Van  Vechten,  92  Wis.,  378,  66 
N.  W.,  507;  Central  Trust  Co.  v. 
Chattanooga,  R.  &  C.  R.  Co.,  68 
Fed.,  685.  See,  also,  Columbian 
Book  Co.  V.  De  Golyer,  115  Mass., 
67;  Smith  v.  McNamara,  15  Hun, 
447.  Notwithstanding  the  doctrine 
of  the  text  is  well  established,  both 
upon  principle  and  authority,  it  is 
held  in  Colorado  that  receivers  over 
a  railway  company,  appointed  be- 
yond the  state  but  operating  a  rail- 
road within  the  state,  are  subject  to 
garnishee   process    when    such   pro- 


ceeding does  not  tend  to  disturb  the 
rights  of  the  receivers  under  the 
general  orders  of  the  court  by 
which  they  were  appointed.  Phe- 
lan  V.  Ganebin,  5  Colo.,  14.  And 
in  such  case  it  is  held  that  the  gar- 
nishee process  may  be  properly 
served  upon  the  agent  of  the  re- 
ceivers within  the  state,  in  like 
manner  as  service  upon  the  agent 
of  a  foreign  corporation.  Phelan 
V.  Ganebin,  5  Colo.,  14;  Ganebin  v. 
Phelan,  5  Colo.,  83.  In  Kriesle  v. 
Campbell,  89  Tex.,  104,  33  S.  W.,  852, 
supra,  it  was  held  that  a  garnish- 
ment proceeding  brought  against  a 
receiver  was  not  a  suit  against  him 
within  the  meaning  of  a  statute 
which  provided  for  the  bringing  of 
suits  against  receivers  without  first 
obtaining  leave  of  the  appointing 
court.  As  to  garnishment  against  a 
receiver  of  a  railway,  see,  post, 
§  39Sb. 

92  Taylor  v.  Gillean,  23  Tex.,  508. 

93  Columbian  Book  Co.  v.  De 
Golyer,  115  Mass.,  67.  See,  also, 
Richards  v.  People,  81  111.,  551. 


182  RECEIVERS.  [chap.  VI. 

is,  that  such  liability,  if  recognized,  would  defeat  the  very  ends 
for  which  he  was  appointed,  since  a  judgment  at  law  upon 
the  garnishment  would,  if  recognized  and  sustained,  entirely 
divest  the  jurisdiction  of  equity. ^^  So  when  creditors  whose 
judgments  against  their  debtor  are  not  a  lien  upon  his  property, 
which  has  passed  into  the  hands  of  a  receiver,  obtain  leave  of 
court  to  garnish  the  receiver,  they  do  not  thereby  acquire  any 
priority  over  other  judgment  creditors  as  to  the  surplus  funds 
remaining  in  the  receiver's  hands.^^  And  where  a  receiver  has 
been  appointed  over  an  insolvent  corporation  at  the  instance 
of  a  mortgage  bondholder  and  has  taken  possession  of  the 
property  of  the  corporation,  a  creditor  who  afterward  procures 
judgment  against  the  corporation  acquires  no  legal  or  equita- 
ble lien  upon  the  property  in  the  possession  of  the  receiver  not 
covered  by  the  mortgage  nor  any  right  greater  than  he  had 
at  the  institution  of  the  receivership  proceeding.^^  But  a 
receiver  is  always  liable  to  garnishment  where  leave  of  the 
court  appointing  him  is  obtained. ^'^  And  where  the  action 
in  which  a  receiver  has  been  appointed  has  been  settled  or  dis- 
missed and  nothing  remains  for  the  receiver  to  do  but  turn 
over  the  fund,  or  where  the  receiver  has  a  fund  in  his  hands 
more  than  sufficient  to  satisfy  the  claims  against  it,  garnish- 
ment will  lie  against  him.^^  So  a  receiver  may  be  garnished 
without  leave  where  nothing  remains  to  be  done  by  him  except 
to  pay  money  to  the  principal  defendant  under  the  final  de- 
cree.^^  And  where  the  appointment  of  a  receiver  over  an  in- 
solvent corporation  is  absolutely  void,  funds  in  the  possession 
of  such  pretended  receiver  are  subject  to  garnishment  by  any 
creditor  of  the  insolvent  corporation. ^     In  Maryland  it  has 

94  Field  V.  Jones,  11  Ga.,  413.  98  Russell    v.    Millett,    20   Wash., 

95  McGowan  v.   Myers,  66  Iowa,      212,  54  Pac,  44. 

99,  23  N.  W.,  282.  99  Robertson    v.    Detroit    Pattern 

96  Mercantile  Trust  Co.  v.  South      Works,  152  Mich.,  612,  116  N.  W., 
ern  States  L.  &  T.  Co..  30  C.  C.  A.,      196. 

349,  86  Fed.,  711,  52  U.  S.  App.,  675.  l  Smith    v.    Ely    &    Walker    Dry 

97  Van  Bianchi  v.  Wayne  Circuit      Goods    Co.,   79    Miss.,   266,    30   So., 
Judge,  124  Mich.,  462,  83  N.  W.,  26.      653. 


CHAP.  VI.]  POSSESSION.  183 

been  held  that  an  indebtedness  due  to  the  defendant,  over  whose 
effects  receivers  have  been  appointed,  is  subject  to  garnish- 
ment at  any  time  before  the  receivers  have  taken  possession.^ 
This  ruHng,  however,  is  plainly  inconsistent  with  the  doctrine 
of  the  courts  of  New  York,  that  the  receiver's  title  and  right 
to  possession  vest  by  relation  back  to  the  date  of  the  original 
order  for  his  appointment,  although  the  proceedings  may  not 
be  perfected  until  a  later  date.^ 

§  152.  Possession  as  between  different  receivers  deter- 
mined by  priority.  As  regards  the  right  of  possession 
when  two  different  receivers  have  been  appointed,  in  different 
proceedings,  over  the  same  fund  or  estate,  the  question  of 
priority  or  precedence  must  be  determined  with  reference  to 
the  date  of  appointment,  since  the  courts  will  not  permit  both 
to  act,  the  title  of  the  one  being  necessarily  exclusive  of  that 
of  the  other.4  And  in  such  case,  where  an  order  of  reference 
has  been  made  to  appoint,  the  receiver  appointed  under  the  first 
order  of  reference  will  be  entitled  to  possession,  the  appoint- 
ment being  regarded  as  dating  back  by  relation  to  the  date 
of  the  order  of  reference ;  and  the  appointment,  under  proceed- 
ings begun  of  a  later  date,  will  be  treated  as  having  been  im- 
providently  made,  and  the  receiver  under  the  first  order  will 
be  allowed  precedence.^  When  both  appointments  have  been 
made  on  one  and  the  same  day,  the  court  may  and  will  inquire 
into  fractions  of  the  day  in  determining  the  question  of  prior- 
ity, and  that  one  whose  appointment  is  of  an  earlier  hour  will 
be  given  priority.  And  the  question  of  precedence  being  de- 
termined adversely  to  the  receiver  in  actual  possession  of  the 
assets,  he  will  be  required  to  surrender  possession  to  the  other.^ 

2  Farmers  Bank  v.  Beaston,  7  G.  Bank,  121  N.  C,  343,  28  S.  R,  488; 

&  J.,  421.  McKay  v.   Van   Kleeck,   133   Mich., 

.■5  See   Rutter  v.  Tallis,  S   Sandf.,  27,  94  N.  W.,  367. 

610;    Steele  v.   Sturges,  5  Ab.    Pr.,  5  Deming   v.    New    York    Marble 

442.  Co.,  12  Ab.  Pr.,  66. 

4  People  V.  Central  City  Bank,  53  6  People  v.  Central  City  Bank,  53 

Barb.,  412;  S.  C,  35  How.  Pr.,  428;  Barb.,  412,  35  How.  Pr.,428;  Worth 

Deming  v.   New  York  Marble  Co.,  v.   Piedmont  Bank,  121   N.   C,  343, 

12  Ab.  Pr.,  66;  Worth  v.  Piedmont  28  S.  E.,  488.    In  the  last  case  cited 


184  RECEIVERS.  [chap.  VI. 

In  no  event  will  a  receiver  appointed  in  the  subsequent  action 
be  justified  in  interfering  with  the  possession  already  acquired 
by  the  former  receiver,  without  some  order  or  direction  of  the 
court.'^  And  where  there  is  a  controversy  between  two  re- 
ceivers appointed  by  the  same  court  as  to  the  right  of  pos- 
session of  certain  property,  the  proper  practice  is  to  proceed 
by  petition  or  independent  bill  in  the  suit  in  which  the  receiver 
in  possession  was  appointed,  in  order  to  determine  the  contro- 
versy.^ 

§  153.  Right  to  possession  as  between  receiver  and  as- 
signee in  bankruptcy.  As  between  the  right  of  possession 
of  a  receiver  and  of  assignees  of  the  same  estate  under  subse- 
quent proceedings  in  bankruptcy,  the  doctrine  of  the  English 
Chancery  is,  that  the  appointment  of  the  receiver  will  not  be 
superseded  nor  his  possession  defeated  by  the  bankrupt  pro- 
ceedings. The  appointment  of  the  receiver  is  regarded  as  a 
discretionary  power,  exercised  by  the  court  of  chancery  with 
as  great  utility  as  any  power  belonging  to  it,  and  the  receiver 
first  appointed  by  that  court  is  entitled  to  possession,  and  the 
assignees  in  bankruptcy  and  all  others  will  be  required  to  sur- 
render possession  to  him.^ 

the  court  say:  "The  test  of  juris-  after  a  dissolution,  for  an  account 
diction  in  such  cases  is  not  the  first  and  a  receiver  of  the  partnership 
issuing  of  the  summons,  nor  the  assets.  Subsequent  to  the  appoint- 
first  preparation  and  verification  of  ment  of  the  receiver,  one  member 
the  papers,  which  are  the  acts  of  of  the  firm  was  adjudicated  a  bank- 
the  parties,  nor  which  receiver  first  rupt,  and  his  assignees  obtained  pos- 
took  possession  since  that  has  no  session  of  a  portion  of  the  firm 
eflfect  unless  legally  authorized  assets,  which  the  bankrupt  had 
(which  it  can  not  be  if  a  prior  order  clandestinely  conveyed  away  from 
has  been  made  appointing  another),  the  receiver.  The  assignees  insisted 
but  which  court  is  first  "seized  of  that  they  were  entitled  to  posses- 
jurisdiction"  by  making  an  order  sion,  and  that  the  partner  who  had 
upon  legal  proceedings  exhibited  obtained  the  receiver  must  come  in 
before  it."  and  share  pari  passu  with  the  cred- 

7  Ward  V.  Sv/ift,  6  Hare,  309.  itors.     Lord   Hardwicke   said:     "A 

8  Comer  v.  Felton,  10  C.  C.  A.,  judgment  creditor,  to  be  sure,  has 
28.  61  Fed.,  731,  22  U.  S.  App.,  313.  no  preference  under  commissions  of 

9  Skip  V.  Harwood,  3  Atk.,  564.  bankruptcy,  though  execution  has 
This  was  an  action  by  one  partner,  been  taken  out,  if  not  actually  ex- 


CHAP.  VI.]  POSSESSION.  185 

§  154.  Rights  of  common.  While  the  appointment  of  a 
receiver  over  real  property  does  not  interfere  with  the  exer- 
cise of  rights  of  common  then  actually  enjoyed  by  other  parties, 
yet  if  the  receiver  has  taken  possession,  the  court  will  not,  as 
against  such  possession,  permit  the  exercise  of  an  alleged  right 
of  common  which  had  been  abandoned  for  several  years.  And 
in  such  a  case,  where  the  person  claiming  the  right  of  com- 
mon had  turned  his  cattle  into  a  part  of  the  estate,  and  the  re- 
ceiver had  impounded  them,  but  he  persisted  in  the  trespass 
and  brought  an  action  of  replevin  for  the  cattle,  he  was  en- 
joined from  further  trespassing  upon  the  property,  and  from 
further  prosecuting  his  action  of  replevin,  but  was  given  leave 
to  go  before  a  master  and  be  examined,  pro  inter  esse  siio,  as 
to  the  right  claimed. i*^ 

§  155.  Mixture  of  funds  by  auctioneer;  right  of  receiver. 
•Where  a  person  doing  business  as  an  auctioneer  is  in  the 
habit  of  depositing  the  proceeeds  of  sales  made  by  him,  in 
the  course  of  his  business,  in  bank  to  his  own  credit,  and  in 
his  own  name,  and  a  customer  of  the  auctioneer,  familiar  with 
this  method  of  doing  business,  has  permitted  the  auctioneer  to 
deposit  money  arising  from  the  sale  of  his  goods,  with  his  own 
funds  in  bank,  without  objecting  thereto,  as  against  such  a 
customer  the  receiver  of  the  auctioneer  is  entitled  to  the  whole 
fund  in  bank,  which  becomes  vested  in  him  by  virtue  of  his 
appointment,  and  the  customer  becomes  merely  a  general  credit- 
or of  the  auctioneer.l^ 

§  156.  Distraint  for  rent  upon  goods  which  have  passed 
into  receiver's  possession.  With  reference  to  the  right  of 
a  landlord  to  distrain  for  rent  due  from  a  defendant,  upon 

ecuted  ;   but  then   a  commission  of  provisional  only  for  the  more  speedy 

bankruptcy  can  not  supersede  a  de-  getting  in   of  a  party's   estate,   and 

cree   of  this   court   for  a   receiver,  securing  it  for  the  benefit  of  such 

which  is   of  a   different   considera-  person  who  shall  appear  to  be  en- 

tion,  and  is  a  discretionary  power  titled,  and  does  not  at  all  affect  the 

exercised  by  this  court  with  as  great  right." 

utility  to  the  subject  as  any  sort  of  10  Johnes  v.  Claughton,  Jac,  573. 

authority  that  belongs  to  it,  and  is  H  Levy  t/.  Cavanagh.  2  Bosw.,  100. 


186  RECEIVERS.  [chap.  VI. 

goods  of  the  defendant  which  have  passed  into  the  possession 
of  his  receiver,  it  is  held,  where  the  property  is  actually  removed 
by  the  receiver  from  the  demised  premises  before  the  landlord 
attempts  to  exercise  his  right  of  distraint,  that  the  landlord's 
right  has  terminated  with  the  removal  of  the  goods.  In  such 
a  case,  therefore,  if  the  receiver  has  done  no  act  to  indicate  his 
acceptance  of  the  lease,  the  landlord  has  no  right  to  follow  the 
goods,  which  belong  to  the  receiver  and  are  not  the  property  of 
the  defendant  at  the  time  of  their  removal. ^2 

§  157.  When  receiver  of  deceased  not  entitled  to  fund 
held  by  creditor.  A  receiver  appointed  to  sell  the  proper- 
ty of  a  decedent,  pending  litigation  concerning  the  adminis- 
tration of  his  estate,  is  not  entitled  to  possession  of  a  fund 
held  by  a  creditor  of  the  deceased  as  security  for  certain  lia- 
bilities of  the  holder  as  an  indorser  for  the  deceased.  The 
holder  of  such  a  fund,  having  acquired  a  legal  title  thereto 
by  agreement  w^ith  the  deceased,  will  not  be  compelled  to  sur- 
render his  title  to  a  receiver,  especially  when  it  is  not  shown 
that  the  fund  is  in  any  danger.^^ 

§  158.  Possession  of  wharf  by  receiver;  injunction  to 
restrain  interference  with.  Where,  pending  litigation  con- 
cerning a  block  of  real  estate  and  certain  mills  situated  thereon, 
a  receiver  is  appointed  with  power  to  take  charge  of  the  prop- 
erty and  to  perform  all  other  duties  pertaining  to  his  office,  the 
receiver  is  entitled  to  the  possession  of  and  to  collect  the 
wharfage  due  from  a  wharf  or  landing  upon  a  river  in  front 
of  the  mills,  which  was  constructed  for  the  purpose  of  more 
conveniently  conducting  the  business  of  the  mills,  the  whole 
constituting  in  effect  one  property,  and  the  receiver  holding 
and  renting  it  for  the  benefit  of  all  parties  interested  in  the  liti- 
gation. And  being  thus  entitled  to  possession,  he  may  maintain 
a  bill  for  an  injunction  against  the  authorities  of  a  municipal 
corporation,  who  interfere  with  his  possession  and  attempt  to 
collect  the  wharfage. ^^ 

12  Martin  v.   Black,  9  Paige,  641.  14  Grant  v.  City  of  Davenport.  18 

13  Brady  v.   Fiirlow,  22  Ga.,  613.      Iowa,  179.    It  is  to  be  observed  that 


CHAP.  VI.]  POSSESSION.  187 

§  159.  Possession  of  commercial  paper  by  receiver  not 
that  of  bona  fide  holder.  It  is  to  be  observed  as  regards 
the  possesssion  of  commercial  paper  by  a  receiver,  which  has 
come  into  his  hands  from  the  defendant  by  virtue  of  his  ap- 
pointment, that  he  acquires  his  title  thereto  by  legal  process, 
and  not  in  the  regular  course  of  dealing  in  commercial  paper. 
He  does  not,  therefore,  stand  in  the  situation  of  a  bona  fide 
holder  for  value  of  such  paper.l^  And  when  a  receiver  takes 
possession  of  notes  and  securities  which  are  the  property  of 
a  third  person,  not  a  party  to  the  cause,  such  person  may  by 
petition  in  the  cause  require  the  receiver  to  surrender  them.^^ 

§  160.  Defendant  relieved  from  responsibility  for  prop- 
erty in  receiver's  possession.  The  effect  of  taking  proper- 
ty from  a  defendant,  and  placing  it  in  the  possession  of  a 
receiver,  would  seem  to  be  to  relieve  the  defendant  from  any 
further  responsibility  concerning  the  property.  And  where, 
upon  a  bill  to  recover  certain  property  consisting  of  slaves,  a 
receiver  is  appointed  and  the  slaves  are  placed  in  his  posses- 
sion, in  accordance  with  the  prayer  of  the  bill,  the  defendant 
from  whom  they  are  taken  will  not  be  held  liable  for  their 
value,  if  they  are  afterwards  emancipated  by  the  act  of  the 
people.  The  property,  in  such  case,  being  put  into  the  receiver's 
possession,  is  regarded  as  being  in  custodia  legis,  thereby  di- 
vesting defendant  of  all  control  over  it.^'^ 

§  161.  Receiver's  title  not  divested  by  order  when  he  is 
not  a  party;  effect  of  appeal. on  his  possession.  After  the 
title  to  property  has  become  vested  in  a  receiver,  by  virtue  of 
the  order  appointing  him,  it  can  not  be  divested  merely  upon 
the  order  of  the  court  made  in  a  proceeding  to  which  he  was 

the  statutes  of  Iowa  provide   with  erty,  and  generally  to  do  such  acts, 

refer«nce  to  the  powers  of  receiv-  in  respect  to  the  property  commit- 

ers,    as    follows:      "Subject    to    the  ted   to  him,  as  the  court  may  au- 

control  of  the  court,  a  receiver  has  thorize." 

power  to  bring  and  defend  actions,  if"  Briggs  v.  Merrill,  58  Barb.,  389. 

to    take    and    keep    possession    of  16  Kimball   v.    Gafford,    78   Iowa, 

property,  to  collect  debts,  to  receive  65,  42  N.  W.,  583. 

the  rents  and  profits  on  real  prop-  17  Lee  v.  Cone,  4  Cold.,  393. 


188  RECEIVERS.  [chap.  VI. 

not  a  party.i^  And  where,  pending  litigation,  property  is 
placed  in  the  hands  of  a  receiver,  who  is  vested  with  the  usual 
powers  of  such  officers,  and  the  defendants  to  the  litigation 
pray  an  appeal  from  the  final  decree  of  the  court  below,  the 
effect  of  the  appeal  and  giving  bond  thereon  is  not  such  as  to 
warrant  the  court  in  granting  an  order  against  the  receiver 
to  turn  over  the  property  and  money  in  his  hands,  and  he  will 
still  be  allowed  to  retain  possession,  notwithstanding  the  ap- 
peal.^^ 

§  162.  Disposal  of  property  by  final  decree.  When 
property  has  been  in  a  receiver's  possession  pending  litigation, 
and  a  final  decree  is  made  directing  that  a  sufficient  portion  be 
set  aside  to  satisfy  the  plaintiff's  demand,  which  is  accordingly 
done  pursuant  to  the  decree,  the  property  thus  set  aside  be- 
comes that  of  the  plaintiff,  although  he  may  refuse  to  receive 
it.  And  it  would  seem,  on  such  a  state  of  facts,  that  the  re- 
ceiver, having  ceased  to  act  in  that  capacity,  holds  the  prop- 
erty thenceforth  only  as  trustee  of  the  person  entitled  thereto 
under  the  final  decree.^O  And  when  the  decision  of  a  court 
of  last  resort  dissolves  an  injunction  against  the  defendant 
and  discharges  a  receiver  of  the  fund  in  litigation,  so  that  de- 
fendant becomes  entitled  to  the  possession  of  his  property,  but 
he  has,  pendente  lite,  applied  for  the  benefit  of  the  state  insol- 
vent laws,  his  trustee  under  such  proceedings  becomes  entitled 
to  possession  of  the  property,  and  the  receiver  will  be  required 
to  deliver  it  to  such  trustee.^i    And  when  the  appointment  of 

18  Rogers  V.  Corning,  44  Barb.,  bill.  Upon  appeal  the  judgment  of 
229.  foreclosure    was    reversed    because 

19  Schenk  v.  Peay,  1  Dill.,  267.  the  bill  failed  to  describe  the  mort- 
To  the  same  effect,  see  State  v.  gaged  premises  with  sufficient  ex- 
Reynolds,  209  Mo.,  161,  114  S.  W.,  actness  to  warrant  the  imposition 
1097.  In  Salisbury  v.  Wilcox,  128  of  a  lien  or  to  justify  a  sale.  It 
Cal.,  347,  60  Pac,  979,  a  bill  had  was  held  that  the  order  appointing 
been  filed  to  foreclose  a  mortgage  the  receiver  should  also  be  reversed 
on  real  estate  and  a  receiver  had  because  there  was  no  res  of  which 
been    appointed   to   take   possession  he  could  take  possession. 

of   a   fruit   crop   growing   upon   the  20  Very  v.  Watkins,  23  How.,  469. 

mortgaged  premises  described  in  the  21  Glenn  v.  Gill,  2  Md.,  1. 


CHAP.  VI.]  POSSESSION.  189 

a  receiver  is  reversed,  as  having  been  illegal  and  unauthorized, 
the  court  will  require  him  to  restore  the  fund  to  the  person 
from  whom  it  was  obtained.22  Sq  when  the  bill  upon  which  a 
receiver  is  appointed  is  afterward  dismissed  for  want  of  juris- 
diction over  the  person  of  the  defendant,  the  receiver  should 
be  directed  to  return  the  property,  which  has  come  into  his  pos- 
session, to  the  persons  from  whom  such  possession  was  ob- 
tained, regardless  of  the  adverse  claim  of  title  of  other  persons 
thereto.  23 

§  162a.  Right  to  possession  not  divested  when  property 
taken  beyond  state  or  country;  when  rule  not  applicable. 
While  the  powers  and  functions  of  a  receiver  are  co-extensive 
only  with  the  jurisdiction  of  the  court  appointing  him,  yet  if 
he  has  rightfully  obtained  possession  of  personal  property  sit- 
uated within  the  jurisdiction  of  his  appointment,  and  in  the 
discharge  of  his  duties  he  takes  the  property  into  another  state, 
his  title  and  right  of  possession  are  not  thereby  divested.  And 
in  such  case,  an  attachment  will  not  be  sustained  against  the 
property  in  the  latter  state  in  behalf  of  creditors  resident 
there.24  So  where  a  receiver,  who  has  been  appointed  over 
an  insolvent  railway  company  by  a  court  of  a  foreign  country, 
has  come  into  the  possession  of  property  of  the  company  which 
he  subsequently  brings  into  this  country,  where  it  is  attached 
by  local  creditors  of  the  insolvent  railway  company,  the  re- 
ceiver may  maintain  an  action  of  replevin  in  the  courts  of  this 
country  as  against  such  local  attaching  creditors.25     But  the 

22  O'Mahoney  v.  Belmont,  62  N.  Coal  Co.  v.  Diamond  State  S.  Co., 
Y.,  133.  affirming  S.  C,  37  N.  Y.  224  Pa.  St.,  217,  —  Atl.,  — .  See, 
Snpr.  Ct.  R.,  380.  contra,  Humphreys  v.   Hopkins,  81 

23  Warren  z:  Bunch,  80  Ga.,  124,  Cal.,  551,  22  Pac,  892.  See,  also, 
7  S.  E.,  270.  Grogan  v.  Egbert,  44  West  Va.,  75, 

24  Chicago,  M.  &  St.  P.  R.  Co.  28  S.  E.,  714,  67  Am.  St.  Rep.,  763. 
t/.Packet  Co.,  108  111.,  317,  48  Am.  25  Robertson  v.  Staed,  135  Mo., 
St.  Rep.,  557;  Woodhull  v.  Farmers'  135,  36  S.  W.,  610,  33  L.  R.  A.,  202, 
Trust  Co.,  11  N.  Dak.,  157,  90  N.  58  Am.  St.  Rep.,  569.  And  see  this 
W.,  795,  95  Am.  St.  Rep.,  712;  Jones  case  as  to  the  proof  of  the  receiver's 
V.  Purcell,  20  App.  D.  C,  209;  Cagill  appointment  by  the  court  of  the  for- 
V.  Wooldridge,  8  Baxter.  580;  Pond  eign  country. 

V.  Cooke,  45  Conn.,  126;   Somerset 


190  RECEIVERS.  [chap.  VI. 

rule  has  no  application  where  the  Hen  asserted  is  for  the  pur- 
pose of  enforcing-  an  indebtedness  which  has  been  incurred  in 
the  foreign  jurisdiction  by  the  receiver  himself  in  the  care  and 
management  of  the  property  in  question.  Thus,  where  a  re- 
ceiver sends  a  vessel  which  constitutes  part  of  the  receivership 
estate  in  his  possession  beyond  the  jurisdiction  of  his  appoint- 
ment and  into  a  foreign  state,  where  necessary  supplies  are 
furnished  the  vessel,  the  person  furnishing  such  supplies  may 
maintaining  proceedings  i)i  ran  in  the  admiralty  court  of  that 
jurisdiction  to  enforce  the  payment  of  his  demand. ^6 

26  The   Willamette   Valley,    (also      App.,  447,  affirming  S.  C,  62  Fed., 
sub   nom.     Clark  v.   Chandler),   13      293  and  63  Fed.,  130. 
C.  C.  A.,  635,  66  Fed.,  565,  29  U.  S. 


CHAP.  VI.]  POSSESSION.  191 


II.  Interference  with  Receiver's  Possession. 

§  163.     Interference    a    contempt    of   court;    punished    accordingly;    illus- 
trations; distraint  for  rent. 

164.  The  doctrine  further  considered;   suit  in  another  jurisdiction; 

interference  by  another  receiver. 

165.  Liability   for    disturbing    receiver's    possession    not   dependent 

upon  legality  of  appointment. 

166.  Not  necessary  that  person  should  be  officially  apprised  of  re- 

ceivership. 
166a.   No  liability  for  interference  where  order  appointing  receiver  is 
void. 

167.  Interference   with   collection   of   rents   by   receiver. 

168.  Surrender   of  property   by  defendant  to   receiver;   void   order; 

surrender  by  purchaser;  what  not  a  contempt. 

169.  Court  itself  must  decide  as  to  compliance  with  its  order,  and 

as  to  attachment  for  contempt. 

170.  Contempt    for    interference    with    receivership    in    foreign    coun- 

try; what  not  a  contempt. 

171.  Actual   interference   necessary  to  contempt;   levy  and  sale  by 

sheriff  under  execution. 

172.  Receiver's  title   not  determined  in  proceedings   for  contempt; 

payment   for   property  as   reparation. 

173.  Contest  between  different  receivers. 

174.  Receiver  liable  to  attachment  for  not  turning  over  property  as 

directed  by  court. 
174a.  Receiver  of  corporation  entitled  to  rights  under  patent. 
1746.  Form  of  judgment  in  contempt  proceedings. 

§  163.  Interference  a  contempt  of  court;  punished  ac- 
cordingly; illustrations;  distraint  for  rent.  The  receiver 
being  an  officer  of  the  court,  and  his  possession  being  regarded 
as  the  possession  of  the  court,  any  unauthorized  interference 
therewith,  whether  by  taking  forcible  possession  of  the  prop- 
erty committed  to  his  charge,  or  by  legal  proceedings  for  that 
purpose  without  the  sanction  of  the  court  from  which  he  derives 
his  appointment,  is  regarded  as  a  contempt  of  court,  and  is 
punished  accordingly,  the  usual  punishment  to  which  resort 
is  had  being  by  attachment  for  contempt.27     Thus,  wliere  an 

27  Noe  V.  Gibson,  7  Paige,  513;  Skip  v.  Harwood,  3  Atk..  564;  Hull 
De  Visser  v.  Blackstone,  6  Blatchf.,  v.  Thomas,  3  Edw.  Ch.,  236;  Anony- 
235;    Lane   v.    Sterne,    3   Gif.,   629;      mous,  2  Mol.,  499;  Broad  v.  Wick- 


192  RECEIVERS.  [chap.  VI, 

ofticer  levies  an  execution  upon  property  of  defendants,  which 
has  already  passed  into  the  hands  of  a  receiver,  who  distinctly 
notifies  the  officer  in  writing  at  the  time  of  making  his  levy 
that  such  property  is  in  his  possession  in  his  capacity  of  re- 
ceiver, the  officer  is  guilty  of  a  contempt  of  court  if  he  pro- 
ceeds with  the  levy.28  So  a  landlord  will  not  be  permitted  to 
take  property  from  a  receiver's  possession,  under  a  distraint  for 
rent  due  from  defendant  in  the  action  in  which  the  receiver 
was  appointed,  his  proper  course  being  to  apply  to  the  court, 
upon  notice  to  the  receiver,  for  an  order  requiring  him  to  pay 
the  rent,  or  that  the  landlord  be  at  liberty  to  proceed  by  dis- 
traint, or  otherwise,  as  the  court  may  direct.  And  where,  with- 
out such  authority  or  sanction  of  the  court,  the  landlord  seizes 
the  property  under  a  distress  warrant,  both  he  and  his  officer 
levying  the  warrant  will  be  punished  by  attachment  for  con- 
tempt of  court.29  So  where  a  receiver  has  been  ordered  to  col- 
lect the  rents  and  profits  of  real  estate,  he  is  regarded  as  being  in 
constructive  possession,  and  any  interference  with  such  posses- 
sion is  punishable  as  a  contempt.^^  And  where,  after  the  dis- 
solution of  a  partnership,  one  of  the  partners  proceeds  to  tam- 
per with  the  employees  in  the  employ  of  the  receiver  of  the 

ham.  4  Sim.,  511;   Russell  v.   East  Bee,  83   Fed.,   761.     See   People  v. 

Anglian  R.  Co.,  3  Mac.  &  G.,  104;  Weigley,  155  III,  491,  40  N.  E.,  300, 

Langford  v.  Langford,  5  L.  J.,  N.  S.  supra,   to   the   effect  that  it  is   im- 

Ch.,  60;  Vermont  &  Canada  R.  Co.  material  whether  or  not  the  person 

V.  Vermont  Central  R.  Co.,  46  Vt.,  charged  is  a  party  to  the  receiver- 

792;    Spinning  v.  Ohio  Life  Insur-  ship  proceeding, 
ance  and  Trust  Co.,  2  Disney,  368;  28  Lane  v.  Sterne,  3  Gif.,  629.     It 

Chafee  v.   Quidnick   Co.,   13   R.    I.,  is  said  in  this  case  that  the  practice 

442;  Secor  v.  T.,  P.  &  W.  R.  Co.,  7  in   the   English   Court  of  Chancery 

Biss.,  513 ;  King  v.  O.  &  M.  R.  Co.,  in  such  cases  is  not  to  punish  the 

7  Biss.,  529;  People  v.  Weigley,  155  offense  ordinarily  by  committal,  but 

111.,  491,  40  N.  E.,  300;   St.  Louis,  that    the    court    uniformly    requires 

A.  &  S.  R.  Co.  V.  Hamilton,  158  111.,  the  offending  party  to  pay  the  costs 
366,  41  N.  E.,  777 ;  Gunning  v.  Sorg,  and  expenses  occasioned  by  his  im- 
214  111.,  616,  7Z  N.  E.,  870;  Delozier  proper  conduct. 

V.   Bird,   125   N.   C,  493,  34   S.   E.,  29  Noe  v.  Gibson,  7  Paige,  513. 

643;  Royal  Trust  Co.  v.  Washburn,  30  Delozier   v.    Bird,    125    N.    C, 

B.  &  I.  R.  Co.,  71  C.  C.  A.,  579,  139  493,  34  S.  E.,  643. 
Fed.,  865 ;  dictum  in  Ledoux  v.  La 


CHAP.  VI.]  POSSESSION.  193 

partnership,  who  is  engaged  in  carrying  on  the  business  under 
the  order  of  the  court,  and  induces  them  to  leave  the  employ 
of  the  receiver  for  the  purpose  of  engaging  in  a  rival  business 
conducted  by  such  partner,  such  conduct  amounts  to  an  unlaw- 
ful interference  with  the  receiver's  possession  and  may  be  re- 
strained by  injunction;  and  in  such  case  it  is  immaterial  that 
no  contracts  are  being  broken  by  such  employees.^^  But  since 
the  refusal  of  the  receiver  of  the  vendee  of  personal  property 
to  accept  the  property  under  the  terms  of  the  contract  prevents 
the  title  and  the  right  of  possession  from  vesting  in  the  re- 
ceiver, the  vendor  will  not  be  held  in  contempt  for  disposing 
of  the  property  without  the  consent  of  the  court.^^ 

§  164.  The  doctrine  further  considered;  suit  in  another 
jurisdiction;  interference  by  another  receiver.  The  doc- 
trine that  an  unauthorized  interference  with  a  receiver's  pos- 
session constitutes  a  contempt  of  court  necessarily  results  from 
the  receiver's  position  as  an  officer  of  the  court,  acting  under 
its  authority  and  in  all  things  subject  to  its  control.  Any  un- 
authorized attempt  to  interfere  with  or  disturb  his  possession 
directly  questions  the  power  of  the  court  appointing  him,  and  it 
becomes  the  duty  of  the  court  to  protect  him,  the  same  rule  be- 
ing applicable  which  obtains  when  sheriffs,  trustees  or  mastei  s 
in  chancery  have  been  invested  under  a  judicial  order  with  the 
control  of  property  pendente  lite.  In  all  such  cases,  the  power 
to  protect  the  receiver  or  officer  of  the  court  necessarily  follows 
from  the  power  to  appoint,  and  the  court  will  extend  its  pro- 
tection by  punishing  as  for  a  contempt  any  unauthorized  in- 
terference with  his  possession,  even  though  it  be  by  another 
receiver  afterwards  appointed  by  another  court,  which  had  sub- 
sequently acquired  jurisdiction  over  the  matter.^^  Nor  can 
such  interference  be  justified  by  the  fact  that  it  is  committed 

31  Dixon  V.  Dixon,  (1904)  1  Ch.,  33  Spinning  v.   Ohio  Life  Insur- 
161.                                                              ance  and  Trust  Co.,  2  Disney,  368. 

32  Moore  v.  Potter,  155  N.  Y., 
481,  SO  N.  E.,  271,  63  Am.  St.  Rep., 
692. 

Receivers — 13. 


194  RECEIVERS.  [chap.  VI. 

beyond  the  jurisdiction  of  the  court  and  in  another  state,  as 
by  instituting  attachment  proceedings  in  another  state  and 
garnishing  funds  due  to  the  receiver.  And  an  attorney  who 
appears  for  and  consents  to  the  appointment  of  a  receiver  over 
a  corporation  and  assists  in  framing  the  order,  and  who  then 
attaches  the  funds  of  the  corporation  in  another  state  to  recover 
for  professional  services,  is  guil'v  of  a  plain  contempt  of  court, 
and  will  be  dealt  with  accordingly.^^  So  when  a  receiver  is 
appointed  over  an  insolvent  partnership,  and  a  manager  of  a 
non-resident  corporation  which  is  a  creditor  of  the  firm,  such 
manager  residing  within  the  jurisdiction  of  the  court,  insti- 
tutes proceedings  in  attachment  in  a  foreign  jurisdiction  to 
recover  property  of  the  debtor  there  located,  he  may  be  pun- 
ished for  contempt  in  thus  interfering  with  the  rights  of  the 
receiver. ^^  So  one  may  be  guilty  of  contempt  in  interfering 
with  the  business  of  a  receiver,  even  though  there  is  no  direct, 
physical  interference  with  his  possession.  Thus,  when  a  former 
clerk  of  a  firm  over  which  a  receiver  is  appointed  sends  to  the 
customers  of  the  firm  a  circular  containing  an  unfair  and  un- 
truthful statement  as  to  the  effect  of  the  proceedings  in  which 
the  receiver  is  appointed,  and  soliciting  the  customers  of  the 
firm,  he  may  be  punished  for  contempt. ^^  So  a  wilful  attempt 
to  interfere  with  a  receiver's  operation  of  a  railroad  upon  the 
part  of  persons  who  are  conspiring  together  in  an  unlawful 
combination,  the  object  of  which  is  to  injure  the  business  of 
the  railroad,  constitutes  an  unlawful  interference  with  the  re- 
ceiver's possession  and  as  such  is  punishable  as  a  contempt.^'^ 
And  so  jealous  are  courts  of  equity  in  protecting  the  rights 
of  their  receivers,  that  they  will  not  sanction  any  unauthorized 
interference  with  property  or  funds  to  which  the  receiver  is 
entitled,  even  though  not  yet  reduced  to  possession.^S     Thus, 

34  Chafee  v.  Quidnick  Co.,  13  R.  37  Thomas  v.  Cincinnati,  N.  O.  & 
I.,  442.  T.  P.  R.  Co.,  62  Fed.,  803. 

35  Sercomb  v.  Catlin,  128  111.,  556,  38  Richards  v.  People,  81  111.,  551 ; 
21  N.  E.,  606.  Hazelrigg  v.  Bronaugh,  78  Ky.,  62. 

36Helmore  v.  Smith,  35  Ch.  D., 
449. 


CHAP.  VI.]  POSSESSION.  195 

one  who,  with  full  knowledge  of  the  appointment  of  a  receiver, 
attempts  by  garnishee  proceedings  to  reach  credits  which  are 
due  to  the  receiver,  but  of  which  he  has  not  yet  obtained  pos- 
session, will  be  punished  for  contempt  of  court. ^^ 

§  165.  Liability  for  disturbing  receiver's  possession  not 
dependent  upon  legality  of  appointment.  The  liability  of 
one  who  disturbs  the  possession  of  a  receiver,  like  that  of  a 
defendant  in  violating  an  injunction,^^  jg  ^ot  dependent  upon 
the  regularity  or  legality  of  the  appointment,  and  it  affords  no 
justification  for  an  unauthorized  interference  with  the  receiver's 
possession  that  the  order  may  have  been  illegally  or  improvi- 
dently  made.  While  the  order  continues  in  existence,  the  court 
requires  that  it  shall  receive  implicit  obedience,  and  will  not 
permit  its  legality  to  be  questioned  by  disobedience,  the  court 
itself  being  always  open  to  any  proper  application  calling  in 
question  the  legality  or  propriety  of  its  order.  If,  therefore, 
a  sheriff  has  levied  executions  upon  property  in  the  custody 
of  a  receiver,  the  officer  making  the  levy  being  fully  notified 
and  apprised  of  the  receiver's  appointment  and  possession,  up- 
on a  motion  to  commit  for  contempt  of  court,  the  respondent 
can  not  justify  his  interference  upon  the  ground  that  the  ap- 
pointment was  improperly  made,  and  the  court  will  not,  upon 
such  a  motion,  consider  the  merits  of  the  original  order.^l 

39  Richards  v.  People,  81  111.,  551.  396;  Billard  v.  Erhart,  35  Kan.,  616, 

40  See  for  a  discussion  of  this  12  Pac,  42;  State  v.  Pierce,  51 
principle  in  cases  of  injunctions,  Kan.,  241,  32  Pac,  924;  Central 
Moat  V.  Holbein,  2  Edw.  Ch.,  188;  Union  T.  Co.  v.  State,  110  Ind., 
Woodward  v.  Earl  of  Lincoln,  3  203,  10  N.  E.,  922,  12  N.  E.,  136; 
Swans.,  626;  Richards  v.  West,  2  In  re  White,  113  Cal.,  282.  45  Pac, 
Green  Ch.,  456;  People  v.  Sturte-  323;  Loven  v.  The  People,  158  111., 
vant,  9  N.  Y.,  263;  Sullivan  v.  159,  42  N.  E.,  82;  Wilber  t;.  Wooley, 
Judah,  4  Paige,  444 ;  Partington  v.  44  Neb.,  739,  62  N.  W.,  1095 ;  State 
Booth,  3  Meriv.,  148;  Rogers  Mfg.  v.  Markuson,  7  N.  Dak..  155.  7Z  N. 
Co.  V.  Rogers,  38  Conn.,  121;  Peo-  W.,  82;  Silliman  v.  Whitmer,  173 
pie  V.  Van  Buren,  136  N.  Y.,  252,  Pa.  St.,  401,  34  Atl.,  56;  State  v. 
32  N.  E.,  775,  20  L.  R.  A.,  446;  Circuit  Court,  98  Wis.,  143,  73  N. 
Cape  May  &  S.  L.  R.  Co.  v.  John-  W.,  788;  Laramie  National  Bank  v. 
son,  35  N.  J.  Eq.,  422 ;  Fleming  v.  Steinhoff,  7  Wyo.,  464,  53  Pac,  299. 
Patterson,  99  N.   C,  404,  6   S.   E.,  41  Russell  v.  East  Anglian  R.  Co., 


196 


RECEIVERS. 


[chap.  VI. 


And  in  proceedings  for  contempt  for  interfering  with  a  re- 
ceiver's possession,  the  court  will  not  consider  whether  the  or- 
der appointing  the  receiver  was  erroneous,  since  such  order 
can  not  be  assailed  in  a  collateral  proceeding,  if  the  court  had 


3  Mac.  &  G.,  104.  This  was  an  ap- 
peal from  an  order  of  the  Vice- 
Chancellor  upon  a  motion  to  com- 
mit a  sheriff  and  under-sheriff  for 
an  alleged  contempt  of  court,  in 
having  interfered  with  the  posses- 
sion of  a  receiver  by  levying  upon 
and  taking  from  him  certain  goods 
and  chattels  under  a  A.  fa.,  in  favor 
of  judgment  creditors  of  the  de- 
fendants. Lord  Truro  observes, 
p.  115:  "When  the  motion  to  com- 
mit was  made  the  answer  given  to 
it  was  that,  although  the  receiver, 
at  the  time  of  the  levy,  gave  notice 
that  he  was  in  possession  of  the 
property  as  an  officer  of  the  court 
of  chancery,  yet  that  the  plaintiffs 
in  the  execution  considered  the 
order,  under  which  the  receiver  was 
appointed,  an  ill-advised,  illegal  and 
indiscreet  order,  and  that  therefore 
they  were  justified  in  treating  it  as 
a  nullity.  It  was  contended,  on  the 
other  side,  that  it  was  wholly  irrele- 
vant to  the  application  whether  the 
order  was  or  was  not  such  an  order 
as  this  court  on  further  considera- 
tion would  deem  it  right  to  have 
made;  that  it  was  a  subsisting  or- 
der; that  the  officer  was  acting  un- 
der it  when  he  was  interrupted  by 
the  sheriff;  that  an  officer  so  acting 
under  the  authority  of  the  court 
was  entitled  to  the  protection  of  the 
court ;  that  if  the  order  was  incor- 
rect in  a  degree  which  interfered 
with  the  legal  rights  of  the  plaintiffs 
in  the  execution,  it  was  open  to 
them  to  come  to  the  court  to  ques- 
tion the  propriety  of  that  order  in 


a  proper  manner,  but  that  it  was 
not  open  to  them  to  do  so  by  dis- 
obeying it,  and  by  interrupting  the 
officer  of  the  court.  The  case  was 
discussed  at  considerable  length, 
and  the  Vice-Chancellor  appears  to 
have  entertained  doubts,  which  I 
think  were  well  founded,  with  re- 
gard to  that  order;  but  he  stated, 
and  it  appears  to  me  correctly,  that 
that  was  not  the  occasion  on  which 
the  court  could  be  properly  called 
upon  to  decide  on  the  validity  of 
the  objection  to  the  order,  and  he 
therefore  declined  to  express  any 
determinate  opinion  upon  that  sub- 
ject, intimating  that  they  might  be 
proper  matters  to  be  discussed  here- 
after. ...  I  have  looked  with 
care  through  the  very  numerous  au- 
thorities that  have  been  cited,  but 
it  is  not  necessary  for  me  to  go 
through  them.  The  result  appears 
to  be  this :  that  it  is  an  established 
rule  of  this  court  that  it  is  not  open 
to  any  party  to  question  the  orders 
of  this  court,  or  any  process  issued 
under  the  authority  of  this  court, 
by  disobedience.  I  know  of  no  act 
which  this  court  may  do  which 
may  not  be  questioned  in  a  proper 
form  and  on  a  proper  application ; 
but  I  am  of  opinion  that  it  is  not 
competent  for  any  one  to  interfere 
with  the  possession  of  a  receiver, 
or  to  disobey  an  injunction,  or  any 
other  order  of  the  court,  on  the 
ground  that  such  orders  were  im- 
providently  made.  Parties  must 
take  a  proper  course  to  question 
their  validity,  but  while  they  exist 


CHAP.  VI.]  POSSESSION.  197 

jurisdiction  of  the  parties  and  of  the  subject-matter. ^2  So 
upon  an  appeal  from  an  order  adjudging  a  defendant  debtor 
guilty  of  contempt  in  refusing  to  assign  his  property  to  a  re- 
ceiver in  a  judgment  creditor's  suit,  the  court  will  not  review 
or  consider  the  propriety  of  appointing  the  receiver.^S  Sq  ^^qj^ 
a  petition  filed  by  a  receiver  for  an  injunction  against  an  action 
of  trover  which  had  been  instituted  against  him  without  leave 
of  court,  the  decree  appointing  the  receiver  can  not  be  assailed 
because  erroneously  or  improperly  made."** 

§  166.  Not  necessary  that  person  should  be  officially 
apprised  of  receivership.  It  is  also  a  well-established  prin- 
ciple, that,  to  render  a  defendant  or  other  person  liable  by  at- 
tachment for  contempt  in  disturbing  or  interfering  with  prop- 
erty of  which  a  receiver  is  entitled  to  possession,  it  is  not  nec- 
essary that  he  should  be  officially  apprised  of  the  receiver's 
appointment,  or  even  that  the  formal  order  should  have  been 
actually  drawn,  provided  he  has  actual  notice  of  the  receiver- 
ship, or  of  the  order  of  court  directing  the  appointment.  Any 
actual  knowledge  of  the  granting  of  the  order  is  sufficient  to 
fix  defendant's  repsonsibility  for  its  violation,  the  same  prin- 
ciple being  applicable  in  such  cases  as  in  case  of  the  violation 
of  an  injunction.45    Thus,  where  defendants  have  knowledge 

they  must  be   obeyed.     I   consider  Lewis,  52  Kan.,  660,  35   Pac,  287. 

the  rule  to  be  of  such  importance  See,  ante,  §  39a. 

to  the  interests  and   safety  of   the  43Bagley   v.    Scudder,   66   Mich., 

public,  and  to  the  due  administra-  97,  33  N.  W.,  47. 

tion  of  justice,  that  it  ought  on  all  44  Montgomery    v.     Enslen,     126 

occasions    to    be    inflexibly    main-  Ala.,  654,  28  So.,  626. 

tained.    I  do  not  see  how  the  court  45  Hull  v.  Thomas,  3  Edw.   Ch., 

can  expect  its   officers   to   do   their  236;  Skip  v.  Harwood,  3  Atk.,  564; 

duty,  if  they  do  it  under  the  peril  Lewis    v.    Singleton,    61    Ga.,    164. 

of  resistance,  and  of  that  resistance  And    see    the    same    doctrine    dis- 

being  justified  on  grounds   tending  cussed  and  applied  to  the  violation 

to   the    impeachment    of   the    order  of  injunctions,  in  Howe  v.  Willard, 

under  which  they  are  acting."    And  40  Vt.,  654 ;   Hearn  v.  Tennant,  14 

see,  ante,  §  143.  Ves.,  136;  McNeil  v.  Garratt,  Cr.  & 

42  Cook     V.      Citizens      National  Ph.,    98;    Poertner    v.    Russell,    33 

Bank,    73    Ind.,    256;    Richards    v.  Wis.,  193 ;  Fleming  t;.  Patterson,  99 

Ptople,  81  111.,  551.    See,  also,  In  re  N.  C,  404,  6  S.  E.,  396;  Powell  v. 


198  RECEIVERS.  [chap.  VI. 

of  the  granting  of  an  injunction  against  their  disposal  of  cer- 
tain property,  and  the  appointment  of  a  receiver  over  the  prop- 
erty, they  are  in  contempt  of  court  if  they  dispose  of  it,  even 
though  the  order  of  the  court  is  not  yet  served  upon  them.^^ 
And  where  a  defendant  is  present  in  court  during  the  hearing 
of  a  cause,  and  knows  that  an  order  granting  a  receiver  of  his 
estates  has  been  allowed,  although  the  decree  itself  has  not  yet 
been  drawn,  he  is  guilty  of  a  contempt  of  court  if  he  removes 
a  portion  of  the  property  and  puts  it  beyond  the  receiver's  pos- 
session for  the  purpose  of  evading  the  decree,  and  he  can  not 
justify  on  the  ground  that  the  decree  has  not  yet  been  entered.^'^ 
So  where  an  order  had  been  entered  requiring  one  who  had 
money  in  his  possession  to  turn  it  over  to  a  receiver,  it  is  not 
necessary  that  he  should  be  officially  served  with  a  copy  of  such 
order  to  render  him  liable  for  failure  to  obey  it.^^ 

§  166a.  No  liability  for  interference  v^here  order  ap- 
pointing receiver  is  void.  The  rule  as  announced  in  the 
preceding  sections  must  always  be  understood   as  applying 

Follett,     Dick.,     116;     Murphy     v.  was  of  opinion  that,  "where  a  per- 

Harker,  115  Ga.,  77,  41  S.  E.,  585;  son,    as    Mr.    Harwood    has    done, 

Lake    Shore    &    M.    S.    R.    Co.    v.  attends   a  cause  to   which   he   is   a 

Taylor,  134  III.,  603,  25  N.  E.,  588;  defendant,    the    whole    time    of   the 

Kempson  v.  Kempson,  61  N.  J.  Eq.,  hearing,  and  had  notice  of  the  de- 

303,  48  Atl.,  244,  modified  and  af-  cree  by  being  present  when  it  was 

firmed  in  63  N.  J.  Eq.,  783,  52  Atl.,  pronounced  in  court,  if  he  does  any 

360,    625 ;    Fowler   v.    Beckman,    66  act  that  is  a  contravention  to  the 

N.  H.,  424,  30  Atl.,  1117;  Ex  parte  decree  he  is  guilty  of  a  contempt, 

Richards,  117  Fed.,  658.  and  punishable  for  it,  notwithstand- 

46  Hull  V.  Thomas,  3  Edw.  Ch.,  ing  the  decretal  order  is  not  drawn 
236.  up;  and  there  are  several  instances 

47  Skip  V.  Harwood,  3  Atk.,  564.  of  this  kind,  or  otherwise  it  would 
This  was  a  bill  between  two  part-  be  extremely  easy  to  elude  decrees, 
ners,  after  a  dissolution,  for  an  some  of  which  in  their  nature  re- 
accounting  and  a  receiver.  The  de-  quire  a  considerable  length  of  time 
fendant,  Harwood,  was  present  in  before  they  can  be  completely 
court  during  the  hearing,  which  drawn  up."  The  defendant  was  ac- 
occupied  three  days,  and  knew  of  cordingly  committed  to  the  Fleet 
the  order  appointing  a  receiver,  but  for  his  contempt  of  court. 

before    the    decree    was    drawn    or  48Drakeford   v.   Adams,   98   Ga., 

entered  he  removed  a  large  portion      722,  25  S.  E.,  833. 
of  the  firm  assets.    Lord  Hardwicke 


CHAP.  VI.]  POSSESSION.  199 

only  to  cases  where  the  court  had  jurisdiction  of  the  subject- 
matter  of  the  controversy  and  where  the  complaint  is  therefore 
merely  one  of  an  irregular  or  erroneous  exercise  of  such  juris- 
diction, which  should  have  been  corrected  upon  appeal  or  by 
application  to  the  appointing  court.  Where,  therefore,  the 
court  which  appointed  the  receiver  was  entirely  without  juris- 
diction of  the  subject-matter  of  the  suit  and  had  no  power 
under  any  circumstances  to  grant  the  principal  relief  sought, 
its  order  appointing  the  receiver  is  to  be  regarded  as  a  nullity 
and  an  unauthorized  interference  with  the  possession  of  such 
receiver  is  therefore  not  punishable  as  a  contempt  of  court. '^^ 
§  167.  Interference  with  collection  of  rents  by  receiver. 
When  a  receiver  is  appointed  to  collect  rents,  it  is  his  duty,  upon 
being  apprised  by  the  tenants  of  interference  with  the  rents  by 
defendant,  to  move  the  court  for  an  attachment  against  de- 
fendant, and  the  receiver's  affidavit  upon  information  and 
belief  is  sufficient  foundation  for  the  proceedings  in  attach- 
ment.^^  And  when  a  person  has  taken  forcible  possession  of 
estates  over  which  a  receiver  has  been  appointed,  an  order  for 
his  commitment  may  be  made,  upon  proof  of  service  of  notice 
of  the  motion,  without  a  rule  nisi  being  first  obtained.^l  But 
when  a  receiver  was  appointed  over  mortgaged  premises, 
pending  an  action  to  foreclose  the  mortgage,  and  a  third  person 
not  a  party  to  the  action  had  collected  the  rents,  under  an  as- 
signment thereof  from  the  owner  of  the  equity  of  redemption 
made  prior  to  the  receiver's  appointment,  he  was  held  not 
liable  as  for  a  contempt  of  court,  although  he  was  apprised 

49  People  V.  Weigley,  155  111.,  491,  rett,  203  111.,  99,  67  N.  E.,  742;  In 

40  N.   E.,  300;   Town  of  Vandalia  re   Sawyer,   124  U.   S.,  200,  8  Sup. 

V.  St.  L.,  V.  &  T.  H.  R.  R.  Co.,  209  Ct.    Rep.,   482 ;    Morgan   v.    County 

111.,   73,   70    N.    E.,   662.     And    see,  Court,  53  West  Va.,  372,  44  S.  E., 

post,  §§  168  and  203.     For  the  ap-  182;    State   v.    Superior   Court,    105 

plication   of  the   same  principle    in  Wis.,   651,   81    N.    W.,    1046,   48   L. 

cases  of  injunctions,  see  Walton  v.  R.    A.,    819;    State    v.    Milligan,    3 

Develing,  61  111.,  201 ;  Darst  v.  The  Wash.,   144,  28  Pac,  369 ;   State  v. 

People,    62    III.,    306;    Andrews    v.  Theard,  48  La.  An.,  1448,  21  So.,  28. 

Knox    Co.,    70    111.,    65 ;    Dickey   v.  50  Anonymous,  2  Mol.,  499. 

Reed,  78  111.,  261;   People  v.   Bar-  51  Broad  z/.  Wickham,  4  Sim.,  511. 


200  RECEIVERS.  [chap.  VI. 

of  the  receivership,  the  receiver  having  taken  no  steps  to  col- 
lect the  rent  or  to  secure  the  attornment  of  the  tenant.^2  /^^d 
when  a  third  person,  not  a  party  to  a  suit  in  which  a  receiver  is 
appointed  over  an  insolvent  debtor,  claims  title  to  certain  prop- 
erty, under  a  conveyance  from  such  debtor,  it  is  not  proper  to 
determine  the  disputed  question  of  title  upon  proceedings  for 
contempt  in  collecting  the  rents  of  such  property,  the  appro- 
priate proceeding  being  by  an  order  directing  the  receiver  to 
bring  an  action  to  set  aside  the  conveyance.^^ 
•  §  168.  Surrender  of  property  by  defendant  to  receiver; 
void  order ;  surrender  by  purchaser ;  what  not  a  contempt. 
A  defendant,  over  whose  property  a  receiver  is  appointed, 
may  be  attached  for  contempt,  if  he  refuses  to  comply  with  an 
order  of  court  directing  him  to  surrender  all  his  property, 
under  oath,  to  the  receiver. ^^  jsJqj-  ^j-e  such  attachment  pro- 
ceedings a  violation  of  the  constitutional  restriction  against 
imprisonment  for  debt,  since  the  order  directing  the  defendant 
to  deliver  property  or  money  to  the  receiver  is  not  an  order 
for  the  payment  of  an  indebtedness,  and  the  receiver  holds  the 
fund  as  a  trustee  for  the  benefit  of  whoever  may  be  entitled 
thereto.^^  So  the  refusal  of  an  officer  of  a  railway  company, 
over  which  a  receiver  is  appointed,  to  comply  with  an  order 
directing  the  delivery  to  the  receiver  of  all  books  of  the  com- 
pany, and  the  collection  by  such  officer  and  depositing  in  bank 
to  the  credit  of  the  company  of  moneys  due  to  it,  after  the  re- 
ceiver's appointment,  constitute  a  contempt  of  court.^^  But  the 
refusal  in  such  case  constitutes  no  contempt  where  the  order 
was  beyond  the  jurisdiction  and  authority  of  the  court.^'^ 
And  when  defendant  is  ordered  to  assign  and  deliver  his  prop- 

52  Bowery  Savings  Bank  v.  Rich-  55  Ryan  v.  Kingsbery,  88  Ga.,  361, 

ards,  6  Thomp.  &  Cook,  N.  Y.  S.  C,  14  S.  E.,  596. 

59,  3  Hun,  366.  56  American    C.    Co.   v.   Jackson- 

53£;r  parte  Hollis,  59  Cal.,  405.  ville,  T.  &  K.  W.  R.  Co.,  52  Fed., 

54  People  V.  Rogers,  2  Paige,  103 ;  937. 

Ryan  v.  Kingsbery,  88  Ga.,  361,  14  57  St.  Louis,  K.  &  S.  R.   Co.  v. 

S.   R,  596;  Williamson  v.  Pender,  Wear,  135  Mo.,  230,  36  S.  W.,  357, 

127  N.  C,  481,  37  S.  E.,  495.  658,  33  L.  R.  A.,  341. 


CHAP.  VI.]  POSSESSION.  201 

erty  to  a  receiver,  under  oath,  under  direction  of  a  master  in 
chancery,  if  the  plaintiff  seeks  an  actual  deUvery  of  the  property 
in  addition  to  a  legal  assignment,  when  a  portion  of  it  is 
claimed  by  a  third  person  under  an  assignment  from  the  debtor, 
he  must  first  have  the  master  determine  what  property  is  under 
defendant's  control,  and  obtain  an  order  upon  him  to  deliver 
over  such  property.  And  until  this  is  done,  defendant  is  not 
in  contempt  for  disobeying  the  order  of  the  court.^^  And  a 
purchaser  of  property  at  a  sheriff's  sale,  under  execution 
against  a  defendant  over  whose  effects  a  receiver  has  been  ap- 
pointed, is  not  in  contempt  for  refusing  to  comply  with  the 
order  of  a  master,  commanding  him  to  surrender  possession 
of  the  property  to  the  receiver,  if  such  purchaser  has  not  been 
made  a  party  to  the  litigation,  and  has  had  no  opportunity  of 
asserting  his  rights  before  the  court.^^  And  where  a  defendant 
has  been  ordered  by  the  court  to  deliver  certain  notes,  held  by 
him  in  trust,  to  a  receiver  previously  appointed  in  the  action, 
he  will  not  be  held  in  contempt  for  a  refusal  to  deliver  the 
notes  to  the  plaintiff  in  the  action,  or  his  attorney,  when  the 
receiver  himself  has  not  demanded  the  notes.  In  such  a  case 
the  defendant  has  not,  in  strictness,  refused  to  comply  with 
the  order  of  the  court,  and  can  not,  therefore,  be  punished  for 
an  alleged  contempt  for  refusing  to  deliver  the  notes  to  the 
plaintiff.^^  And  where  funds  which  were  on  deposit  in  a  bank 
to  the  credit  of  a  receiver  have  been  attached  and  the  bank 
garnished,  the  refusal  of  the  cashier  to  turn  such  money  over 
to  the  receiver  upon  his  presentation  of  his  check  therefor  con- 
stitutes no  contempt  where  the  order  of  appointment  was  abso- 
lutely void  and  beyond  the  jurisdiction  of  the  court  to  enter. ^^ 
And  where  an  order  has  been  entered  upon  the  appointment  of 

58  Cassilear  v.  Simons,  8  Paige,  61  State  v.  District  Court,  21 
273.  And  see  Parker  v.  Browning,  Mont.,  155,  53  Pac,  272,  69  Am.  St. 
id.,  389.                                                      Rep.",   645.     And  see,  ante,  §   166a 

59  Robeson  v.  Ford,  3  Edw.  Ch.,      and,  post,  §  203. 
441. 

60  Panton  v.  Zebley,  19  How.  Pr., 
394. 


202  RECEIVERS.  [chap.  VI. 

a  receiver  of  a  corporation  directing  that  the  property  of  the 
corporation  be  turned  over  to  the  receiver,  one  who  is  not  a 
party  to  the  suit  can  not  be  held  guilty  of  contempt  for  re- 
fusing to  surrender  property  claimed  by  the  receiver,  which 
he  believes  in  good  faith  belongs  to  others  to  whom  he  would 
in  fact  be  responsible  if  it  did  so  belong  to  them. ^2 

§  169.  Court  itself  must  decide  as  to  compliance  with  its 
order,  and  as  to  attachment  for  contempt.  As  regards 
the  power  of  punishing  a  defendant,  by  attachment  or  other- 
wise, for  a  contempt  of  court  in  refusing  to  obey  an  order 
to  surrender  his  property  to  the  receiver,  the  court  issuing  the 
order  is  the  only  competent  judge  as  to  the  question  of  com- 
pliance. An  attachment,  therefore,  for  contempt  in  such  a  case 
should  be  issued  or  withheld,  sustained,  modified,  or  set  aside, 
only  by  the  direct  order  of  the  court  itself ;  and  it  is  improper 
to  make  the  issuing  of  such  attachment  dependent  upon  the 
judgment  of  a  special  commissioner,  appointed  by  the  court 
to  take  an  account  of  the  property  involved. ^^ 

§  170.  Contempt  for  interference  with  receivership  in 
foreign  country;  what  not  a  contempt.  The  power  of  a 
court  of  equity  over  persons  within  its  jurisdiction  and  sub- 
ject to  its  process,  to  appoint  a  receiver  of  their  property,  sit- 
uated in  foreign  country,  is,  as  has  elsewhere  been  shown,^^ 
well  established.  And  while  the  court  may  not  have  the  means 
of  sending  its  officers  into  the  foreign  country,  to  carry  into 
effect  its  orders  there,  yet  if  the  defendant  within  the  jurisdic- 
tion of  the  court  instructs  his  representatives  or  agents  in  the 
foreign  country  to  resist  the  enforcement  of  the  order  for  the 
receiver,  he  is  guilty  of  resistance  to  the  mandate  of  the  court, 
and  liable  to  punishment  as  for  contempt. ^^     But  where  the 

62  State    V.    Denhatn,    30    Wash.,      within  the  jurisdiction  of  the  Court 
643,  71  Pac,  196.  of  Chancery  there,   a  receiver  was 

63  Geisse  v.  Beall,  5  Wis.,  224.'  appointed   over   his   estates   in   Ire- 

64  Ante,  §  44.  land.     The  defendant  instructed  his 
63  Langford  v.  Langford,  5  L.  J.,      solicitor  in   Ireland   "to   oppose,   as 

N.  S.  Ch.,  60.     In  this  case  the  de-      far   as   the   law   would  permit,    the 
fendant     being     in     England,     and      receivers  of  such  rents  and  profits 


CHAP.  VI.] 


POSSESSION. 


203 


property  is  located  in  a  foreign  country  and  is  therefore  not  in 
the  possession  of  the  receiver,  a  person,  not  a  party  to  the  suit, 
who  takes  proceedings  in  that  country  is  not  guiUy  of  contempt 
for  interfering  with  the  receiver's  possession.66 

§  171.  Actual  interference  necessary  to  contempt;  levy 
and  sale  by  sheriff  under  execution.  To  render  a  person 
liable  to  attachment  for  contempt  of  court  in  interfering  with 
the  possession  of  a  receiver,  there  must  be  an  actual  interfer- 
ence with  or  disturbance  of  the  possession.^'!'  Where,  therefore, 
a  receiver  is  in  the  actual  possession  of  defendant's  real  estate, 
which  is  subject  to  the  lien  of  a  judgment  against  the  defend- 
ant, the  levy  upon  and  sale  of  defendant's  interest  in  the  real 
estate  by  a  sheriff  does  not  disturb  the  receiver's  possession, 
and  is  not  a  contempt  of  court.  The  sheriff,  in  such  case, 
merely  sells  the  interest  of  the  judgment  debtor  in  the  real  es- 
tate, subject  to  all  just  claims  of  the  receiver  or  of  any  other 


from  receiving  the  same."  The  so- 
licitor accordingly  notified  defend- 
ant's tenants  in  Ireland  that  the 
order  of  the  English  Court  of 
Chancery  appointing  a  receiver  was 
of  no  effect  in  Ireland,  and  that  de- 
fendant would  still  enforce  pay- 
ment of  his  rents  as  before.  The 
English  receiver  was  thus  pre- 
vented from  receiving  any  rents. 
Upon  motion  for  a  sequestration 
against  the  defendant  for  the  con- 
tempt, Lord  Langdale,  Master  of 
the  Rolls,  held  as  follows :  "That 
this  is  a  contempt,  I  have  no  doubt. 
It  is  true  that  this  court  has  not 
the  means  of  sending  its  officers  to 
carry  into  effect  its  orders  in  Ire- 
land; but  it  has  jurisdiction  over  all 
persons  in  this  country,  and  can 
compel  obedience  to  its  orders.  The 
defendant  sends  to  his  solicitors  in 
Ireland  to  oppose  by  all  lawful 
means  the  receiver  appointed  by 
this  court  from  receiving  the  rents. 


If  he  meant  by  all  lawful  means 
in  this  country,  there  should  be  no 
resistance  at  all;  because  a  party 
is  not  justified  in  opposing  the 
order  of  the  court;  but  he  says  by 
all  lawful  means  in  Ireland ;  that 
is  to  say,  because  this  court  can  not 
send  its  process  into  Ireland,  there- 
fore Lord  Langford's  agent  is  to 
use  all  means  in  Ireland  to  oppose 
the  order  of  the  court  here."  His 
Honor  said  he  hoped  that  Lord 
Langford  would  see  his  error,  and 
know  that  he  could  not  resist  the 
order  of  this  court ;  and  that  the 
order  for  a  sequestration  must, 
therefore,  be  made,  unless  his  Lord- 
ship ceased  to  interfere  with  the 
officer  of  the  court. 

66  In  re  Maudslay,  Sons  &  Field, 
(1900)  1  Ch.,  602. 

67  Albany  City  Bank  v.  Schermer- 
horn,  9  Paige,  372;  Same  v.  Same, 
10  Paige,  263. 


204  RECEIVERS.  [chap.  VI. 

person,  and  does  not,  therefore,  commit  a  contempt  of  court.^^ 
And  a  mere  formal  levy  by  the  sheriff  upon  property  construct- 
ively under  the  receiver's  control  does  not  constitute  such  a 
disturbance  of  possession  as  to  render  the  sheriff  liable  to  at- 
tachment therefor,  when  immediately  upon  making  the  levy  he 
consents  that  the  receiver  may  take  possession  of  the  interest 
levied  upon  and  dispose  of  the  same,  holding  the  proceeds  sub- 
ject to  the  order  of  the  court  by  which  the  receiver  was  appoint- 
ed. In  such  a  case  the  possession  of  the  court  is  not  disturbed, 
since  the  property  is  placed  in  the  same  situation  which  it  would 
have  occupied  had  the  receiver  in  the  first  instance  reduced  it 
to  actual  possession  and  retained  it  throughout.^^  And  it  has 
been  held  that  the  fact  that  the  property  was  in  the  hands  of  a 
receiver  would  not  prevent  the  prosecution  of  an  action  to  es- 
tablish a  mechanic's  lien  against  the  property. '^^ 

§  172.  Receiver's  title  not  determined  in  proceedings 
for  contempt;  payment  for  property  as  reparation.  In  a 
proceeding  for  contempt  instituted  against  a  claimant  of  prop- 
erty, who  has  taken  it  from  the  receiver's  possession  without  the 
sanction  of  the  court,  the  court  will  not  determine  the  question 
of  the  receiver's  title  or  ultimate  right  to  the  property,  since 
this  can  only  be  tried  in  some  action  appropriate  for  that  pur- 
pose, to  be  instituted  against  the  receiver.  But  when,  in  such 
proceedings  for  contempt,  the  claimant  has  taken  the  property 
out  of  the  state,  and  it  is  impossible  for  the  court  to  compel  its 
restoration  to  the  receiver,  it  is  proper  to  order  him  to  pay  the 
receiver  the  value  of  the  property  by  way  of  reparation. "^^ 

§  173.  Contest  between  different  receivers.  While 
courts  of  equity  will  not  justify  any  unauthorized  interference 
with  the  possession  of  a  receiver  regularly  appointed,  yet  as  be- 
tween two  different  receivers  appointed  over  the  same  property 
in  different  actions,  in  a  contest  as  to  their  right  of  possession, 

68  Albany  City  Bank  v.  Schermer-  70  Richardson     v.     Hickman,     32 
horn,  9  Paige,  372.  Ark.,  406. 

69  Albany  City  Bank  v.  Schermer-  71  hi  re  Day,  34  Wis.,  638. 
horn,  10  Paige,  263. 


CHAP.  VI.]  POSSESSION.  205 

the  court  will  hesitate  to  exercise  its  extreme  powers  against 
the  second  receiver  by  commitment  for  contempt  in  interfer- 
ing with  the  possession  of  the  first,  when  the  dispute  as  to  pos- 
session has  been  determined,  and  the  only  object  of  the  appli- 
cation is  to  compel  payment  of  costs.'^2  ^nd  where,  as  between 
two  receivers  of  the  same  property,  appointed  in  different  pro- 
ceedings, the  question  of  priority  is  determined  adversely  to 
the  receiver  in  possession,  and  he  is  required  to  surrender  the 
property  to  the  other,  he  will  not  be  punished  by  attachment 
for  disobedience  of  the  order  of  the  court  appointing  the 
other  receiver,  when  it  is  apparent  that  he  has  acted  in  good 
faith,  under  authority  of  the  order  appointing  him,  since  he  was 
entitled  to  regard  such  order  as  valid  until  the  question  of  prior- 
ity could  be  determined  by  a  competent  tribunal.'^^ 

§  174.  Receiver  liable  to  attachment  for  not  turning 
over  property  as  directed  by  court.  Since  a  receiver  is 
not  properly  entitled  to  an  appeal  from  an  order  of  the  court 
discharging  him  from  his  trust,  not  being  a  party  in  interest, 
but  merely  the  officer  or  representative  of  the  court,  he  may 
be  compelled  to  turn  over  the  property  as  directed  by  the  order 
for  his  discharge,  notwithstanding  he  has  prayed  an  appeal  to 
an  appellate  court  and  has  filed  an  appeal  bond.  And  if  he 
refuses  to  comply  with  such  order  as  to  the  disposition  of  the 
assets,  obedience  may  be  enforced  by  attachment.  But  the 
court  will  not,  under  such  circumstances,  direct  an  attachment 
to  issue  in  the  first  instance,  when  the  receiver  expressly  dis- 
claims any  intentional  disregard  of  its  authority. "^4 

§  174a.  Receiver  of  corporation  entitled  to  rights  under 
patent.  When  a  corporation  is  dissolved  and  its  property 
and  assets  are  vested  in  a  receiver,  who  is  authorized  by  the 
court  to  continue  the  business,  the  corporation  having  been 
vested  with  the  exclusive  right  to  manufacture  certain  articles 

72  Ward  V.  Swift,  6  Hare,  309,  12         74  /„  re  Rachel  Colvin,  3  Md.  Ch., 
Jur.,  173.  300. 

73  People  V.    Central    City  Bank, 
S3  Barb.,  412,  35  How.  Pr.,  428. 


206  RECEIVERS.  [chap.  VI. 

under  letters  patent,  this  right  passes  to  the  receiver  by  virtue 
of  his  appointment.  And  in  such  case,  a  former  officer  of  the 
corporation  who  engages  in  the  business  of  manufacturing  the 
same  articles,  even  under  a  license  from  the  patentee,  is  guilty 
of  such  an  interference  with  the  possession  and  rights  of  the . 
receiver  as  to  render  him  liable  for  contempt  of  court.'^^ 

§  1 74^.  Form  of  judgment  in  contempt  proceedings.  A 
proceeding  instituted  by  a  receiver  in  the  cause  in  which  he  is 
appointed  against  an  officer  of  a  corporation  defendant,  for 
contempt  of  court  in  withholding  funds  to  which  the  receiver  is 
entitled,  is  not  regarded  as  a  civil  action  for  the  recovery  of 
money.  The  appropriate  judgment  in  such  case,  if  respondent 
is  found  guilty,  is  by  fine  or  imprisonment,  or  both,  and  it  is 
improper  to  render  a  money  judgment  against  respondent 
for  the  recovery  of  the  amount  of  money  which  he  has  refused 
to  surrender  to  the  receiver.'^^ 

75  In  re  Woven  Tape  Skirt  Co.,  76  Edrington  v.  Pridham,  65  Tex., 
12  Hun,  111.  612. 


CHAPTER  VII. 

OF  THE  RECEIVER'S  FUNCTIONS. 

I.  General  Nature  of  His  Functions  §  175 

II.  Sales  by  Receivers  191 

I.  General  Nature  of  His  Functions. 

§  175.  Office  one  of  trust;  limited  discretion;  not  an  assignee;  repre- 
sents all  parties;  not  an  adverse  party;  hiring  employees; 
can  not  profit  at  expense  of  trust;  should  make  inventory; 
may  make  admissions  in  cause. 

176.  Discretion  in  accepting  or  rejecting  bids;  degree  of  care  neces- 

sary. 

177.  Subject  to  court  in  settlement  of  demands  or  suits. 

178.  No  discretion  in  application  of  funds;  when  not  allowed  offset; 

payments  made  in  good  faith. 

179.  Enlargement  of  powers  by  court;  protection  of  court. 

180.  Power  as  to  making  repairs. 

181.  Not  allowed  to  originate  action  under  English  and  Irish  prac- 

tice; practice  in  this  country. 

182.  Custodians  in  the  nature  of  receivers;  same  rules  applicable. 

183.  Exemption  from  arrest  while  attending  court. 

184.  Effect  of  receivership  as  regards  statute  of  limitations. 

185.  Abatement  of  cause  does  not  determine  receiver's  functions; 

order  of  removal  necessary. 

186.  Power  of  court  over  receiver's  contract;  assignee  of  contract 

with  receiver;  lease  of  offices. 

187.  Relative  functions  as  between  different  receivers. 

188.  Entitled  to  advice  and  instruction  of  court;  may  have  his  own 

counsel;  must  show  necessity  therefor;  attorney  and  counsel; 
should  not  employ  counsel  of  party. 

189.  May  receive  money  not  yet  due. 

190.  Effect  on  receiver's  functions  of  appeal  and  supersedeas. 
190o.  Court  may  make  administrative  orders  for  care  of  property 

notwithstanding  appeal  and  supersedeas. 

§  175.  Office  one  of  trust;  limited  discretion;  not  an 
assignee ;  represents  all  parties ;  not  an  adverse  party ;  hir- 
ing employees;  can  not  profit  at  expense  of  trust;  should 
make  inventory;  may  make  admissions  in  cause.  The  of- 
fice of  recei'/er  is  treated  as  one  of  confidence  and  trust,  al- 

207 


208  RECEIVERS.  [chap.  VII. 

though  his  discretionary  powers  are  limited.  As  a  rule  he  may 
do  nothing  to  impair  the  funds  in  his  hands  without  the  order 
of  the  court,  and  may  make  no  dividend  without  the  special 
sanction  of  the  court,  since  the  funds  in  his  possession  are 
considered  as  in  custodia  legis  for  whoever  may  ultimately  es- 
tablish a  title  thereto.^  And  a  receiver  has  no  greater  rights 
than  the  guardian  of  a  ward's  estate,  and  is  not  an  assignee  of 
the  person  over  whose  estate  he  is  appointed,  being  simply 
an  officer  of  the  court  appointed  to  take  charge  of  the  prop- 
erty pending  litigation. ^  And  it  is  necessary  to  a  proper  un- 
derstanding of  the  functions  of  a  receiver,  and  of  the  real  na- 
ture of  his  office,  to  bear  in  mind  that  he  is  not  appointed  for 
the  benefit  merely  of  the  plaintiff  on  whose  application  the  ap- 
pointment is  made,  but  for  the  equal  benefit  of  all  persons  who 
may  establish  rights  in  the  cause,  and  that  he  is  not  the  plain- 
tiff's agent,  but  is  equally  the  representative  of  all  parties  in 
his  capacity  as  an  officer  of  the  court.^  And  since  a  receiver  is 
the  representative  of  all  the  parties,  he  is  in  no  sense  an  adverse 
party  within  the  meaning  of  a  statute  requiring  the  service  of 

1  Hooper  v.  Winston,  24  111.,  353.  was  held  that,  where  a  receiver  was 

2  King  V.  Cutts,  24  Wis.,  627.  appointed    to    manage    and    control 

3  Delany  v.  Mansfield,  1  Hog.,  the  property  of  a  debtor  under  the 
234;  McLeod  v.  City  of  New  Alba-  orders  of  the  court,  it  was  no  part 
ny,  13  C.  C.  A.,  525,  66  Fed.,  378,  of  the  duty  of  the  receiver  to  pre- 
24  U.  S.  App.,  601.  In  the  case  last  sent  the  claim  of  a  creditor,  and 
cited  it  was  held  that,  since  a  re-  where  the  receiver's  report  had  been 
ceiver  represented  all  parties  to  a  filed  and  approved  and  the  assets 
suit  in  defending  against  an  inter-  distributed,  a  claim  which  the  cred- 
vening  petition  filed  by  a  munici-  itor,  through  his  own  negligence, 
pality  to  enforce  the  payment  of  had  failed  to  present  was  barred, 
back  taxes  upon  the  property  in  the  In  Luderbach  Plumbing  Co.  v.  Its 
possession  of  the  receiver,  the  lat-  Creditors,  121  La.,  371,  46  So.,  359, 
ter,  upon  an  appeal  from  an  order  it  was  held  that  the  brother  of  a  re- 
directing such  payment,  could  not  ceiver  might  buy  up  claims  against 
object  that  certain  of  the  parties  to  the  estate  where  there  was  no  sug- 
the  proceeding  had  not  been  form-  gestion  that  the  receiver  was  in  any 
ally  notified  of  the  filing  of  the  way  interested  with  him  in  the  pur- 
intervening  petition.      In  Halsted  v.  chase. 

Forest  Hill   Co.,   109   Fed.,   820,   it 


CHAP.  VII.]  FUNCTIONS.  209 

notice  of  an  appeal  by  appellant  upon  the  adverse  party.*  If 
he  is  empowered  by  the  court  to  continue  the  management  of 
the  business  over  which  he  is  appointed,  he  may  employ  such 
persons  as  may  be  necessary  for  this  purpose,  and  the  court 
will  not  interfere  with  his  discretion  as  regards  such  employ- 
ment unless  some  abuse  is  shown. ^  And  since  a  receiver  occu- 
pies a  position  of  confidence,  he  will  not  be  permitted  to  profit 
at  the  expense  of  his  trust.  Thus,  where  a  receiver  purchases 
at  a  discount  claims  which  are  payable  out  of  the  funds  in  his 
possession,  he  is  not  entitled  to  credit  in  the  settlement  of  his 
accounts  for  the  full  face  value  of  such  claims  but  only  for  the 
amount  which  he  actually  paid  for  them.^  And  it  is  held  that  a 
trusted  clerk  of  a  receiver  can  not,  by  taking  advantage  of  his 
knowledsfe  of  the  affairs  of  the  debtor  over  whom  the  receiver 
has  been  appointed,  buy  up  claims  and  make  a  secret  profit  out 
of  the  administration  of  the  estate;  and  having  made  such  a 
profit  ^nd  having  invested  the  proceeds  in  real  estate,  it  was 
held  that  the  receiver  could  maintain  a  bill  in  equity  to  declare 
a  constructive  trust  in  the  land."^  And  one  of  the  first  duties 
of  a  receiver,  immediately  after  his  appointment,  is  to  make  a 
complete  inventory  of  all  the  property  which  has  come  into  his 
hands. 8  xA.nd  as  the  representative  and  custodian  of  the  estate 
in  his  possession,  a  receiver  may,  subject  to  the  supervision  of 
the  court,  bind  it  by  admissions  made  in  good  faith  in  the 
progress  of  a  suit.^ 

§  176.  Discretion  in  accepting  or  rejecting  bids;  degree 
of  care  necessary.  In  the  management  of  property  in- 
trusted to  their  charge,  receivers  are  vested  with  a  certain  de- 

4  Medynski    v.    Theiss,    36    Ore.,  8  Jn  re  Receivership  of  the  N.  I. 
397,  59  Pac,  871.                                       C.   Mill   Co,   109  La.,  875,   33   So., 

5  Taylor  v.  Sweet,  40  Mich.,  736.      903. 

As  to  management  of  business  by  9  Bosworth  v.  St.  Louis  Terminal 

a  receiver  generally,  see  ante,  §  36.  R.  Assn.,  174  U.  S.,  182,  19  Sup.  Ct. 

6  Roller  v.  Paul,  106  Va.,  214,  55  Rep.,  625,  43  L.  Ed.,  941,  modifying 
S.  E.,  558.  and  affirming  S.  C,  26  C.  C.  A.,  279, 

7  Gilbert  v.   Hewetson,  79  Minn,  80  Fed.,  969,  53  U.  S.  App.,  302. 
326,  82  N.  W,  655,  79  Am.  St.  Rep., 

486. 

Receivers — 14. 


9 


210  RECEIVERS.  [chap.  VII. 

gree  of  discretion  for  which  they  are  responsible  to  the  court 
appointing  them,  and  in  the  exercise  of  which  they  are  subject 
to  its  control ;  and  if  they  act  in  good  faith  and  without  preju- 
dice to  the  rights  of  the  parties  in  interest,  their  action  will  be 
sustained  by  the  court.  For  example,  when  receivers  have  ad- 
vertised for  proposals  for  leasing  property  under  their  control, 
they  may  exercise  a  wide  discretion  in  accepting  or  rejecting 
bids  received,  and  are  not  bound  to  lease  the  property  for  the 
highest  price  offered,  without  regard  to  the  bidder  or  to  the  dis- 
position he  may  make  of  the  property.  And  the  advertisement 
of  the  receivers,  in  such  a  case,  does  not  constitute  such  a  con- 
tract with  the  bidder  as  to  compel  them  to  take  the  highest  bid, 
nor  does  it  limit  them  to  a  certain  time  within  which  to  receive 
bids.  If,  therefore,  the  receivers,  in  the  exercise  of  their  dis- 
cretion, have  awarded  the  lease  of  the  premises  to  a  particular 
bidder,  and  have  acted  prudently  in  the  matter  and  with  regard 
to  the  best  interests  of  the  trust  committed  to  their  charge, 
the  court  will  not  entertain  the  application  of  another  bidder 
to  compel  the  receivers  to  execute  a  lease  to  him.^*^  And  in 
handling  the  trust  estate  in  his  possession,  a  receiver  should 
exercise  the  same  degree  of  discretion  which  an  ordinarily 
prudent  man  of  business  would  exercise  in  the  management  of 
his  own  affairs.ll 

§  177.  Subject  to  court  in  settlement  of  demands  or 
suits.  The  power  of  courts  over  their  own  receivers,  in- 
cluding their  authority  to  control  them  in  the  settlement  of 
all  demands  against  the  property  held  by  them  in  their  capacity 
as  receivers,  is  well  established,  and  as  officers  of  the  court  it  is 
their  duty  to  obey  all  orders  of  the  court  in  this  regard.  And  it 
is  equally  the  duty  of  the  court  appointing  a  receiver  to  com- 
pel the  settlement  of  claims  against  the  property  in  his  posses- 
sion in  the  most  expeditious  manner,  and  so  as  to  avoid  litiga- 

10  Knott  V.   Receivers  of  Morris  H  McKennon     v.      Pentecost,     8 

Canal  &  Banking  Co.,  3  Green  Ch.,      Okla.,  117,  56  Pac,  958. 
423. 


CHAP.  VII.]  FUNCTIONS.  211 

tion  and  expense  to  the  fund  in  charge  of  the  court.^2  /^ri^j 
the  right  of  a  receiver  to  settle  claims  and  compromise  actions 
with  the  approval  and  sanction  of  the  court  is  well  recognized. ^^ 
And,  in  the  absence  of  an  abuse  of  discretion,  the  action  of  the 
court  in  authorizing  its  receiver  to  compromise  an  action  will 
not  be  disturbed  upon  appeal. ^^ 

§  178.  No  discretion  in  application  of  funds;  when  not 
allowed  offset;  payments  made  in  good  faith.  A  receiver 
has  in  general  no  discretion  in  the  application  of  funds  in  his 
hands  by  virtue  of  his  receivership,  but  holds  them  strictly  sub- 
ject to  the  order  of  the  court,  to  be  disposed  of  as  the  court 
may  direct.^^  He  will  usually  be  required  to  pay  over  funds 
in  his  hands  to  the  persons  who  are  ratably  entitled  thereto, 
rather  than  to  invest  them,  when  the  persons  entitled  are  al- 
ready ascertained,  and  when  there  can  be  no  difficulty  in  carry- 
ing out  the  direction  of  the  court  in  this  respect.^^  And  when 
he  is  ordered  to  make  any  particluar  disposition  of  funds  in  his 
hands,  as,  for  example,  to  return  money  to  the  person  from 
whom  he  collected  it,  he  will  not  be  allowed  to  offset  his  own 
personal  claims  against  the  person  to  whom  he  is  directed  to 
return  the  money,  since  to  allow  this  would  render  the  dis- 
position of  the  money  as  uncertain  as  before  the  receiver's 
appointment,  and  would  thus  defeat  the  very  object  of  his 
appointment.^'^     He  will  be  protected  as  to  payments  made 

12  Guardian     Savings    Institution  16  Collins  v.  Case,  25  Wis.,  651. 
V.  Bowling  Green  Savings  Bank,  65          17  Johnson    v.    Gunter,    6    Bush, 
Barb.,  275.  534,      Mr.    Justice    Peters,    for    the 

13  Alexander  t/.  Maryland  T.  Co.,  court,  says,  p.  536:  "If  the  mere 
106  Md.,  170,  66  Atl.,  836;  State  v.  agent  or  instrument  of  the  court 
Bank  of  Rushville,  57  Neb.,  608,  78  can  be  permitted,  after  receiving 
N.  W.,  281 ;  Insurance  Commis-  funds  under  its  order,  to  set  up 
sioner  v.  C.  M.  Ins.  Co.,  20  R.  I.,  claims  to  them  wholly  foreign  to 
7,  36  Atl.,  930.    And  see, /'o.j/,  §  336.  the  object  of  his  appointment,  the 

14  State  V.  Bank  of  Rushville,  57  position  of  a  receiver  is  perverted 
Neb.,  608,  78  N.  W.,  281.  into  that  of  a  speculator  in   funds, 

15  Johnson  v.  Gunter,  6  Bush,  constructively  at  least  in  court,  and 
534;  State  Central  Savings  Bank  v.  their  destiny  becomes  as  uncertain 
Ball-Bearing  Chain  Co.,  118  Iowa,  after  they  enter  the  precincts  of  the 
698,  92  N.  W.,  712.  court    as    before.      The    court    will 


212  RECEIVERS.  [chap.  VII. 

in  good  faith,  under  an  existing  order  of  court,  although 
such  order  is  afterwards  reversed  upon  appeal.  In  such  case 
he  will  not  be  directed  in  the  first  instance  to  repay  the  mon- 
ey to  the  person  who  is  found  to  be  entitled  thereto;  but  if 
the  money  has  been  applied  under  the  order  of  court  to  a 
particular  purpose,  as  in  payment  of  counsel  fees,  the  court 
may  compel  its  restitution  to  the  receiver,  who  may  then  be 
required  to  make  payment  to  tlie  proper  person. l^ 

§  179.  Enlargement  of  powers  by  court;  protection  of 
court.  It  frequently  happens  that  an  enlargement  of  a 
receiver's  powers  becomes  necessary  in  order  that  he  may 
properly  discharge  his  trust,  or  because  of  obstructions  or 
resistance  which  he  may  receive  in  attempting  to  perform  his 
duties.  In  such  cases  it  is  the  province  of  the  court  which  has 
appointed  him,  upon  the  facts  being  properly  presented,  to  en- 
large his  powers  and  to  afford  him  the  necessary  protection  in 
the  performance  of  his  duties.^^ 

§  180.  Power  as  to  making  repairs.  Receivers  are  not 
usually  permitted,  at  their  own  discretion,  to  apply  funds  in 
their  hands  in  repairing  or  improving  the  premises  under  their 
control,  without  a  previous  application  to  the  court  and  obtain- 
ing leave  so  to  do.^*^  If,  however,  a  receiver  has  made  repairs 
without  permission,  a  reference  may  be  had  to  a  master  to  in- 
quire whether  they  were  reasonable. ^l  And  if,  upon  reference 
to  a  master,  it  is  found  that  the  repairs  were  necessary  and 
proper,  and  for  the  lasting  benefit  and  improvement  of  the  es- 
tate, they  may  be  allowed  by  the  court.^^  And  a  general  direc- 
tion to  a  receiver  of  landed  property  to  manage  it,  authorizes 
him  to  propose  to  the  master,  from  time  to  time,  to  make  all 

not  thus  permit  itself  to  be  made  a  20  Blunt    v.     Clitherow,    6    Ves., 

quasi  suitor."  799;  Attorney-General  v.  Vigor,  11 

18  In  re  Home  P.  S.  F.  Associa-  Ves.,  563. 

tion,  129  N.  Y.,  288,  29  N.  E.,  323.  21  Attorney-General  v.   Vigor,   11 

I'?  Ohio  Turnpike  Co.  v.  Howard,  Ves.,  563. 

1  Western  Law  Journal  216;  State  22  Blunt    v.     Clitherow,    6    Ves., 

V.   City   of   New   Orleans,    106   La.,  799. 
469,  31  So.,  55. 


CHAP.  VII.]  FUNCTIONS.  213 

ordinary  repairs,  and  a  special  application  to  the  court  for  that 
purpose  is  unnecessary  in  such  case.^S 

§  181.  Not  allowed  to  originate  action  under  English 
and  Irish  practice;  practice  in  this  country.  It  seems  to 
be  the  estabhshed  rule  in  England,  that  a  receiver  in  a  cause  is 
not  allowed  to  originate  any  steps  or  proceedings  therein  of  his 
own  motion,  but  should  leave  the  parties  to  the  cause  to  make 
all  applications  for  that  purpose.  The  rule,  however,  is  not 
without  exception,  and  when  the  parties  are  guilty  of  great 
delay  or  laches  in  moving,  the  receiver  is  justified  in  himself 
proceeding.24  Under  the  practice  of  the  Irish  Court  of  Chan- 
cery, it  is  also  held  that  a  receiver  should  not,  of  his  own  mo- 
tion, interfere  with  the  rights  of  parties  to  the  cause  by  ap- 
plications to  the  court,  and  that  court  has  always  manifested  an 
extreme  reluctance  to  granting  orders  upon  motions  made  by  a 
receiver  himself,  upon  the  ground  that  he  should  not  assume  to 
himself  the  management  of  the  cause.^^  Thus,  a  motion  made 
by  a  receiver  to  let  certain  lands  under  his  control  has  been  re- 
fused by  that  court,  on  the  ground  that  such  a  motion  should 
properly  come  from  the  plaintiff  in  the  cause. ^6  So  it  has  been 
held  that  an  application  to  the  court  for  directions  as  to  whether 
a  mortgage  on  the  lands  subject  to  the  receivership  should  be 
paid,  should  be  made  by  the  parties  to  the  cause,  and  not  by  the 
receiver.27  So,  too,  a  motion  by  a  receiver  for  permission  to 
bring  an  ejectment  against  certain  lands  in  possession  of  one 
of  the  defendants  has  been  denied,  on  the  ground  that  it  was 
not  the  proper  function  of  the  receiver  to  carry  on  plaintiff's 
cause  upon  a  question  involving  the  relative  rights  of  the  par- 
ties.28  In  this  country,  however,  the  courts  have  inclined  to  a 
broader  view  of  the  proper  functions  of  a  receiver,  and  it  is 

23Thornhill      v.     Thornhill,      14  see   Callaghan  v.   Reardon,    Sail.   & 

Sim.,  600.  Sc,  682;  Clark  v.  Fisher,  id..  684. 

24  Ireland  v.   Eade,   7  Beav..   55 ;  2G  Wrixon  v.  Vize,  5  Ir.  Eq.,  276. 
Parker  v.  Dunn,  8  Beav.,  497.  27  O'Connor  v.  Malone,  1  Ir.  Eq., 

25  O'Connor  v.  Malone,  1  Ir.  Eq.,  20. 

20;  Wrixon  v.  Vize,  5  Ir.  Eq.,  276;  28  Comyn  v.  Smith,  1  Hog.,  81. 

Comyn  v.   Smith,  1  Hog.,  81.     And 


214  RECEIVERS.  [chap.  VII. 

believed  that  his  right  to  apply  to  the  court  for  directions  as  to 
the  management  of  the  estate,  or  for  leave  to  institute  any  nec- 
essary proceedings  connected  therewith,  is  generally  recognized 
by  the  courts  in  most  of  the  states.^^ 

§  182.  Custodians  in  the  nature  of  receivers;  same  rules 
applicable.  When  custodians  of  a  fund  which  is  in  litiga- 
tion occupy  the  same  relation  to  the  fund  and  to  the  court  as 
regularly  appointed  receivers,  their  functions  or  possession 
differing  only  in  name,  it  would  seem  that  they  are  to  be  gov- 
erned as  to  their  rights  and  liabilities  by  the  same  rules  which 
apply  in  the  case  of  receivers.  And  it  follows,  necessarily,  that 
since  they  are  bound  to  obey  the  orders  of  the  court  in  relation 
to  the  fund  in  their  possession,  they  are  entitled  to  the  protec- 
tion of  the  court  against  all  loss  by  reason  of  disbursements 
which  were  necessary  and  proper,  and  such  as  a  reasonable 
and  prudent  man,  acting  as  receiver,  would  have  been  justified 
in  incurring.^^ 

§  183.  Exemption  from  arrest  while  attending  court. 
Under  the  Irish  chancery  system,  a  receiver  is  exempt  from 
arrest  while  in  attendance  upon  the  court ;  and  when  a  receiver 
was  in  attendance  upon  a  motion  made  against  him  in  the 
course  of  his  receivership,  and  was  arrested  for  debt  under  a 
ca.  sa.,  he  was  discharged  upon  the  ground  that  he  was  privi- 
leged from  arrest. ^1 

§  184.  Effect  of  receivership  as  regards  statute  of  limi- 
tations. The  appointment  of  a  receiver  over  an  estate  or 
property  does  not  alter  or  affect  the  rights  of  parties  as  regards 
the  operation  of  the  statute  of  limitations.^^  And  a  payment 
made  by  a  receiver  to  one  of  the  parties  in  the  cause,  out  of 
funds  collected  by  him  in  his  receivership,  is  not  regarded  as  a 
payment  made  by  the  debtor,  to  the  extent  of  being  an  acknowl- 
edgment of  the  indebtedness  so  as  to  take  the  cause  out  of  the 

29  See   Neun  v.  Blackstone  B.  &  32  Harrison  v.  Dignan,  1  Con.  & 
L.  Assn.,  149  Mo.,  74,  50  S.  W.,  436.  Law.,  376 ;   Kyme  v.   Dignan,  4  Ir. 

30  Adams  v.  Haskell,  6  Cal.,  475.  Eq.,"   562.     But    see    Kirkpatrick  v. 

31  Brabazon    v.    Teynham,    2    Ir.  McElroy,  41  N.  J.  Eq.,  539,  7  Atl., 
Ch.,  N.  S.,  563.  647. 


CHAP.  VII.]  FUNCTIONS.  215 

Statute  of  limitations,  since  such  payment  is  made  by  the  receiv- 
er in  his  official  capacity  and  as  an  officer  of  the  court,^^  But  it 
has  been  held  that  the  appointment  of  a  receiver  prevents  the 
statute  of  limitations  from  running,  at  least  in  a  court  of  equity, 
in  favor  of  a  stranger  to  the  suit.^^ 

§  185.  Abatement  of  cause  does  not  determine  receiv- 
er's functions;  order  of  removal  necessary.  The  abate- 
ment of  the  cause  in  which  a  receiver  was  appointed  does  not 
necessarily  determine  his  functions,  and  his  authority  is  regard- 
ed as  continuing  until  an  order  for  his  removal.  And  until 
such  order,  he  may  continue  to  take  the  necessary  steps  to  en- 
force the  collection  of  rents,  which  it  is  still  his  duty  to  receive 
and  account  for.^^ 

§  186.  Power  of  court  over  receiver's  contract;  assignee 
of  contract  with  receiver ;  lease  of  offices.  Since  a  receiver 
is  an  officer  of  the  court,  and  all  contracts  made  with  him  are 
subject  to  ratification  by  the  court,  it  has  undoubted  power  to 
vacate  or  modify  any  agreement  or  contract  which  the  receiver 
has  made,  and  to  direct  the  making  of  another  agreement; 
but  it  will  not  exercise  such  power  without  notice  and  without 
hearing  the  contracting  parties. ^^  And  where  one  who  enters 
into  a  contract  with  a  receiver  assigns  his  interest  therein  to 
another,  who  agrees  to  be  bound  by  the  conditions  of  the  con- 
tract, such  assignee  thereby  submits  himself  to  the  jurisdiction 
of  the  court ;  and  the  court,  upon  proper  notice,  has  the  power  to 
vacate  the  contract  on  account  of  the  refusal  of  the  assignee  to 
fulfil  his  obligations  thereunder.^'^  And  since  a  receiver  has  no 
power  to  make  contracts  without  the  authority  of  the  court, 
all  persons  contracting  with  him  are  chargeable  with  knowledge 

33  Whitely  v.  Lowe,  2  DeG.  &  J.,  corporation  to  enforce  its  contracts, 
704,  affirming  S.  C,  25  Beav.,  421.  see  Florence  Gas,  E.  L.  &  P.  Co.  v. 

34  Wrixon  V.  Vize,  3  Dr.  &  War.,  Hanby,    101    Ala.,    15,    13    So.,    343. 
104.  And  see  Lazear  v.  Ohio  Valley  S. 

35  Newman  v.  Mills,  1  Hog.,  291.  F.  Co.,  65  West  Va.,  105,  —  S.  E., 

36  Mooney  v.  British  Commercial  — . 

Life     Insurance     Co.,    9    Ab.     Pr.,  37  Pacific    Lumber    Co.    v.    Pres- 

N.  S.,  103.     As  to  the  right  of  the      cott,  40  Ore.,  374,  67  Pac,  207. 
court  to  authorize  the  receiver  of  a 


216  RECEIVERS.  [chap.  VII. 

of  his  functions  in  this  regard  and  contract  at  their  peril. ^^ 
So  a  receiver  of  a  railway  has  no  power,  without  the  sanction 
of  the  court,  to  lease  offices  for  a  term  of  years,  even  though  by 
tlie  order  appointing  him  he  is  authorized  to  make  all  contracts 
which  may  be  necessary  in  carrying  on  the  business  of  the  road, 
subject  to  the  supervision  of  the  court. -^^ 

§  187.  Relative  functions  as  between  different  receivers. 
A  receiver  may  be  appointed  to  take  charge  pendente  lite 
of  the  fund  in  controversy,  notwithstanding  a  receiver  has 
previously  been  appointed  over  the  same  fund  in  another  action. 
But  in  such  case  the  powers  and  functions  of  the  second  re- 
ceiver are  subordinate  to  those  of  the  first,  and  he  is  only  en- 
titled to  custody  of  the  fund,  or  of  so  much  as  remains  of  it, 
after  the  first  receiver  has  become  functus  oificioA^ 

§  188.  Entitled  to  advice  and  instruction  of  court;  may 
have  his  own  counsel;  must  show  necessity  therefor;  at- 
torney and  counsel;  should  not  employ  counsel  of  party. 
A  receiver  being  always  regarded  as  an  officer  of  the  court, 
and  at  all  times  subject  to  its  direction  and  orders,  it  is  proper, 
in  the  discharge  of  his  official  duties,  that  he  should  on  suitable 
occasions  apply  to  the  court  for  instruction  and  advice ;  and  he 
is  at  all  times  entitled  to  such  advice  from  the  court,  and  should 
not  hesitate  to  apply  for  it  when  questions  of  intricacy  or  diffi- 
culty occur.'*^  Such  an  application  may  be  made  ex  parte/^ 
although  it  is  deemed  the  better  practice  to  give  notice  to  all 

38  Tripp  V.  Boardman,  49  Iowa,  41  Jn  re  Van  Allen,  37  Barb.,  225 ; 
410;  Ellis  V.  Little,  27  Kan.,  707;  Smith  v.  New  York  Consolidated 
Hendrie  &  Bolthoff  Co.  v.  Parry,  Stage  Co.,  28  How.  Pr.,  377,  18  Ab. 
Z7  Colo.,  359,  86  Pac.,  113.  Pr.,  431;   Curtis  v.   Leavitt,    1   Ab. 

39  Chicago  Deposit  Vault  Co.  v.  Pr.,  274 ;  Lottimer  v.  Lord,  4  E.  D. 
McNulta,  153  U.  S.,  554,  14  Sup.  Ct.  Smith,  191 ;  Cammack  v.  Johnson, 
Rep.,  915,  38  L.  Ed.,  819.  To  the  1  Green  Ch.,  163;  People  v.  Secu- 
same  effect,  see  Braman  v.  Farmers'  rity  Life  Insurance  Co.,  79  N.  Y., 
L.  &  T.  Co.,  51  C.  C.  A.,  644,  114  267. 

Fed.,  18.  42  Allen  v.  Cooky,  53  S.  C,  414, 

40  Bailey  v.  Belmont,  10  Ab.  Pr.,      31  S.  E.,  634. 
N.  S.,  270;  Bailey  v.  O'Mahoney,  33 

N.  Y.  Supr.  Ct.  R.,  239. 


CHAP.  VII.]  FUNCTIONS.  217 

parties  in  interest  in  the  estate  or  fund.'*^  And  a  receiver  acts 
at  his  peril  where  he  assumes  to  determine  as  between  different 
claimants  to  the  fund  in  his  possession  without  seeking  the  ad- 
vice of  the  court."*^  And  since  the  receiver  in  a  cause  is  not  the 
representative  or  receiver  of  the  person  at  whose  instance  he  is 
appointed,  he  should  not  act  under  his  advice  or  that  of  his 
counsel,  but  in  all  cases  of  doubt,  and  especially  when  there  is  a 
conflict  of  interest,  he  should  obtain  the  direction  of  the  court; 
and  he  will  be  allowed  to  and  should  obtain  counsel  for  him- 
self.^^  Indeed,  it  has  been  held  reversible  error  to  make  an  al- 
lowance of  counsel  fees  to  a  receiver's  attorney  who  also  repre- 
sented the  plaintiff  in  the  action. ^^  But  while  a  receiver  is 
entitled  as  a  matter  of  right  to  counsel  where  the  nature  of  his 
duties  requires  it  and  while  he  usually  selects  his  own  counsel, 
he  can  not  make  any  contract  for  hiring  or  agreement  for 
compensation  which  will  in  any  way  be  binding  upon  the  court, 
for  it  is  the  function  of  the  court  to  determine  the  necessity 
for  the  employment  of  counsel  and  the  compensation  to  be 
allowed.'*''^  Nor  will  a  receiver  be  permitted  to  employ  counsel 
unless  the  services  of  one  are  reasonably  necessary  and  then 
only  to  the  extent  that  they  are  thus  required ;  nor  should  a  re- 
ceiver, in  such  case,  except  under  extraordinary  circumstances, 
employ  different  persons,  one  as  his  attorney  and  another  as 
counsel.'*^  And  in  making  an  application  for  the  employment 
of  counsel,  the  receiver  must  show  some  necessity  for  such  em- 
ployment.'*^  And  it  is  held  that  the  action  of  the  lower  court 
in  advising  and  instructing  its  receiver  will  not  be  disturbed 
upon  appeal  unless  there  has  been  a  clear  abuse  of  discretion.^*^ 

43  Smith    v.    New    York    Consol-  47  Hickey  v.  Parrott  S.  &  C.  Co., 
idated    Stage    Co.,    28    How.    Pr.,      32  Mont.,  143,  79  Pac,  698. 

377,  18  Ab.  Pr.,  431.  48  Harrigan     v.      Gilchrist.      121 

44  In  re  Hone,  153  N.  Y.,  522,  47      Wis.,  127,  437,  99  N.  W.,  909,  1008. 
N.  E.,  798.  49  Terry  v.  Martin,  7  New  Mex., 

45Lottimer    v.    Lord,    4    E.    D.  54,  32  Pac,  157. 

Smith,  191.  50  State  v.  Bank  of  Rushville,  57 

46  Veith  V.  Ress,  60  Neb.,  52,  82  Neb.,  608,  78  N.  W.,  281. 
N.  W.,  116.  And  see,  post,  §  216. 


218  RECEIVERS.  [chap.  VII. 

§  189.  May  receive  money  not  yet  due.  When  a  re- 
ceiver is  appointed  pendente  lite,  and  is  authorized  by 
the  order  of  the  court  to  sue  for  and  collect  such  debts  as  are 
due  and  may  become  due,  he  may  properly  receive  not  only 
money  which  is  actually  due,  but  money  not  yet  due,  and  may 
give  a  receipt  and  satisfaction  therefor.^^  So  if  he  is  author- 
ized by  the  order  of  the  court  appointing  him  to  execute  and 
acknowledge  for  record  formal  satisfaction  of  all  real-estate 
mortgages  which  come  to  his  hands  as  receiver,  upon  payment 
or  collection  by  him  of  the  debts  which  they  were  given  to  se- 
cure, he  may  receive  payment  of  and  discharge  a  mortgage 
which  is  not  yet  due.^^ 

§  190.  Effect  on  receiver's  functions  of  appeal  and  su- 
persedeas. If  an  appeal  is  taken  from  an  order  appointing 
a  receiver,  and  the  appellate  court  grants  a  supersedeas  and 
directs  the  receiver  to  undo  what  he  has  done,  and  to  restore  to 
its  original  owners  the  property  which  he  has  taken,  his  author- 
ity is  thereby  completely  suspended  and  rendered  nugatory  by 
operation  of  law\  And  while  the  supersedeas  does  not  render 
nugatory  or  unlawful  any  action  of  the  receiver,  had  under 
the  order  of  the  court  below  before  the  appeal  was  taken,  it 
forbids  that  court  and  its  officer  from  further  acting  in  the 
matter.  The  power  of  the  court  below  being  suspended,  the 
power  of  its  officer  necessarily  becomes  inoperative.  If, 
therefore,  the  receiver  refuses  to  obey  the  mandate  of  the  ap- 
pellate court,  and  continues  to  exercise  the  functions  of  his 
office,  he  is  guilty  of  a  contempt  of  court,  and  may  be  pun- 
ished by  imprisonment  until  he  complies  with  the  order.^^ 
And  where  a  receiver  has  been  appointed  and  has  taken  pos- 
session of  the  property  of  the  defendant,  and  afterward  an 
appeal  is  taken  from  the  order  of  appointment  and  a  supersedeas 
bond  is  filed  in  accordance  with  the  provisions  of  the  statute,  the 

51  Olcott    V.    Heermans,    3    Hun,  53  State  v.  Johnson,  13  Fla.,  33. 
431.                                                            And  see,  ante,  §§  29  and  161. 

52  Heermans  v.   Clarkson,  64  N. 
Y.,  171. 


CHAP.  VII.]  FUNCTIONS.  219 

power  of  the  receiver  is  entirely  suspended  thereby,  and  upon 
being  notified  of  the  filing  of  the  bond,  it  is  his  duty  to  imme- 
diately restore  to  the  defendant  the  possession  of  the  proper- 
ty. 5'*  So  where,  upon  the  granting  of  an  appeal,  the  reviewing 
court  has  issued  a  writ  of  supersedeas  requiring  a  receiver  to 
restore  to  the  defendants  the  possession  of  certain  property 
which  had  been  taken  from  them  as  the  result  of  the  receiver- 
ship proceeding,  the  refusal  of  the  receiver  to  obey  the  writ 
constitutes  a  contempt  for  which  he  may  be  punished  by  impris- 
onment. And  in  such  case  it  is  no  defense  that  the  action  of  the 
receiver  was  based  upon  the  advice  of  counsel.  And  while, 
ordinarily,  the  fact  that  the  action  was  based  upon  such  ad- 
vice will  be  received  in  mitigation  of  the  punishment,  this  re- 
sult will  not  follow  where  it  is  clear  that  this  defense  is  a  mere 
pretense  and  that  the  action  of  the  receiver  was  willful  and  de- 
liberate. Nor  can  the  receiver  defend  upon  the  ground  that 
the  writ  was  too  broad  in  its  effect,  since  his  remedy  in  such 
case  was  to  apply  to  the  court  for  a  modification. ^5  And  where 
an  appeal  has  been  perfected  and  a  supersedeas  bond  filed,  the 
court  has  no  jurisdiction  to  pass  the  final  account  of  the  re- 
ceiver and  order  his  discharge.56  But  when  by  a  final  decree 
the  receiver  is  directed  to  pay  over  the  fund  in  his  hands  to  the 
person  found  to  be  entitled  thereto,  he  may  properly  make  such 
payment  before  an  appeal  from  the  decree  is  perfected  by  giv- 
ing a  bond  to  operate  as  a  supersedeas.  And  in  such  case,  al- 
though the  decree  is  finally  reversed  upon  appeal,  the  receiver 
can  not  be  again  required  to  account  for  the  money  so  paid.^'^ 

54  Farmers'  National  Bank  v.  A.,  615,  106  Fed.,  775.  And  see 
Backus,  63  Minn.,  115,  65  N.  W.,  this  case  to  the  effect  that  where 
255 ;  Buckley  -v.  George,  71  Miss.,  the  punishment  is  fixed  at  imprison- 
580,  15  So.,  46;  State  v.  Hirzel,  137  ment,  the  costs  of  the  contempt 
Mo.,  435,  37  S.  W.,  921,  38  S.  W.,  proceedings  should  not  be  taxed 
961 ;  Rumney  v.  Donovan,  28  Mont.,  against  the  receiver. 

69,  72  Pac,  305.     And  see  State  v.  56  Brundage    v.    Home    S.    &    L. 

Bell,  36  Wash.,   196,  78  Pac,  908.  Assn.,  11  Wash.,  288,  39  Pac,  669. 

Contra,   Bristow  v.    Home   B.   Co.,  57  Hovey    v.    McDonald,    109    U. 

91  Va.,  18,  20  S.  K,  946.  S.,  ISO,  3  Sup.  Ct.  Rep.,  136. 

55  Tornanses  v.  Mel  sing,  45  C.  C. 


220  RECEIVERS.  [chap.  VII. 

§   190(7.  Court  may  make  administrative  orders  for  care 
of  property  notwithstanding  appeal  and  supersedeas.    An 

appeal  from  a  linal  decree  in  a  receivership  cause  and  the  grant- 
ing of  a  supersedeas  upon  the  tiHng  of  the  proper  bond  will 
not  have  the  effect  of  depriving  the  lower  court  of  the  right 
to  make  all  necessary  administrative  orders  for  the  proper  care 
and  preservation  of  the  property  in  its  charge.  In  such  case 
the  property  is  still  in  the  custody  of  the  court  through  its  re- 
ceiver and  it  is  the  duty  of  the  receiver,  under  the  directions  of 
the  court,  to  protect  and  preserve  the  property  or  fund  for 
the  benefit  of  the  persons  who  shall  ultimately  be  adjudged  to 
be  entitled  thereto. ^^ 

58  Lamb  v.  Rowan,  81  Miss.,  369,  33  So.,  4. 


CHAP.  VII.]  FUNCTIONS.  221 


11.  Sales  by  Receivers. 

§  191.     Sale  subject  to  action  of  court;  does  not  divest  existing  liens; 
may  be  conducted  by  master  in  chancery  or  agent  of  receiver. 

192.  Court  vested  with  power  of  sale  whenever  necessary,  although 

rights  in  property  not  ascertained;  sale  of  steamboat. 

193.  Receiver  can  not  purchase  at  his  own  sale;  general  rule  as  to 

trustees  applicable;  can  not  purchase  in  name  of  wife. 

194.  Illustrations   of   the   rule;   purchase   in   receiver's   interest   set 

aside. 

195.  Departure  from  rule  by  consent  of  parties. 

196.  Order  for  receiver's  sale  can  not  be  questioned  collaterally; 

illustrations. 

197.  Satisfactory  evidence  required  as  to  necessity  for  sale;  order 

should  be  specific;  sale  to  pay  taxes. 

198.  Discretion  as  to  sales  in  bulk  or  by  parcels;  private  sale;  ex 

parte  application;  stockholder  of  corporation  may  object; 
improper  advertisement;  notice  of  sale;  order  of  sale  appeal- 
able; same  of  order  confirming  sale  of  real  estate. 

199.  Receiver's  power  to  execute  deed;  when  deed  should  be  made. 
199fl.  Sale  subject  to  incumbrances;  title  of  third  person;  partner- 
ship; dower  interest. 

I99b.  Doctrine  of  caveat  emptor  applied. 

199c.  Confirmation  of  sale  unnecessary;  when  confirmation  not  re- 
fused; no  redemption  from  sale. 
\99d.  Fraudulent  sale  by  receiver. 
199c.  Sale  must  take  place  at  time  designated  by  court. 

§  191.  Sale  subject  to  action  of  court;  does  not  divest 
existing  liens;  may  be  conducted  by  master  in  chancery 
or  agent  of  receiver.  The  functions  and  powers  of  receiv- 
ers touching  the  sale  of  property  committed  to  their  charge, 
unless  defined  or  regulated  by  statute,  rest  upon  and  are 
governed  by  the  orders  of  the  court  appointing  them.  Good 
faith  and  fair  dealing  are  required  of  receivers  in  the  execution 
of  such  orders,  and  if  a  receiver  fraudulently  imposes  upon  and 
deceives  the  court  in  obtaining  an  order  of  sale,  the  sale  may 
be  vacated  and  the  parties  may  be  restored  to  their  original 
position. 59     And  when,  acting  under  a  misapprehension  as  to 

59  Hackley  v.   Draper,  60  N.  Y.,      And    see    Tozer    v.    O'Gorman,    60 
88.  affirming  S.  C,  4  Thomp.  &  C.       Minn.,  42,  61  N.  W.,  895. 
(N.    Y.    S.    C),    614,   2   Hun,    523. 


222  RECEIVERS.  [chap.  VII. 

the  value  of  certain  assets,  a  receiver  sells  them  at  a  grossly  in- 
adequate price,  and  upon  learning  the  real  facts  he  refuses  to 
complete  the  sale  and  to  deliver  the  property,  the  court  may, 
in  the  exercise  of  its  discretion,  refuse  an  application  by  the 
purchaser  to  compel  the  completion  of  the  sale.  Such  a  contract 
of  sale,  while  it  remains  executory,  is  subject  to  the  supervision 
of  the  court,  and  the  purchaser  will  be  presumed  to  have  pur- 
chased subject  to  the  implied  condition  that  the  court  may, 
in  the  exercise  of  a  sound  discretion,  sanction  or  disapprove  the 
sale,  as  it  shall  see  fit.^^  And  since  the  appointment  of  a  receiv- 
er does  not  divest  existing  liens  upon  the  property  which  is 
subject  to  the  receivership,  it  follows  that  a  sale  by  a  receiver 
of  a  partnership  property  mortgaged  by  the  firm  gives  to  the 
purchaser  only  such  interest  as  the  firm  itself  had  in  the  prop- 
erty, and  does  not  divest  or  impair  the  paramount  mortgage 
lien  of  a  stranger  to  the  action  in  which  the  receiver  was  ap- 
pointed.^l  And  where  real  estate  which  is  sold  by  a  receiver 
is  subject  to  a  judgment  lien,  the  purchaser  takes  title  subject 
to  the  lien. ^2  Sq  where  a  mechanic's  lien  has  attached  to 
property  which  subsequently  comes  into  the  possession  of  a 
receiver,  such  lien  is  not  disturbed  by  the  appointment  of  the  re- 
ceiver, and,  upon  a  sale  of  the  property,  the  lien  attaches  to 
the  fund.^'^  So  when  executions  have  become  liens  upon  per- 
sonal property,  a  sale  of  such  property  by  a  receiver  subsequent- 
ly appointed  in  an  action  to.  which  the  lien-holders  were  not 
parties  will  not  divest  their  liens,  which  may  still  be  enforced 
notwithstanding  such  sale.^*  Nor  will  the  fact  that  the  order 
of  the  court,  directing  a  sale  by  a  receiver,  does  not  specifically 
provide  that  the  property  shall  be  sold  to  pay  off  adjudged  liens 

60  Attorney-General  v.   Continen-  62  /„  re  Coleman,  174  N.  Y.,  373, 
tal   Life   Insurance   Co..   94   N.   Y.,      66  N.  E.,  983. 

199;   South  Baltimore  B.  &  T.  Co.  63Totten  &  Hogg  I.  &  S.  F.  Co. 

V.  Kirby,  89  Md.,  52,  42  At!.,  913.      v.  Muncie  Nail  Co.,  148  Ind.,  372, 

61  Lorch    V.    Aultman,    75    Ind.,      47  N.  E.,  703. 

162;  McLaughlin  t;.  Taylor,  115  Ga.,  64  Dann     Manufacturing    Co.    v. 

671,  42   S.   E.,  30.     And   see,  post,      Parkhurst,  125  Ind.,  317,  25  N.  E., 
§  199a.  347. 


CHAP.  VII.]  FUNCTIONS.  223 

cut  off  such  liens  or  compel  the  lienors  to  look  to  the  property 
in  the  hands  of  the  purchaser.^^  So  when  a  corporation  over 
which  a  receiver  is  appointed  has,  prior  to  such  appointment, 
conveyed  lands  to  trustees  to  secure  the  holders  of  stock  of  the 
corporation,  and  thereafter,  and  before  the  receiver  is  appoint- 
ed, the  equity  of  redemption  in  such  lands  is  also  sold  under 
execution  against  the  corporation,  and  the  time  for  redemption 
expires  without  redemption  being  made,  the  receiver  takes  no 
title  to  such  lands,  and  a  sale  by  him  will  convey  no  title. ^^ 
And,  in  the  absence  of  any  statutory  prohibition,  a  receiver's 
sale  may  be  conducted  by  a  master  in  chancery  or  agent  upon 
behalf  of  the  receiver,  and  it  need  not  necessarily  be  conducted 
by  the  receiver  himself;  nor  need  such  master  or  agent  give 
bond  or  take  an  oath  before  conducting  the  sale.^'^ 

§  192.  Court  vested  with  power  of  sale  whenever  neces- 
sary, although  rights  in  property  not  ascertained;  sale  of 
steamboat.  A  court  of  equity  appointing  a  receiver  to 
take  possession  of  property,  pending  a  litigation  concern- 
ing the  rights  of  the  parties  thereto,  is  vested  with  the 
power  of  selling  the  property  in  the  receiver's  hands,  when- 
ever such  course  becomes  necessary  to  preserve  the  in- 
terests of  all  parties. ^^  Thus,  in  an  action  to  determine 
the  rights  of  conflicting  claimants  to  a  steamboat  which 
was  placed  in  the  hands  of  a  receiver  pendente  lite,  and  was 
operated  under  his  direction  for  two  years,  the  court,  upon 
being  satisfied  that  it  was  highly  inconvenient  and  unfit  to  con- 
tinue in  possession  and  operate  the  boat  for  a  longer  period, 
ordered  it  sold,  although  the  bill  on  which  the  receiver  was  al- 
lowed was  not  framed  for  the  purpose  of  effecting  a  sale.^^ 

65  Mueller  v.  Stinesville  &  B.  S.  As  to  the  circumstances  which  will 
Co.,  154  Ind.,  230,  56  N.  E.,  222.  justify  the  court  in  directing  a  re- 

66  Fitch  V.  Wetherbee,  110  111.,  ceiver's  sale  of  the  real  and  per- 
475.  sonal  property  of  an  insolvent  cor- 

67  Threadgill  v.  Colcord,  16  poration  and  in  retaining  the  fund 
Okla.,  447,  85  Pac,  703.  to  be  distributed  upon  a  final  hear- 

68  Crane  v.  Ford,  Hopk.  Ch.,  114;  ing,  see  Forsaith  Machine  Co.  v. 
Smith  V.  Burton,  67  Vt.,  514,  32  Lumber  Co.,  109  N.  C,  576,  13  S.  E., 
Atl.,  467.  869. 

6»  Crane  v.  Ford,  Hopk.  Ch.,  114. 


224  RECEIVERS.  [CIIAP.  VII. 

And  a  sale  may  be  decreed  in  such  case,  although  the  rights 
of  the  parties  to  the  property  have  not  yet  been  ascertained  and 
estabhshed ;  nor  is  it  an  objection  to  the  sale  that  a  petition  has 
not  been  filed  therefor,  where  the  bill  prays  for  a  sale  and  a 
receivership  pending  the  sale.'^^ 

§  193.  Receiver  can  not  purchase  at  his  own  sale;  gen- 
eral rule  as  to  trustees  applicable;  can  not  purchase  in 
name  of  wife.  A  receiver  is  regarded  as  occupying  a  fiduciary 
relation,  in  the  sense  that  he  will  not  be  allowed  to  purchase 
for  his  own  benefit  property  connected  with  or  forming  a  part 
of  the  subject-matter  of  his  receivership,  or  in  his  possession  in 
that  capacity.  The  courts  will  not  permit  him,  any  more  than 
any  other  trustee,  to  subject  himself  to  the  temptation  arising 
from  a  conflict  between  the  interest  of  a  purchaser  and  the 
duty  of  a  trustee.  And  the  rule  has  its  foundation  in  grounds 
of  public  policy,  and  in  the  peculiar  relation  sustained  by  a  re- 
ceiver to  the  fund  or  estate  in  his  custody,  which  resembles  in 
this  respect  that  of  a  solicitor,  trustee,  or  any  other  fiduciary 
relation  of  a  like  nature  where  the  same  rule  of  equity  prevails. 
Unless,  therefore,  it  clearly  appears  that  it  would  be  for  the 
benefit  of  the  parties  in  interest  to  hold  the  receiver  to  his 
purchase,  he  will  not  be  permitted  to  derive  any  benefit  from  a 
purchase  made  by  himself  of  property  pertaining  to  his  receiv- 
ership ;  and  whatever  purchase  he  may  make  will  be  held  to 
be  for  the  benefit  of  the  real  parties  interested,  whose  interests 
he  as  receiver  represents,  and  his  purchase  will  be  held  voidable 
at  their  election. "^^     And  a  court  of  equity  will  not  ordinarily 

<o  Smith  V.   Burton,  67  Vt.,  514,  40,    87    S.    W.,    625,    1024;    In    re 

32  Atl.,  467.  Sheets    Lumber    Co.,    52    La.    An., 

Tljewetti/.  Miller,  10  N.  Y.,  402;  1337,    27    So.,    809;     Pangburn    v. 

Carr  v.  Houser,  46  Ga.,  477;  Alven  American  V.,  S.  &  L.  Co.,  205  Pa. 

V.  Bond,  Flan.  &  K.,  196;   S.  C,  3  St.,   93,   54  Atl.,   508;    Harrigan  v. 

Ir.  Eq.,  365 ;  Eyre  v.  M'Donnell,  15  Gilchrist,  121  Wis.,  127,  363,  99  N. 

Ir.    Ch.,    N.    S.,    534;    Anderson    v.  W.,    909,    982.     See,    also,     Penzel 

Anderson,  9  Ir.  Eq.,  23 ;  Nugent  v.  Grocer    Co.    v.    Williams,    53    Ark., 

Nugent.    (1908),  1  Ch.,  546,  affirm-  81,  13  S.  W.,  736;  Herrick  v.  Mil- 

ing  S.  C,   (1907),  2  Ch.,  292;  Tith-  ler,  123  Ind.,  304,  24  N.  E.,  Ill;  In 

crington's     Adm'r     v.     Hodge,     81  re  Receivership  of  Dugdamonia   S- 

Ky.,  286;  Cook  v.  Martin,  75  Ark.,  &  L.  Co.,  118  La.,  242,  42  So.,  789; 


CHAP.  VII.]  FUNCTIONS.  225 

permit  a  receiver  to  become  a  bidder  at  a  sale  of  lands  of  which 
he  has  had  the  previous  management  as  receiver,  it  being  re- 
garded as  of  great  importance  to  the  interests  of  suitors,  and 
to  the  faithful  discharge  of  their  duties  by  receivers,  that  they 
should  be  beyond  the  reach  of  all  temptation  to  compromise 
those  duties.'^2  Pqj.  jjj^g  reasons  a  receiver  will  not  be  permitted 
to  become  a  mortgagee  or  pledgee  of  property  committed  to 
his  charge,  to  secure  a  personal  indebtedness  due  to  himself 
for  money  advanced,  even  though  such  advances  were  made  in 
good  faith.  He  may  not,  therefore,  take  a  chattel  mortgage 
upon  shares  of  stock  held  by  him  as  receiver,  to  secure  moneys 
which  he  has  loaned  or  advanced  to  one  of  the  defendants  in 
the  cause,  pendente  liteJ^  So,  where  a  receiver  has  been  ap- 
pointed in  a  creditor's  suit  to  take  charge  and  collect  the  rents 
of  real  estate,  he  will  not  be  permitted,  in  the  name  of  his  wife, 
to  purchase  a  superior  outstanding  title,  but  such  title  will 
be  decreed  to  be  held  for  the  benefit  of  the  parties  to  the  pro- 
ceeding in  which  he  was  appointed.'^^  If,  however,  he  pur- 
chases property  at  an  execution  sale  against  a  corporation  over 
which  he  is  appointed,  the  propriety  of  his  action  and  the  va- 
lidity of  the  sale  will  not  be  considered  in  a  suit  to  redeem  from 
the  sale."^^  And  while  a  sale  in  which  a  receiver  is  interested  as 
purchaser  is  presumptively  irregular,  the  presumption  is  not 
conclusive,  and  the  sale  is  not  void  but  only  voidable  at  the 
election  of  the  beneficiary,  whose  subsequent  conduct  may  pre- 
clude him  from  objecting  to  the  sale.'^^ 

§  194.  Illustrations  of  the  rule;  purchase  in  receiver's 
interest  set  aside.  The  general  rule  as  above  stated,  deny- 
ing receivers  the  privilege  of  becoming  purchasers  of  property 

Donahue  v.  Quackenbush,  75  Minn.,  73  Thompson     v.     Holladay,     15 

43,  77  N.  W.,  430.    As  to  the  right  Ore.,  34,  14  Pac,  725. 

of  a  receiver  to  purchase  from  him-  74  Cook   v.    Martin,   75    Ark.,   40, 

self  as  an  individual,  see  Patterson  87  S.  W.,  ^25,   1024. 

V.  Ward,  6  N.  Dak,  609,  72  N.  W.,  75  Hobart    v.    Bennett,    77    Me., 

1013.  401. 

72  Anderson   v.    Anderson,    9    Ir.  7G  Jackson   v.    First    State   Bank, 

Eq.,  23.  21    S.   Dak.,  484,   113   N.   W.,  876. 
Receivers — 15. 


226 


RECEIVERS. 


[chap.  VII. 


pertaining  to  their  trust,  is  entirely  independent  of  the  question 
Avhether  any  fraud  in  fact  has  intervened.''"^  And  a  receiver  of 
an  insolvent  bank,  who  in  that  capacity  holds  the  equity  of  re- 
demption of  certain  mortgaged  premises,  and  who  purchases 
the  premises  at  a  foreclosure  sale  under  the  mortgage,  can  not 
take  any  title  or  benefit  of  such  purchase  to  himself.  And  the 
general  rule  applies  in  such  a  case,  notwithstanding  the  sale  is 
a  judicial  sale,  under  a  decree  against  the  receiver,  and  based 
upon  a  title  paramount  to  his  title,  and  to  the  interest  of  his 
cestui  que  trustJ^  And  when  a  portion  of  the  premises  sold 
under  the  decree  in  the  cause  has  been  purchased  for  the  re- 


77  Nugent  V.  Nugent,  (1908)  1 
Ch.,  546,  affirming  S.  C,  (1907)  2 
Ch.,  292. 

78  Jewett  V.  Miller,  10  N.  Y.,  402. 
Johnson,  J.,  observes,  p.  404: 
"When  Miller  purchased  the  prem- 
ises in  question  at  the  master's  sale, 
December  7,  1842,  he  Vvfas  receiver 
of  the  Wayne  County  Bank.  The 
sale  was  made  on  a  foreclosure  of 
a  mortgage  made  by  one  Williams, 
then  the  owner  of  the  premises,  to 
Minot  C.  ^Morgan  and  others,  dated 
October  15,  1838,  which  mortgage 
was  assigned  first  to  the  Wayne 
County  Bank  by  Morgan  and 
others,  and  afterward  by  the  bank 
to  the  people  of  the  state  of  New 
York  as  collateral  security  for 
moneys  borrowed  by  the  bank  from 
the  canal  fund.  After  this  last  as- 
signment, Williams  sold  the  prem- 
ises to  the  defendant,  Cook,  who 
gave  his  mortgage  for  the  purchase- 
money,  and  this  mortgage  was  as- 
signed by  Williams  to  the  bank  as 
security  for  a  debt  due  by  him  to 
the  bank.  On  the  28th  of  August, 
1841,  as  receiver  of  the  Wayne 
County  Bank,  Miller  procured  a 
quitclaim  deed  of  the  premises  from 
Cook  and  wife.     Miller  then  as  re- 


ceiver had  the  right  to  redeem  the 
mortgage  assigned  as  security  to 
the  state,  and  also  the  general  equi- 
ty of  redemption  by  the  quit- 
claim from  Cook  and  wife.  Thus 
situated  upon  the  foreclosure  by  the 
state,  he  became  the  purchaser  of 
the  premises.  It  is  contended,  on 
the  part  of  the  defendant  Miller, 
that  his  case  is  out  of  the  general 
rule  which  forbids  a  trustee  to  pur- 
chase on  his  own  account  the  trust 
property,  upon  the  ground  that  the 
sale  in  this  case  was  a  judicial  sale, 
made  under  a  decree  against  the 
trustee,  and  based  upon  a  title  par- 
amount to  the  title  of  the  trustee, 
and  to  the  interest  of  the  cestui  que 
trust.  That  this  is  not  the  rule 
was  adjudged  in  the  case  of  Van 
Epps  V.  Van  Epps  (9  Paige,  237)  ; 
Iddings  V.  Bruen  (4  Sandf.  Ch.  R., 
263).  It  is  hardly  possible  to  state 
the  rule  of  equity  too  broadly  or 
too  strongly.  It  will  not  permit  a 
trustee  to  subject  himself  to  the 
temptation  which  arises  out  of  the 
conflict  between  the  interest  of  a 
purchaser  and  the  duty  of  a  trustee. 
It  was  Miller's  duty  as  receiver  to 
make  the  property  bring  the  high- 
est possible  price;  but  as  purchaser 


CHAP.  VII.] 


FUNCTIONS. 


227 


ceiver,  the  sale  may  be  set  aside,  even  after  confirmation  by 
the  court,  such  a  case  falHng  directly  within  the  principle  of  the 
general  rule  as  above  stated. '^^  And  when  a  receiver  had  pur- 
chased at  an  undervaluation  an  annuity,  which  was  charged 
upon  certain  lands  subject  to  his  receivership,  and  which  it 
was  his  duty  to  collect,  the  personal  representatives  of  the 
vendor  were  held  entitled  to  rescind  the  purchase  and  to  re- 
cover the  annuity.^0 

§  195.  Departure  from  rule  by  consent  of  parties. 
While,  as  already  shown,  the  courts  insist  upon  a  strict  observ- 
ance of  the  rule  that  a  receiver  shall  not  derive  any  advantage 
from  the  purchase  of  the  trust  property,  yet  upon  obtaining 


this  was  not  his  interest.  The  rule 
is  entirely  independent  of  the  ques- 
tion whether  in  point  of  fact  any 
fraud  has  intervened.  It  is  to  avoid 
the  necessity  of  any  such  inquiry 
in  which  justice  might  be  balked, 
that  the  rule  takes  so  general  a 
form.  After  the  purchase  by  Mil- 
ler, it  follows  that  his  cestui  que 
trust  had  the  right  either  to  demand 
a  resale  of  the  property  or  to  adopt 
his  purchase  as  made  for  their  ben- 
efit, subject,  of  course,  in  the  latter 
case,  to  his  lien  for  advances. 
(Slade  V.  Van  Vechten,  11  Paige, 
21.)" 

79  Alven  v.  Bond,  Flan.  &  K.,  196. 
The  doctrine  is  very  clearly  set 
forth  in  this  case  by  Sir  Michael 
O'Loghlen,  Master  of  the  Rolls,  in 
the  following  language,  p.  211:  "I 
do  not  at  all  agree  with  the  counsel 
for  the  purchaser,  who  contend 
that  if  the  court  shall  set  aside  this 
sale,  because  the  purchase  was 
made  in  trust  for  the  receiver,  it 
will  introduce  a  new  doctrine  into 
a  court  of  equity,  and  make  an  or- 
der which  no  other  judge  ever  be- 
fore ventured  to  make,  when  I  find 
it    to   be    the    general    rule    of    this 


court,  founded  on  principles  of  pub- 
lic policy,  that  trustees,  assignees  of 
bankrupts,  solicitors  or  agents  for 
the  assignees,  and  all  persons  fill- 
ing any  confidential  office  in  rela- 
tion to  the  property  to  be  sold,  shall 
not,  without  the  special  leave  of  the 
court,  and  probably  the  assent  of 
all  parties  interested,  purchase  the 
property  with  which  they  are  by 
their  office  connected.  I  make  no 
new  decision  if  I  apply  that  prin- 
ciple to  a  receiver,  and  hold  that 
the  purchase  made  by  him  at  a  sale 
under  a  decree  of  this  court  of  the 
property  over  which  he  is  acting  as 
receiver,  made  without  the  sanction 
of  the  court  or  the  assent  of  the 
parties  interested,  but  concealed 
from  both,  can  not  be  sustained. 
I  only  apply  a  well-established  rule 
of  the  court  to  a  case  which  I  think 
fully  within  it,  and  show  that  this 
rule  of  a  court  of  equity  is,  as  Lord 
Cottenham,  in  Scarborough  v.  Bor- 
man,  4  Myl.  &  Cr.,  379,  says  our 
legal  system  is,  'capable  of  adapt- 
ing itself  to  the  exigencies  of  so- 
ciety.' " 

80  Eyre  v.  M'Donnell,  15  Ir.  Ch., 
N.  S.,  534. 


228  RECEIVERS.  LCHAP.  VII. 

consent  of  all  parties  interested  in  the  lands  forming  the  sub- 
ject-matter of  the  litigation,  a  receiver  has  been  allowed  to  be- 
come a  tenant  of  the  lands,  when  such  course  appeared  to  the 
court  to  be  beneficial  to  the  estate  and  to  all  parties  in  interest.^^ 
And  a  sale  of  real  property  by  a  receiver  to  his  sons  will  not  be 
set  aside  because  of  such  relationship,  when  made  in  good  faith, 
for  the  full  value  of  the  premises  and  with  the  consent,  express 
or  implied,  of  all  parties  in  interest.^2 

§  196.  Order  for  receiver's  sale  can  not  be  questioned 
collaterally;  illustrations.  When  a  court  of  equity  prop- 
erly acquires  jurisdiction  of  the  parties  and  of  the  subject-mat- 
ter in  a  cause,  and  appoints  a  receiver  therein  and  orders  him  to 
sell  the  property  in  controversy,  such  order,  although  irregular 
and  improvident,  can  not  be  assailed  or  questioned  in  a  col- 
lateral action,  and  such  an  action  will  not  lie  to  set  aside  the 
order  of  sale  and  proceedings  thereunder.^^  The  appropriate 
method  of  correcting  such  irregularities  is  by  motion  to  the 
court  making  the  order,  and  an  independent  action  for  that 
purpose  will  not  be  entertained.^^  And  the  rule  applies  al- 
though the  sale  has  been  made  by  a  court  of  a  foreign  state.^^ 
And  where  a  receiver  purchases  at  his  own  sale,  while  such  sale 
would  be  voidable  if  attacked  directly  upon  that  ground  by 
parties  interested,  it  is  not  void  and  is  not  subject  to  being  as- 
sailed in  a  collateral  proceeding.^^  And  the  failure  of  the  court 
to  enter  a  formal  order  extending  a  receivership  from  one  cause 
to  another  is  a  mere  irregularity  to  be  taken  advantage  of  in 

SlStannus  v.  French,  13  Ir.  Eq.,  150,    102    N.    W.,    604;    Gila    Bend 

161.  R.  &  I.   Co.  V.   Gila  Water   Co.,  9 

82Yetzer  v.  Applegate,  85  Iowa,  Ariz.,  57,  76  Pac,  990,  affirmed  in 

121,  52  N.  W.,  118.  202  U.   S.,  270,  26   Sup.   Ct.   Rep., 

83Libby  v.   Rosekranz,  55  Barb.,  615,  50  L.  Ed.,  1023. 

219 ;  Brande  v.  Bond,  63  Wis.,  140,  84  Libby  v.  Rosekranz,  55  Barb., 

23  N.  W.,  101 ;  Anderson  v.  Chica-  219. 

go  T.  &  T.  Co.,  101  Wis.,  385,  77  N.  85  Anderson  v.  Chicago  T.  &  T. 

W.,  710 ;  Schaberg  v.  McDonald,  60  Co.,  101  Wis.,  385,  77  N.  W.,  710. 

Neb.,  493,  83  N.  W.,  7Z7 ;  Groeltz  v.  86  Groeltz     v.     Cole,     128     Iowa, 

Cole,  128  Iowa,  340,  103  N.  W.,  977;  340,  103  N.  W.,  977. 
Juckett  V.  Fargo  M.  Co.,  19  S.  Dak., 


CHAP.  VII.  J  FUNCTIONS.  229 

the  proceeding;  and  where  a  receiver's  sale  has  been  had  in  the 
latter  proceeding,  such  sale  is  not  subject  to  collateral  attack 
on  account  of  the  irregularity  in  question  in  a  subsequent  action 
brought  to  quiet  the  title  to  the  property  sold.^'^  But  when  the 
receiver  has  procured  an  order  of  sale  by  a  fraudulent  imposi- 
tion upon  the  court,  it  has  been  held  that  an  action  would  lie  to 
set  aside  the  sale,  even  though  relief  might  be  had  upon  motion 
before  the  court  appointing  the  receiver.^s 

§  197.  Satisfactory  evidence  required  as  to  necessity  for 
sale;  order  should  be  specific;  sale  to  pay  taxes.  When  a 
receiver  applies  for  an  order  of  court  to  authorize  him  to  sell 
certain  of  the  property  in  his  possession,  for  the  purpose  of 
meeting  taxes  due  and  to  become  due  upon  other  property,  the 
evidence  showing  the  necessity  for  such  a  sale  should  be  clear 
and  satisfactory  to  the  court,  and  the  order  of  sale  should  be 
specific,  and  should  designate  the  particular  property  which  the 
receiver  is  authorized  to  sell.^^  And  where  an  application  is 
made  by  a  collector  of  taxes  to  the  court  for  an  order  on  a  re- 
ceiver to  pay  taxes  due  upon  property  in  his  possession,  the 
court  should  either  direct  the  receiver  to  sell  a  part  of  the  prop- 
erty in  his  custody  in  order  to  raise  a  fund  sufficient  to  pay  the 
taxes  or  should  give  him  directions  which  will  enable  him, 
without  a  sale,  to  bring  about  the  same  result,  and  it  is  no  de- 
fense that  the  income  arising  from  the  property  is  insufficient 
to  pay  operating  expenses  or  that  such  sale  will  jeopardize  the 
interests  of  the  general  creditors. ^^ 

§  198.  Discretion  as  to  sales  in  bulk  or  by  parcels;  pri- 
vate sale ;  ex  parte  application ;  stockholder  of  corporation 
may  object ;  improper  advertisement ;  notice  of  sale ;  order 
of  sale  appealable;  same  of  order  confirming  sale  of  real 
estate.    As  regards  the  functions  and  powers  of  receivers 

87  Gila  Bend  R.  &  I.  Co.  v.  Gila  88,  affirming  S.  C.,  4  Thomp.  &  C. 

Water    Co.,   9   Ariz.,    57,    16    Pac,  (N.  Y.  S.  C),  614,  2  Hun,  253. 

990,  affirmed  in  202  U.  S.,  270,  26  ^  J*^  ^'^^^  ^-   ^"therford,  26   Ga., 

Sup.  Ct.  Rep.,  615,  50  L.  Ed.,  1023.  90  Dysart  v.   Brown,   100  Ga..   1. 

88Hackley  v.  Draper,  60  N.  Y.,  26  S.  E.,  767. 


230  RECEIVERS.  [chap.  VII. 

in  effecting  sales  of  personal  property  intrusted  to  their  charge, 
considerable  latitude  and  discretion  are  allowed  them  as  to 
whether  the  sale  shall  be  in  bulk  or  by  parcels.  And  when 
the  receiver  has  exercised  his  discretion  in  the  matter  in  good 
faith,  the  court  will  not  set  aside  the  sale  merely  because  it  may 
differ  from  him  as  to  which,  under  all  the  circumstances,  was 
the  best  method  of  selling.^^  But  where  a  receiver  has  adver- 
tised a  sale  to  be  made  as  a  whole  or  in  parcels  as  may  be  to 
the  best  interest  of  the  trust,  and  a  sale  is  made  in  parcels 
and  the  property  is  not  offered  in  bulk,  the  sale  is  properly  set 
aside  at  the  instance  of  a  prospective  buyer  upon  his  entering 
into  a  bond  to  bid  at  a  sale  in  bulk  more  than  the  property 
realized  at  the  sale  in  lots.^^  And  where  it  appears,  in  a  bill 
for  a  receiver  filed  by  the  mortgagee  in  a  chattel  mortgage, 
that  a  sale  by  a  receiver  from  retail  sales  would  produce  better 
prices  than  could  be  obtained  by  sales  in  bulk  under  the  mort- 
gage, a  proper  case  is  presented  for  the  appointment  of  a  re- 
ceiver.^3  And  when  the  order  for  the  appointment  of  a  re- 
ceiver w^as  obtained  by  the  plaintiff  late  at  night,  and  upon 
an  ex  parte  application,  and  the  receiver  sold  the  property  at 
private  sale  early  the  following  morning,  without  notice  to 
the  defendants  interested  therein,  the  sale  was  set  aside  and 
the  receiver's  appointment  revoked,  the  proceedings  being  re- 
garded as  contrary  to  all  principles  of  equity,  and  in  conflict 
with  the  due  and  ordinary  course  of  procedure  in  courts  of 
justice.^*  And  where  a  decree  requires  a  public  sale  to  be 
made,  a  private  sale*  made  contrary  to  the  provisions  of  the 
decree  will  be  set  aside.^^  So,  where  a  receiver,  without  any 
authority  from  the  court,  proceeds  to  dispose  of  property  at  a 

91  National  Bank  of  the  Metrop-  93  Valley  National  Bank  v.  Claflin 
olis  V.  Sprague,  5  C.  E.  Green,  170.  Co.,  108  Iowa,  504,  79  N.  W.,  279. 
As  to  the  manner  in  which  a  re-  94  Simmons    v.    Wood,   45    How. 
ceiver   over   a   large   manufacturing  Pr.,   268. 

business    should    sell    the    business  95  South  Baltimore  B.  &  T.  Co., 

and  personal  property,  see  Case  v.      v.  Kirby,  89  Md.,  52,  42  Atl.,  913. 
Fish,  63  Wis.,  475,  22  N.  W.,  322. 

92  Patterson  v.  Patterson,  207  Pa. 
St..  252.  56  Atl..  442. 


CHAP.  VII.]  FUNCTIONS.  231 

private  sale,  and  it  appears  that  the  property  has  brought  less 
than  would  have  been  realized  at  a  public  sale,  the  sale  should 
be  set  aside.^^  And  in  such  case,  a  stockholder  in  the  cor- 
poration over  which  the  receiver  has  been  appointed  has  such 
an  interest  in  the  matter  as  will  entitle  him  to  make  the  appli- 
cation to  vacate  the  sale.^"^  So  a  sale  is  properly  set  aside 
where  the  terms  of  the  sale  are  such  that  the  property  is  not 
fairly  placed  upon  the  market  and  consequently  sells  for  much 
less  than  its  real  value.  And  where  neither  the  order  of  sale 
nor  the  advertisement  thereof  conveys  any  information  that  a 
bulk  sale  of  the  property  in  the  receiver's  hands  will  give  to 
the  purchaser  the  right  to  use  certain  valuable  patents,  the  sale 
is  properly  set  aside.  So  the  neglect  of  the  receiver  to  answer 
inquiries  in  regard  to  the  nature  of  the  property  is  a  sufficient 
reason  for  setting  aside  the  sale.  And  it  is  improper  to  direct 
the  receiver  to  sell  all  the  bills  payable  and  debts  due  the  con- 
cern where  they  are  widely  scattered  and  it  is  impossible  to 
form  an  estimate  of  their  probable  value.^^  And  the  court 
may,  of  its  own  motion,  revoke  an  order  of  sale  improvidently 
made,  as  where  the  sale  had  been  ordered  to  be  made  on  credit 
when  it  should  have  been  for  cash.^^  But  a  sale  should  not  be 
set  aside  because  of  want  of  notice  to  a  particular  creditor, 
where  it  appeared  that  the  sale  was  made  in  good  faith  and 
that  the  highest  amount  obtainable  had  been  realized  from 
the  property.!  And  an  order  made  after  notice  to  the  parties 
in  interest  and  after  a  hearing,  directing  a  receiver  of  a  rail- 
way company  to  sell  certain  bonds  and  property  of  a  third 
party,  which  have  been  pledged  to  the  receiver  as  an  indemnity 
against  debts  and  obligations  of  the  company,  is  an  order  con- 
cluding the  rights  of  the  parties  in  interest  and  is,  therefore, 

96  Mason    v.    Hubner,    104    Md.,  98  Deford  v.   Macwatty,  82   Md., 
554,  65  Atl.,  367.  168.  33  Atl.,  488. 

97  South  Baltimore  B.  &  T.  Co.  v.  99  Fitzner  v.  Noullet,  114  La.,  400, 
Kirby,    89    Md.,    52,    42    Atl.,   913;  38  So.,  398. 

Mason  v.  Hubner,  104  Md.,  554,  65  1  Nisbet    v.    Great    Northern    C. 

Atl.,  367.  Co.,  41  Wash.,  107,  83  Pac,  15. 


232  RECEIVERS.  [chap.  VII. 

appealable.2  And  it  is  held  that  an  order  confirming  a  sale  of 
real  estate  by  a  receiver  is  appealable.^ 

§  199.  Receiver's  power  to  execute  deed;  when  deed 
should  be  made.  When  a  receiver  is  authorized  and  re- 
quired by  order  of  court  to  sell  real  estate,  the  authority  to 
sell  necessarily  carries  with  it  authority  to  give  to  the  pur- 
chaser the  usual  evidence  of  a  transfer  of  title,  the  power  of 
the  receiver  to  give  the  deed  being  necessarily  implied  from 
the  order  of  sale.  And  while  it  may  be  irregular  for  the  re- 
ceiver to  execute  a  conveyance  of  the  real  estate  sold,  before 
confirmation  of  the  sale  by  the  court,  such  conveyance  is  not 
on  that  account  void,  but  only  voidable,  and  the  sale  having 
been  confirmed  by  the  court  the  objection  is  removed.^  But 
when,  by  the  terms  of  his  appointment,  a  receiver  is  authorized 
to  sell  the  property  committed  to  his  trust,  subject  to  the  order 
of  the  court,  no  transfer  can  be  properly  made  or  consummated 
by  the  receiver  until  the  sale  is  reported  to  the  court  and  con- 
firmed, after  notice  to  the  parties  who  have  appeared  in  the 
action.  And  any  transfer  before  such  confirmation  is  unau- 
thorized, and  any  payment  made  is  at  the  purchaser's  risk.^ 

§  199(7.  Sale  subject  to  incumbrances;  title  of  third  per- 
son; partnership;  dower  interest.  A  sale  by  a  receiver, 
under  an  order  of  court  which  makes  no  mention  of  prior  liens 
or  incumbrances,  operates  as  a  transfer  of  title  to  the  purchaser 
subject  to  the  lien  of  whatever  incumbrances  may  be  outstand- 
ing ;  ^  and  the  purchaser  may  contest  the  validity  of  apparent 
incumbrances,  either  with  respect  to  their  legal  existence,  or 
as  to  the  amount  due.*^  Nor  is  the  title  of  a  third  person,  not 
a  party  to  the  cause  in  which  the  receiver  is  appointed  and  the 

2  Philadelphia    &    R.    R.    Co.    v.  6  Fidelity  Title  &  T.  Co.  v.  Schen- 
Little,  41  N.  J.  Eq.,  519,  7  Atl.,  356.  ley  P.  &  H.  R.  Co.,  189  Pa.  St.,  363, 

3  State    V.    Fawcett,   6  Neb.,  393,  42  Atl.,  140,  69  Am.  St.  Rep.,  815. 
83  N.  W.,  176.  7Hackensack  Water   Co.  v.   De- 

4Koontz   V.    Northern   Bank,    16      Kay,  36  N.  J.  Eq.,  548.     And  see, 
Wal.,  196.  ante,  §  191. 

5  Simmons  v.  Wood,  45  How.  Pr., 
268. 


CHAP.  VII.]  FUNCTIONS.  233 

sale  made,  divested  or  affected  by  such  sale.  And  a  receiver 
over  a  partnership  who  sells  the  real  estate  of  the  firm,  under 
an  order  of  court,  sells  it  subject  to  the  lien  of  a  judgment 
against  the  individual  interest  of  one  member  of  the  firm. 
And  the  title  of  a  purchaser  at  a  sheriff's  sale  under  such  judg- 
ment will  prevail  over  that  of  a  purchaser  from  the  receiver.^ 
So  a  sale  of  the  husband's  real  estate,  by  a  receiver  appointed 
in  behalf  of  judgment  creditors,  should  be  made  subject  to  the 
dower  interest  of  the  wife,  and  it  is  improper  to  direct  pay- 
ment by  the  receiver  to  the  wife  of  her  inchoate  right  of  dower 
out  of  the  proceeds.^ 

§  1996.  Doctrine  of  caveat  emptor  applied.  The  doc- 
trine of  caveat  emptor  applies  in  cases  of  receivers'  sales,  like 
all  other  judicial  sales,  the  purchaser  being  chargeable  with 
knowledge  that  only  the  interest  of  the  parties  to  the  suit  can 
be  sold  by  the  receiver,  and  it  is  for  him  to  ascertain  before 
purchasing  what  that  interest  is.  The  rule  applies  to  the  con- 
dition of  the  property  as  well  as  to  its  title ;  and  to  an  action 
by  a  receiver  against  a  purchaser  for  the  recovery  of  the  pur- 
chase price  of  real  estate  sold  by  the  receiver,  the  defendant  can 
not  plead  the  defective  condition  of  the  property  at  the  time  of 
his  purchase,  in  the  absence  of  fraud  or  misrepresentation. 
And  when  such  purchaser  has  acquiesced  in  and  consented  to 
the  ratification  of  the  sale,  he  can  not  defeat  an  action  for  the 
recovery  of  the  purchase-money  upon  the  ground  that  another 
piece  of  real  estate  was  included  in  the  sale  but  omitted  from 
the  deed  tendered  to  him  by  the  receiver.io  And  the  rule  ap- 
plies even  though  the  sale  has  been  made  without  an  express 
order  of  the  court.^^ 

§  199c.  Confirmation  of  sale  unnecessary;  when  con- 
firmation not  refused;  no  redemption  from  sale.  If,  in 
making  a  sale  of  property,  the  receiver  conforms  in  all  re- 

8  Foster    v.    Barnes,    81    Pa.    St.,  H  Campbell  v.    Parker,   59   N.  J. 

377.  Eq.,  342,  45  Atl.,  116. 

n  Lowry  v.  Smith,  9  Hun,    514. 
10  Barron    v.     Mullin,    21     Minn., 
374. 


234  RECEIVERS.  [CHAP.  VII. 

spects  to  the  order  of  the  court,  no  confirmation  of  the  sale 
is  necessary  to  give  it  full  validity  and  effect.  The  sale  is  re- 
garded as  a  judicial  sale  and  the  purchaser  becomes  subject 
to  the  jurisdiction  of  the  court,  which  may,  by  order  in  the 
cause,  compel  him  to  complete  his  purchase.^^  And  a  sale 
fairly  made  by  a  receiver  to  a  bona  fide  bidder,  who  is  pur- 
chasing in  good  faith,  will  not  be  refused  confirmation  because 
a  higher  bid  is  subsequently  obtained. ^^  And  it  is  held  that 
a  receiver's  sale  of  real  estate  of  an  insolvent  corporation  is  not 
subject  to  redemption  by  a  judgment  creditor,  whose  judg- 
ment is  recovered  subsequent  to  the  receiver's  appointment,  as 
in  ordinary  sales  of  real  estate  under  execution.  In  such  case 
the  property  is  regarded  as  in  the  custody  of  the  law  for  the 
benefit  of  the  creditors,  and,  therefore,  not  subject  to  the  or- 
dinary remedies  of  creditors  having  no  liens  at  the  date  of  the 
receivership.!'* 

§  199cy.  Fraudulent  sale  by  receiver.  Fraud  and  collu- 
sion in  a  sale  made  by  a  receiver  always  afford  good  ground 
for  setting  aside  the  sale.  Thus,  where  a  receiver,  his  insolvent 
and  a  third  person  enter  into  a  fraudulent  and  collusive  agree- 
ment by  which  the  latter  is  to  purchase  the  property  at  much 
less  than  its  real  value  and  is  afterward  to  transfer  it  to  the 
wife  of  the  insolvent  for  the  benefit  of  the  latter,  such  sale  is 
properly  set  aside  by  the  court  and  the  receiver  charged  with 
the  full  value  of  the  property.!^ 

§  199^.  Sale  must  take  place  at  time  designated  by 
court.  A  receiver,  when  ordered  by  the  court  to  make  a 
sale,  should  see  that  it  takes  place  at  the  time  designated  by 
the  court.  And  where  he  holds  the  sale  without  authority  at  a 
date  later  than  the  time  named  by  the  order  of  the  court,  thr 

12 /n  re  Denison,  114  N.  Y.,  621,  14  Watkins   v.    Minnesota   T.    M. 

21  N.  E.,  97.     As  to  what  amounts       Co.,  41  Minn.,  150,  42  N.  W.,  862. 
to  a  confirmation  of  a  sale  by  a  re-  15  In  re  Shea,  57  Minn.,  415,  59 

ceiver,    see    Threadgill    v.    Colcord,       N.  W.,  494. 
16  Okla.,  447,  85  Pac,  703. 

13  Rogers   v.    Rogers   Locomotive 
Co.,  62  N.  J.  Eq.,  IJl,  50  Atl..  10. 


CHAP.  VII.]  FUNCTIONS.  235 

sale  is  regarded  as  totally  void,  and  confirmation,  over  objec- 
tion presenting  the  question,  can  not  take  the  place  or  answer 
the  purpose  of  an  order,  made  in  advance,  directing  the  sale 
to  be  made.i^ 

16  Ackerman    v.    Ackerman,    SO  Neb.,  54,  69  N.  W.,  388L 


CHAPTER  VIII. 

OF  ACTIONS  BY  AND  AGAINST  RECEIVERS. 

I.  Principles   Governing  Actions  by  Receivers   §  200 

II.  Pleadings  and  Proofs  in  Actions  by  Receivers 231 

III.  Actions  by  Receivers  in  Foreign  Courts  239 

IV.  Defenses  to  Actions  by  Receivers  245 

V.  Actions   Against   Receivers    254 

I.  Principles  Governing  Actions  by  Receivers. 

§  200.     Practice  divergent  in  different  states. 

201.  Receiver  succeeds  to  principal's  rights  of  action;  what  he  must 

show;  action  on  note. 

202.  Court  maintains  strict  control  over  receiver;  does  not  permit 

unauthorized  suits. 

203.  Regularity  of  receiver's  appointment  and  his  competency  can 

not  be  questioned  collaterally;  otherwise  if  order  void. 

204.  Appointment  of  receiver  does  not  change  rights  of  action;  suit 

by  receiver  of  insurance  company;  sale  prior  to  appointment. 

205.  Defense  available  against  original  plaintiff,  available  against  re- 

ceiver. 

206.  Judgment  in  favor  of  receivers  of  banking  corporation,  bar  to 

subsequent  suit  in  name  of  bank. 

207.  Receiver  not  restricted  in  management  of  suit;  may  remove 

cause    to    United    States    court;    but    is    limited    to    existing 
remedies. 

208.  Receiver  should  obtain  leave  of  court  before  bringing  action; 

English  and  American  doctrine. 

209.  Conflict  of  authority  as  to  name  in  which  receiver  must  sue; 

the  general  rule  stated. 

210.  Exceptions  to  the  rule;  suits  in  name  of  receiver. 

211.  The  question  as  regulated  by  statute. 

212.  The  same;  trover  by  receiver  of  bank;  suits  by  receiver  of  in- 

surance company;  by  receiver  of  insolvent  state  bank  against 
directors. 

213.  On  removal  or  death  of  receiver,  suit  continued  by  his  suc- 

cessor. 

214.  Receiver  substituted  in  lieu  of  original  plaintiff  on  terms. 

236 


CHAP.  VIII.]  ACTIONS.  237 

§  215.     Foreclosure  of  mortgage  by  successors  to  original  receivers  of 
bank. 

216.  Employment  of  counsel  by  receiver;  should  not  employ  coun- 

sel of  either  party. 

217.  The  rule  limited  to  cases  of  adverse  interest, 

218.  Receiver  may  bring  action  of  detinue. 

219.  Judgment   recovered   by   receiver,   bar  to   subsequent   suit  by 

plaintiff  in  original  cause. 

220.  Suit  by  administrator  subsequently  appointed  receiver. 

221.  Distinction  as  to  receiver's  rights  of  action  founded  upon  title 

to  real  estate. 

222.  Receiver  may  recover  usury  paid  by  principal. 

223.  May  recover  rents   on   notice   to   tenant;  action   for  unpaid  pur- 

chase money. 

224.  May  enforce  an  unpaid  subscription. 

225.  Suit  by  receiver  of  corporation;  illegality  of  appointment  no 

defense;  corporation  not  a  proper  party  plaintiff. 

226.  When  right  of  action  relates  back  to  beginning  of  principal's 

title. 

227.  Failure  of  receiver  to  execute  bond  a  ground  for  nonsuit;  in- 

formality in  bond. 

228.  May  move  for  judgment  against  sheriff  for  money  collected. 

229.  Receiver's  liability  for  costs. 

230.  May  garnish  plaintiff  in  original  suit. 

§  200.  Practice  divergent  in  different  states.     One  of 

the  most  important  functions  exercised  by  receivers  in  the  dis- 
charge of  their  official  duties  is  that  of  bringing  such  actions 
as  may  be  necessary  to  the  proper  discharge  of  their  trust,  as 
well  as  to  secure  and  protect  the  assets  and  funds  to  whose  con- 
trol they  are  entitled  by  virtue  of  their  appointment.  In  some 
of  the  states  the  functions  of  receivers,  as  regards  the  bringing 
of  actions,  are  regulated  to  a  considerable  extent  by  statute, 
while  in  others  the  English  practice  prevails,  leaving  the  entire 
subject  to  be  regulated  by  the  court  making  the  appointment, 
in  accordance  with  established  principles  governing  the  juris- 
diction. 

§  201.  Receiver  succeeds  to  principal's  rights  of  action; 
what  he  must  show ;  action  on  note.  In  general,  a  receiver, 
by  virtue  of  his  appointment,  is  clothed  with  only  such  rights 
of  action  as  might  have  been  maintained  by  the  persons  over 
whose  estate  he  has  been  appointed,  and  to  whose  rights,  for 


238 


RECEIVERS. 


[chap.  VIII. 


purposes  of  litigation,  he  has  succeeded.^  It  is  essential,  there- 
fore, in  order  to  sustain  a  suit  brought  by  him  in  his  represent- 
ative capacity,  that  he  should  allege  and  set  forth  the  equities 
of  the  parties  whose  rights  of  action  he  represents,  and  he  must 
also  show  that  by  the  appointment  of  the  court,  properly  made 
in  a  matter  within  its  jurisdiction,  authority  has  been  conferred 
upon  him,  in  his  representative  capacity  as  receiver,  to  prose- 
cute the  action ;  and  failing  to  show  this,  he  can  not  maintain 
an  action. 2  And  when  an  obligation  has  been  extinguished 
or  paid  to  the  obligee,  his  receiver  can  not  afterward  maintain 
an  action  thereon,  either  at  law  or  in  equity.^  But  where  a 
receiver  has  come  into  the  possession  of  notes  belonging  to  the 
person  over  whose  estate  he  has  been  appointed  and  has  been 


1  Coope  V.  Bowles,  28  How.  Pr., 
10,  42  Barb.,  87;  Curtis  v.  Mcll- 
henny,  5  Jones  Eq.,  290;  Falken- 
bach  V.  Patterson,  43  Ohio  St.,  359, 
1  N.  E.,  757. 

2  Coope  V.  Bowles,  28  How.  Pr., 
10,  42  Barb.,  87;  Davis  v.  Ladoga 
Creamery  Co.,  128  Ind.,  222,  27  N. 
E.,  494;  Hatfield  v.  Cummings,  142 
Ind.,  350,  39  N.  E.  859;  Gainey  v. 
Gilson,  149  Ind.,  58,  48  N.  E.,  633. 
And  see,  post,  §  231.  For  allega- 
tions of  a  receiver's  authority  to  sue 
held  to  be  sufficient  under  the  rule, 
see  Hatfield  v.  Cummings,  152  Ind., 
280,  50  N.  E.,  817,  53  N.  E.,  231; 
Taylor  v.  Canaday,  155  Ind.,  671,  57 
N.  E.,  524,  59  N.  E.,  20 ;  Coddington 
V.  Canaday,  157  Ind.,  243,  61  N.  E., 
567.  In  Hatfield  v.  Cummings,  142 
Ind.,  350,  39  N.  E.,  859,  supra,  an 
allegation  that  the  receiver  "was  ap- 
pointed, and  has  since  qualified  as 
receiver  of  said  association,  and  is 
empowered  to  collect  by  suits  the 
claims  due  said  association"  was 
held  insufficient.  And  see  Davis  v. 
Talbot,  137  Ind.,  235,  36  N.  £.,  1098. 


In  Ueland  v.  Haugan,  70  Minn.,  349, 
73  N.  W.,  169,  it  was  held,  under 
the  provisions  of  the  statute  of 
Minnesota,  that  the  receiver  of  an 
insolvent  state  bank  might  maintain 
an  action  against  the  shareholders 
of  the  bank  to  enforce  their  double 
stock  liability  without  alleging  and 
proving  his  authority  from  the  court 
to  maintain  the  action,  since  the  ac- 
tion against  the  shareholders  was  to 
be  regarded  as  merely  a  part  of  the 
main  receivership  cause.  In  Davis 
7'.  Ladoga  Creamery  Co.,  128  Ind., 
222,  27  N.  E.,  494,  supra,  it  was  held 
that  upon  the  appointment  of  a  re- 
ceiver over  a  corporation,  he  suc- 
ceeds to  all  its  rights  of  action,  and 
that  the  right  of  the  corporation  to 
bring  suit  is  suspended  during  the 
receivership.  As  to  the  right  of  a 
receiver  to  maintain  an  action  in  his 
representative  capacity  against  him- 
self in  his  individual  capacity,  see 
Murphy  v.  Penniman,  105  Md.,  452, 
66  Atl.,  282. 

3  Curtis   V.    Mcllhenny,   5   Jones, 
Eq.,  290. 


CHAP.  VIII.]  ACTIONS  239 

directed  to  bring  suit  thereon,  he  and  no  other  person  can  main- 
tain the  action  to  enforce  their  payment. ^ 

§  202.  Court  maintains  strict  control  over  receiver ;  does 
not  permit  unauthorized  suits.  Courts  of  equity  are  in- 
clined to  the  exercise  of  a  strict  control  over  their  receivers 
in  the  matter  of  allowing  them  to  bring  suits  concerning  their 
receivership,  and  an  action  brought  by  a  receiver  is  considered 
as  brought  under  the  order  of  the  court  itself.  And  a  re- 
ceiver will  not  be  permitted  to  abuse  the  power  intrusted  to 
him  by  unauthorized  suits  against  third  persons,  under  pre- 
tense of  authority  derived  from  the  court.  If,  therefore,  he 
institutes  an  action  in  the  name  of  a  third  person,  without  his 
authority  and  without  any  foundation  or  pretense  of  right,  the 
parties  to  such  suit  are  entitled  to  the  protection  of  the  court 
against  such  unauthorized  proceedings  on  the  part  of  the  re- 
ceiver, who  will  be  directed  to  discontinue  the  action  and  will 
be  enjoined  from  further  proceeding  therein.^  No  greater  de- 
gree of  diligence  is  exacted  of  receivers  in  instituting  actions 
concerning  their  trust  than  in  the  case  of  a  trustee,  who  is 
required  to  act  in  good  faith  and  with  the  same  prudence  and 
discretion  which  a  prudent  man  is  accustomed  to  exercise  in 
his  own  affairs.^ 

§  203.  Regularity  of  receiver's  appointment  and  his 
competency  can  not  be  questioned  collaterally ;  otherwise 
if  order  void.  It  would  seem  that  the  regularity  of  a  re- 
ceiver's appointment,  or  the  competency  of  the  person  ap- 
pointed, may  not  be  called  in  question  in  a  collateral  action,  but 
must  be  impeached,  if  at  all,  in  a  direct  proceeding  for  that 
purpose.  It  follows,  therefore,  that  in  an  action 'instituted  by 
a  receiver  in  matters  connected  with  his  trust,  as  to  obtain  pos- 
session of  funds  belonging  to  him  in  his  official  capacity,  if 

4  Driver  v.  Lanier,  66  Ark.,  126,  to  which  a  receiver  will  be  upheld 
49  S.  W.,  816.  in  effecting  a  compromise  of  a  pend- 

5  In  re  Merritt,  5  Paige,  125.  ing  action  or  controversy,  see  Unit- 

6  Reynolds'  Executor  v.  Petty-  ed  States  v.  Church,  6  Utah,  9,  21 
John,  79  Va.,  327.    As  to  the  extent  Pac,  503,  524. 


240  RECEIVERS.  [chap.  VIII. 

proper  record  evidence  of  his  appointment  is  produced,  it  will 
be  regarded  as  conclusive  upon  the  question  of  the  receiver's 
right.  The  court  proceeds,  in  such  a  case,  upon  the  ground 
that  it  is  immaterial  whether  the  appointment  was  proper  or 
improper  in  the  first  instance ;  and  that  while  it  remains  a  sub- 
sisting order  of  a  court  of  competent  jurisdiction,  it  is  not  to 
be  questioned,  unless  by  appropriate  proceedings  to  test  its 
validity."^  If,  however,  the  order  is  absolutely  void,  a  different 
rule  prevails,  and  in  such  case  the  objection  to  its  validity  may 
be  urged  in  a  collateral  proceeding.  For  example,  when  a  stat- 
ute provides  that  notice  to  a  defendant  shall  be  given  of  any 
application  for  the  appointment  of  a  receiver,  and  that  the  or- 
der, if  made  without  notice,  shall  be  void,  a  defendant  over 
whose  property  a  receiver  is  appointed  without  notice  may 
maintain  an  action  against  such  receiver  to  recover  rents  of 
the  premises  which  he  has  collected.^ 

§  204.  Appointment  of  receiver  does  not  change  rights 
of  action ;  suit  by  receiver  of  insurance  company ;  sale  prior 
to  appointment.  The  appointment  of  a  receiver  does  not 
have  the  effect  of  changing  any  rights  of  action,  or  of  changing 
the  contract  relations  existing  between  the  original  parties, 
against  whom  the  receiver  is  appointed,  and  their  debtors.  A 
receiver,  therefore,  can  not  maintain  an  action  upon  a  note  or 
obligation  running  to  the  original  party,  which  he  himself 
could  not  have  maintained.^  For  example,  in  the  case  of  a 
mutual  insurance  company,  when  the  obligation  of  the  assured 
upon  a  premium  note  given  for  a  policy  of  insurance  depends 
upon  an  assessment  and  notice  thereof,  which  assessment  and 
notice  have'  never  been   given   by  the   company,    so   that   it 

7  Vermont   &    Canada   R.    Co.  •  v.  son  v.  Greeley,  107  Mo.,  577,  17  S. 

Vermont    Central    R.    Co.,    46    Vt.,  W.,  962.     See,  ante,  §  39a. 

792;   Cox  V.  Volkert,  86  Mo.,  505;  8  Johnson    v.    Powers,    21    Neb., 

Barbour     v.      National      Exchange  292,  32  N.  W.,  62.    But  see  Edee  v. 

Bank,  45  Ohio  St.,  133,  12  N.  E.,  5.  Strunk,  35  Neb.,  307,  53  N.  W.,  70. 

See,      also,      Attorney-General      v.  See,  ante,  §§  166a  and  168. 

Guardian     Mutual    Life    Insurance  9  Williams  v.   Babcock,  25  Barb., 

Co.,  77  N.  Y.,  272;  Block  v.  Estes,  109;  Bell  v.  Shibley,  33  Barb.,  610. 
92  Mo.,  318,  4  S.  W.,  731 ;  Thomp- 


CHAP.  VIII.]  ACTIONS.  241 

could  maintain  no  action  upon  the  note,  a  receiver  of  the  com- 
pany stands  in  the  same  situation,  and  will  not  be  allowed  to 
sue  without  having  taken  the  necessary  steps  to  fix  the  maker's 
liability.io  And  a  receiver  can  not  maintain  an  action  for  the 
recovery  of  property  of  the  defendant  which  had  been  sold 
under  execution  prior  to  his  appointment.^! 

§  205.  Defense  available  against  original  plaintiff,  avail- 
able against  receiver.  For  the  purpose  of  actions  and  suits 
connected  with  their  receivership,  receivers  occupy  substan- 
tially the  same  relation  which  was  occupied  by  the  original 
parties  against  whom  or  over  whose  estate  they  were  appointed. 
Any  defense,  therefore,  which  a  defendant  might  have  made 
to  an  action  brought  by  the  original  party  in  interest  is  equally 
available,  and  may  be  made  with  like  effect  when  the  action  is 
instituted  by  his  receiver.12  Thus,  when  receivers  of  a  bank- 
ing corporation  institute  an  action  upon  a  note  given  for  a  sub- 
scription to  the  capital  stock  of  the  bank,  and  the  maker  relies 
for  his  defense  upon  the  fact  that  the  note  was  obtained  through 
fraudulent  representations  made  by  agents  of  the  bank  as  to 
the  condition  and  value  of  its  stock,  such  defense  is  available 
to  the  same  extent  and  with  like  effect  as  if  interposed  in  an 
action  brought  by  the  bank  itself.l^  If,  however,  the  defend- 
ant in  such  a  case  is  himself  culpably  chargeable  with  partici- 

10  Williams  v.  Babcock,  25  Barb.,  and  another  for  a  fraudulent  con- 
109.  See  also,  Thomas  v.  Whallon,  spiracy  to  prevent  the  collection  of 
31  Barb.,  172.  the    judgment    creditor's    debt,    see 

11  Mcllrath  v.  Snure,  22  Minn.,  Ward  v.  Petrie,  157  N.  Y.,  301,  51 
391.  N.  E.,  1002,  68  Am.  St.  Rep.,  790. 

12  Litchfield  Bank  v.  Peck,  29  13  Litchfield  Bank  v.  Peck,  29 
Conn.,  384;  Wardle  v.  Hudson,  96  Conn.,  384.  Sandford,  J.,  says,  p. 
Mich.,  432,  55  N.  W.,  992;  State  v.  385:  "The  only  question  in  this 
Sullivan,  120  Ind.,  197,  21  N.  E.,  case  is,  whether  the  defense  set  up 
1093,  22  N.  E.,  325 ;  Chicago  Title  can  be  made  available  against  these 
&  Trust  Co.  V.  Brady,  165  Mo.,  197,  receivers.  That  it  would  have  been 
65  S.  W.,  303.  As  to  the  right  of  a  entirely  so,  in  a  contest  between 
receiver  in  supplementary  proceed-  the  defendant  and  the  bank  itself, 
ings  under  the  code  of  New  York  is  undeniable,  and  is^  not  denied; 
to^  maintain  an  action  to  recover  but  the  receivers  claim  that  they 
damages  from  the  judgment  debtor  represent    creditors,    and    therefore 

Receivers — 16. 


242  RECEIVERS.  [chap.  VIII. 

pation  in  tlie  fraud,  having  united  with  others  in  the  formation 
of  a  fraudulent  banking  corporation,  which  passes  into  the 
hands  of  receivers  for  the  benefit  of  its  creditors,  he  can  not 
urge  such  fraudulent  organization  in  defense  of  an  action 
brought  against  him  by  the  receivers  to  enforce  his  subscrip- 
tion to  the  capital  stock.^^  So  when  a  receiver  of  an  insolvent 
mutual  fire  insurance  company  brings  an  action  against  a  mem- 
ber of  the  company  to  recover  an  assessment,  which  would 
have  been  barred  by  the  statute  of  limitations  had  the  action 
been  brought  by  the  corporation  itself,  such  defense  is  equally 
available  as  against  the  receiver.^^  And  a  receiver  can  not 
maintain  an  action  against  the  debtor,  over  whom  he  is  ap- 
pointed, and  his  sureties  upon  an  official  bond,  since  the  debtor 
himself  could  not  have  maintained  such  action. ^^  So  when, 
pending  a  suit  for  the  recovery  of  property  held  by  a  copart- 
nership, a  receiver  is  appointed  over  the  defendants,  who  in- 
tervenes in  the  suit  and  is  substituted  as  defendant,  he  will  be 
permitted  to  assert  no  title  to  the  property  other  than  or  dif- 
ferent from  that  of  the  original  defendants. ^"^ 

§  206.  Judgment  in  favor  of  receivers  of  banking  corpo- 
ration, bar  to  subsequent  suit  in  name  of  bank.  When  re- 
stand  on  higher  ground  than  the  the  law  charged  with,  any  respon- 
bank  ever  stood,  and  that  against  sibility  for  its  debts  or  obligations, 
them  this  defense  can  not  be  inter-  These  receivers  are  not  indorsees, 
posed.  That  they  represent  cred-  nor  were  they  in  fact  appointed  un- 
itors  may  be  conceded,  and  that  in  til  after  maturity  of  the  note,  so 
some  cases  they  may  enforce  claims  that  the  rule  of  policy  which  pro- 
which  the  bank  itself  could  not  en-  tects  the  holder  of  negotiable  paper 
force,  need  not,  perhaps  ought  not,  can  have  no  application  in  their 
to  be  denied ;  but  in  what  way  and      favor." 

by  force  of  what  principles  of  law,  1^  Litchfield   Bank  v.   Church,  29 

equity  or  justice,  receivers  or  cred-       Conn.,  137.    And  see  comments  up- 
itors  could  avoid  the  application  or      on   this   case   in   Litchfield   Bank  v. 
escape    the    force    of    this    defense.      Peck,  29  Conn.,  387,  388. 
and  compel  the  payment  of  this  de-  1^  Wardle   v.    Hudson,   96   Mich., 

mand,    we   are    unable    to    discover.      432,  55  N.  W.,  992. 
.     .     .     Neither    in    law,    equity    or  16  State  v.  Sullivan,  120  Ind.,  197, 

conscience   was   this    defendant   the      21  N.  E.,  1093,  22  N.  E.,  325. 
debtor  of  the  bank,  nor  had  he  as-  i"*"  Head  v.  Miller,  45  Minn.,  446, 

sumed,  nor  was  he  by  the  charter  or      48  N.  W.,  192. 


CHAP.  VIII.  J  ACTIONS.  243 

ceivers  of  a  banking  corporation  institute  an  action  in  one  state 
upon  liabilities  due  to  the  bank,  and  recover  judgment  thereon, 
such  judgment  constitutes  a  good  defense  in  bar  to  an  action 
brought  against  the  same  defendants  for  the  same  cause  of  ac- 
tion in  another  state,  even  though  the  former  suit  was  brought 
in  the  name  of  the  receivers,  and  the  latter  in  the  name  of  the 
bank  itself.  Such  receivers,  being  empowered  by  the  law  where 
they  were  appointed  to  sue  in  the  corporate  name,  or  in  their 
individual  names,  and  being  clothed  with  all  the  powers  and 
rights  in  the  collection  of  debts  due  to  the  bank  which  the  cor- 
poration itself  possessed,  are  merely  its  representatives  for  the 
purposes  of  litigation,  and  the  judgment  recovered  by  them  in 
that  capacity  should  have  the  same  effect  as  if  recovered  in  the 
name  of  the  corporation. ^^ 

§  207.  Receiver  not  restricted  in  management  of  suit; 
may  remove  cause  to  United  States  court;  but  is  limited 
to  existing  remedies.  It  is  important  to  observe,  that  the 
general  doctrine  of  courts  of  equity,  recognizing  a  receiver  as 
the  officer  or  representative  of  the  court  from  which  he  derives 
his  appointment,  is  not  to  be  understood  as  limiting  or  restrict- 
ing his  rights  in  the  management  of  a  suit  which  he  has  once 
undertaken.  And  after  entering  upon  the  litigation,  he  is  re- 
garded as  being  entitled  to  all  the  freedom  of  action  of  any 
other  suitor,  and  the  fact  that  he  appeals  from  a  decision  which 
is  adverse  to  him  is  not  of  itself  evidence  of  bad  faith  or  of 
mismanagement  of  his  trust,  and  may  be  a  meritorious 
rather  than  a  censurable  act.^^  So  if  the  citizenship  of  a  re- 
ceiver is  such  as  to  entitle  him  to  remove  a  cause  brought 
against  him  in  a  state  court  to  a  federal  court,  he  may  exercise 
the  right  of  removal,  although  the  citizenship  of  the  corpora- 
tion over  which  he  is  appointed  would  not  have  entitled  it  to 
remove  the  cause  if  brought  against  the  corporation  itself.^o 

18  Bank    of    North    America    v.  20  Brisenden   v.    Chamberlain,    53 
Wheeler,  28  Conn.,  433.                            Fed.,  307. 

19  Devendorf     v.     Dickinson,     21 
How.  Pr.,  275. 


244  RECEIVERS.  [chap,  VIII. 

A  receiver,  however,  in  all  actions  which  he  may  bring  by  virtue 
of  his  receivership,  must  pursue  the  appropriate  and  existing 
remedies,  and  the  authority  to  sue  conferred  upon  him  by  the 
court  can  not  convert  that  into  an  equitable  right  of  action 
which  was  before  a  legal  one,  or  change  the  established  methods 
of  procedure  for  enforcing  the  right.^i  If,  therefore,  the  de- 
mand sued  upon  by  the  receiver  is  legal  in  its  nature,  and  sus- 
ceptible of  enforcement  in  an  action  at  law,  he  can  not  maintain 
a  bill  in  equity.  Thus,  when  by  the  order  of  his  appointment 
the  receiver  of  a  railway  company  is  vested  with  full  power  to 
"take  into  his  possession  the  bills,  bonds,  notes,  and  other  evi- 
dences of  debt,  belonging  to  said  company,  with  full  power 
to  sue  for  and  collect  all  moneys  due  on  the  same,"  the  right 
of  action  thus  conferred  is  to  be  exercised  in  accordance  with 
the  appropriate  existing  remedies,  and  the  receiver  can  not 
maintain  a  bill  in  equity,  in  his  own  name,  to  enforce  a  subscrip- 
tion to  the  capital  stock  of  the  company,  since  the  liability  of 
defendant  is  purely  a  legal  one,  to  be  enforced  by  an  action  at 
law.22  So  if  the  proper  mode  of  procedure  to  enforce  the  right 
in  question  is  by  bill  in  equity,  a  receiver  can  not  maintain  his 

21  Freeman  v.  Winchester,  18  failure  to  pay.  The  remedy  by  for- 
Miss.,  577;  Receiver  v.  First  Na-  feiture  and  sale  is  but  cumulative, 
tional  Bank,  34  N.  J.  Eq.,  450.  And  The  question  then  is,  can  the  corn- 
see  Kretschmar  v.  Stone,  90  Miss.,  plainant  sue  in  his  own  name  in 
375,  43  So.,  177.  equity,  to  recover  a  debt  which,  as 

22  Freeman  v.  Winchester,  18  between  the  original  parties,  was 
Miss.,  577.  This  was  a  bill  by  the  recoverable  only  at  law?  .  .  . 
receiver  of  a  railway  company,  in  He  is  but  an  officer  of  the  court,  ap- 
his own  name,  to  enforce  an  unpaid  pointed  to  hold  a  fund  pending  lit- 
subscription  to  the  capital  stock  of  igation  or  infancy.  But  if  he  can 
the  company.  The  court,  Sharkey,  sue  at  all  it  must  be  in  the  name 
C.  J.,  says,  p.  579:  "The  liability  of  of  the  party  having  the  legal  right; 
the  respondent  on  his  subscription,  and  authority  to  sue  does  not  con- 
as  it  originally  existed,  was  purely  vert  that  into  an  equitable  right 
legal  in  its  character.  He  was  liable  which  was  before  purely  legal,  or 
to  be  sued  at  lav/  by  the  corpora-  he  could  not  bring  ejectment.  If 
tion  for  the  amount  which  he  had  he  is  to  be  regarded  as  an  assignee, 
subscribed,  although  the  charter  he  should  sue  at  law,  of  course  on 
may  have  contained  a  clause  provid-  mere  legal  demands.  And  if  he  is 
ing  for  a  forfeiture  of  the  stock,  on  considered  as  trustee,  it  is  the  same 


CHAP.  VIII.]  ACTIONS.     *  245 

action  by  a  mere  petition,  but  must  conform  to  the  established 
and  usual  practice  in  this  regard. ^3 

§  208.  Receiver   should  obtain  leave  of  court  before 
bringing  action;  English  and  American  doctrine.    The  us- 
ual practice,  both  in  England  and  in  America,  before  institut- 
ing actions  by  a  receiver  in  matters  connected  with  his  trust, 
is  to  apply  to  the  court  from  which  he  derives  his  appointment 
for  leave  to  bring  such  actions.    And  although  it  is  frequently 
the  case  that  the  order  of  appointment  in  general  terms  author- 
izes the  receiver  to  sue  for  and  collect  all  demands  due,  yet  it 
is  a  common  practice  to  first  obtain  special  leave  of  court  be- 
fore beginning  any  action.    In  the  English  Court  of  Chancery, 
the  rule  was  laid  down  in  the  time  of  Lord  Thurlow,  that  a  re- 
ceiver had  not,  by  virtue  of  his  appointment,  sufficient  author- 
ity, without  permission  of  the  court,  to  institute  an  action  of 
ejectment  against  tenants  of  the  estate  over  which  he  was  ap- 
pointed.24    jhe  same  rule  was  recognized  and  adopted  by  the 
New  York  Court  of  Chancery,  which  required  the  receiver  to 
first  obtain  special  leave  of  court  before  bringing  an  action  of 
ejectment.     And  when  a  receiver  was  appointed  over  certain 
lands  held  in  trust  by  defendant  for  plaintiffs,  and  the  defend- 
ant trustee  was  enjoined  from  interfering  with  the  trust  estate, 
the  court,  on  the  application  of  the  cestui  que  trust,  authorized 
the  receiver  to  institute  actions  of  ejectment  for  the  recovery 
of  portions  of  the  estate  held  by  adverse  claimants,  when  it  was 
apparent  that  such  course  was  necessary  for  the  security  and 
benefit  of  the  trust.25    The  same  general  principle  is  recognized 

thing,  for  a  trustee  may  sue  at  law.  cellor    can    not    convert    remedies 

But  does  the  receiver  derive  power  from    legal    to    equitable.      If    he 

to    sue    in   this    instance    from    the  could  confer  the  power  to  sue,  he 

order    of   his    appointment?      It    is  could  confer  it  to  be  exercised  as 

alleged  in  the  bill  that  he  is  author-  well  at  law  as  in  equity." 

ized    to    sue    for    and    collect    all  23  Receiver     v.     First     National 

moneys  due  the  company.     Admit-  Bank,  34  N.  J.  Eq.,  450. 

ting  that  this   order  conferred   the  24  Wynn  v.  Lord  Newborough,  3 

power    to    sue,    it    only    gives    the  Bro.  C.  C,  88. 

power  to  be  exercised  according  to  25  Green  v.  Winter,  1  Johns.  Ch., 

the  appropriate  remedy.    The  chan-  60. 


246  RECEIVERS.  [chap.  VIIl. 

and  enforced  in  North  Carolina,  where  it  is  held  that,  notwith- 
standing the  adoption  of  a  code  of  procedure  regulating  to  a 
certain  extent  the  powers  of  courts  in  appointing  receivers,  the 
right  of  a  receiver  to  maintain  an  action  is  to  be  governed  by 
the  established  rules  of  equity,  and  the  courts  still  follow  the 
practice  of  the  English  Chancery  in  this  regard,  as  settled  by 
the  authorities.  A  receiver,  therefore,  is  not  allowed  to  bring 
an  action  for  the  recovery  of  property  belonging  to  the  estate 
over  which  he  has  been  appointed,  without  an  order  of  court 
authorizing  the  proceeding.26  So  in  Minnesota,  it  is  held  that 
the  receiver  of  a  railway  company  can  not  institute  condemna- 
tion proceedings  without  first  obtaining  leave  of  the  appointing 
court. 27  And  in  Tennessee,  the  receiver  of  an  insolvent  cor- 
poration can  not,  without  leave  of  court,  maintain  an  action  to 
enforce  the  liability  of  the  shareholders  upon  their  stock  sub- 
scriptions and  to  recover  from  the  officers  and  directors  for 
negligence  in  the  management  of  the  affairs  of  the  corpora- 
tion.^8  And  in  Virginia,  it  is  held  that  a  receiver  who  has  been 
directed  to  collect  the  purchase  money  for  lands,  the  sale  of 
which  has  been  confirmed  in  the  cause,  can  not,  without  leave 
of  court,  institute  an  action  in  another  court  to  set  aside  an 
alleged  fraudulent  conveyance  of  other  land  made  by  the  pur- 
chase-money debtor,  in  order  to  subject  it  to  the  payment  of 
the  debt  which  the   receiver  is  ordered  to   collect. ^9      So   in 

20  Battle  V.  Davis,  66  N.  C,  252.  rer.     Hardin  v.  Sweeney,  14  Wnsli., 

But   see   Gray  v.   Lewis,   94   N.    C.  129,  44  Pac,   133;   Allen  v.    IVixter, 

392.    And  in  Weill  v.  First  National  42  Wash.,  434,  85  Pac,  26.     And  in 

Bank,  106  N.  C,  1,  11  S.  E.,  277,  it  Compton  v.  Schwabachcr.  15  Wa^li.. 

was  held  under  the  provisions  of  the  306,  46  Pac,  338.  it  was  held  ilr\t  a 

code   of   procedure    that    a    receiver  receiver    may     institute     an     action 

in  aid  of  judgment  creditors,   upon  without  leave  of  court. 

proceedings  supplemental  to  execu-  27  Minneapolis    Western    Ry.    Co. 

tion,  might  sue  to  recover  property  v.  Minneapolis  &  St.   L.  R.   Co.,  61 

of  the  debtor  without  leave  of  court.  Minn.,  502,  63  N.  W.,  1035. 

In    Washington    it    is    held    that    a  28  Simmons  v.  Taylor,  106  Tenn., 

declaration    which    fails    to    allege  729,  63  S.  W.,  1123. 

that    a    receiver    is    authorized    to  29  McAllister  v.  Harman,  97  Va., 

bring  the  action  in  his  own  name  is  543,  34  S.  E.,  474. 
not  obnoxious  to  a  general  demur- 


CHAP.  VIII.]  ACTIONS.  247 

Georgia,  it  is  held  that  a  receiver  has  in  general  no  authority  to 
bring  suit  to  recover  property  over  which  he  is  appointed,  with- 
out an  order  of  court,  and  that  his  general  authority  to  col- 
lect and  hold  the  assets  is  not  sufficient  to  warrant  him  in 
bringing  suit ;  since,  being  an  officer  of  the  court,  it  is  for  the 
court  to  say  whether  there  shall  be  litigation.^*^  And  in  au- 
thorizing its  receiver  to  bring  suit,  it  is  proper  for  the  court 
to  make  the  bringing  of  the  action  conditioned  that,  upon  in- 
vestigation, it  shall  appear  that  there  is  a  reasonable  prospect 
of  realizing  upon  any  judgment  which  may  be  rendered.^^ 
In  Maryland,  however,  it  has  been  held,  that  when  receivers 
are  in  possession  of  property,  which  is  taken  from  them  pend- 
ing an  appeal  from  the  order  for  their  appointment,  the  appeal 
bond  standing  in  lieu  of  the  property,  upon  their  appointment 
being  affirmed  by  the  appellate  court,  it  is  their  immediate  duty 
to  bring  an  action  upon  the  appeal  bond,  without  any  special 
order  of  court  for  that  purpose.32  And  in  Wisconsin,  under 
the  provisions  of  the  statute  of  that  state,  it  is  held  that  an  ac- 

30  Screven  v.  Clark,  48  Ga.,  41.  Chancery  Practice,  1988  et  seq.  A 
This  was  an  action  by  a  receiver  of  receiver  is  at  last  only  an  officer  of 
a  railway  corporation  to  recover  the  court,  and  the  foundation  of  the 
certain  cars  of  the  company,  his  rule  probably  is  that  it  is  always 
only  authority  being  the  order  ap-  for  the  court  itself  to  determine 
pointing  him  temporary  receiver  of  whether  it  shall  be  dragged  into 
the  company  and  of  all  its  prop-  litigation.  At  law  the  party  having 
erty,  and  containing  these  words:  the  legal  right  to  sue  is  the  proper 
"And  he  is  hereby  ordered  to  col-  party,  and  if  one  comes  suing  for 
lect  immediately  all  said  property  the  property  of  another,  he  must 
together,  and  hold  the  same  sub-  show,  as  part  of  his  right  to  re- 
ject to  the  further  order  of  the  cover,  the  authority  he  has  to  come 
court."  This  was  held  insufficient  into  a  court  of  law  asserting  an- 
to  authorize  him  to  bring  suit,  Mc-  other's  right.  We  think  this  fail- 
Cay,  J.,  observing,  p.  42,  as  follows  :  ure  to  show  any  authority  to  sue  is 
"The  rule  is  perhaps  an  arbitrary  fatal  to  the  case  of  the  plaintiff  be- 
one,  but   is,  nevertheless,  well   set-  low." 

tied,  that  the  receiver  has  no  right  31  Sterling  Electric  Co.  v.  Augus- 

to    sue    without    express    authority  ta  T.  &  E.  Co.,  124  Ga.,  371,  52  S. 

from  the  chancellor;  his  general  au-  E.,  541. 

thority  to  collect  and  keep  the  as-  32  Everett  v.  The  State,  28  Md., 

sets  is  not  sufficient  to  justify  him  190.     The   decision,   however,   rests 

in    bringing    an    action.     Daniell's  upon  a  law  of  that  state  making  it 


248  RECEIVERS.  [chap.  VIII. 

tion  brought  by  a  receiver  to  set  aside  a  fraudulent  conveyance 
niav  be  maintained  without  leave  of  the  appointing  court. ^^ 
It  will  thus  be  seen  that,  while  there  are  respectable  authorities 
to  the  contrary,  the  decided  weight  of  authority  is  in  support 
of  the  general  rule  that  a  receiver  can  not  institute  an  action 
connected  with  the  administration  of  his  trust  without  first 
procuring  the  leave  of  the  court  which  has  appointed  him. 

§  209.  Conflict  of  authority  as  to  name  in  which  receiver 
must  sue;  the  general  rule  stated.  Some  conflict  of  author- 
ity exists  in  the  reported  cases  upon  the  question  whether,  in 
the  absence  of  statutory  authority,  a  receiver  may  institute  and 
conduct  actions  in  his  own  name,  in  matters  concerning  his  re- 
ceivership, or  whether  he  must  sue  in  the  name  of  the  original 
party  in  whose  favor  the  action  accrued.  It  is  believed,  how- 
ever, that  the  weight  of  authority  clearly  supports  the  proposi- 
tion, that  the  receiver  must  sue  in  the  name  of  the  person  hav- 
ing the  legal  right,  and  that  when  neither  the  laws  of  the  state 
nor  the  order  of  his  appointment  authorize  him  to  proceed  in 
his  own  name,  he  can  only  proceed  in  the  name  of  the  person 
in  whom  the  right  of  action  existed  before  the  receiver's  ap- 
pointment.^^    Thus,  a  receiver  of  a  corporation  can  not,  by 

the  duty  of  receivers  to  take  charge  King  v.  Cutts,  24  Wis.,  627;  Wilson 
of  and  sell  the  property,  and  collect  v.  Welch,  157  Mass.,  77,  31  N.  E., 
the  debts,  and  declaring  that  they  712;  Fort  Payne  Coal  &  Iron  Co.  v. 
shall  be  "bound  and  held  liable  for  Webster,  163  Mass.,  134,  39  N.  E., 
their  default,  negligence  or  mal-  786;  Harland  v.  Bankers  &  Mer- 
feasance  in  office."  And  the  court  chants  Telegraph  Co.,  32  Fed.,  305; 
say  that,  in  such  case,  it  is  unneces-  Freeman  v.  Winchester,  18  Miss., 
sary  to  inquire  whether,  ordinarily,  577;  Battle  v.  Davis,  66  N.  C,  252; 
a  receiver  can  bring  an  action  with-  Carver  v.  Kent,  70  Ind.,  428;  Mo- 
out  a  previous  order  of  the  court  riarty  v.  Kent,  71  Ind.,  601 ;  Harrell 
from  which  he  derives  his  appoint-  v.  Kent,  71  Ind.,  602.  See,  also, 
ment.  See  as  to  the  doctrine  in  Ingersoll  v.  Cooper,  5  Blackf.,  426; 
Louisiana,  Helme  v.  Littlejohn,  12  Harland  v.  Bankers  &  Merchants 
La.  An.,  298.  Telegraph   Co.,  33   Fed.,    199.     But 

33  Wisconsin  Trust  Co.  v.  Jen-  see,  contra.  Wray  v.  Jamison,  10 
kins,  110  Wis.,  531,  86  N.  W.,  153.  Humph.,  186;  Henning  v.  Raymond, 

34  Yeager  v.  Wallace,  44  Pa.  St.,  35  Minn.,  303,  29  N.  W.,  132;  Helme 
294;  Justice  v.  Kirlin,  17  Ind.,  588;  v.  Littlejohn,  12  La.  An.,  298;  Baker 
Manlove   v.    Burger,    38   Ind.,   211;  v.    Cooper,   57   Me.,   388.     And   see 


CHAP.  VIII.] 


ACTIONS. 


249 


virtue  of  his  appointment,  prosecute  suits  for  the  enforcement 
of  choses  in  action  and  debts  originally  due  to  the  corporation, 
in  his  own  name,  but  must  proceed  in  the  name  of  the  corpora- 
tion, in  whose  favor  the  legal  right  accrued. ^^  And  the  rule 
applies,  even  though  the  order  of  his  appointment  authorizes 
the  receiver  to  collect  such  choses  in  action  as  may  come  to  his 
hands,  for  which  purposes  he  is  authorized  to  prosecute  suits 
in  the  courts  of  the  state,  and  he  must  still  proceed  in  the  name 
of  the  corporation,  and  can  not  sue  in  his  own  name.^^  So  in 
the  case  of  a  receiver  over  a  partnership,  it  is  held  that  he  can 
not  maintain  an  action  of  trover,  in  his  own  name,  for  the  con- 
version of  property  before  his  appointment,  but  that  suit  must 
be  brought  in  the  name  of  the  firm  in  which  the  right  of  action 
originally  existed.  The  receiver's  appointment,  it  is  held,  does 
not  transfer  to  him  the  legal  rights  of  the  firm  in  any  of  their 
choses  in  action,  and  trover  can  only  be  maintained  by  one  who 
has  the  legal  right.^"^    And  where,  pending  litigation  concern- 


Iglehart  v.  Bierce,  36  111.,  133.  In 
Hardin  v.  Sweeney,  14  Wash.,  129, 
44  Pac,  138,  the  court  refer  to  the 
rule  that  a  receiver  is  a  quasi-as- 
signee,  and  may  therefore  sue  in 
his  own  name.  And  see  Murtey  v. 
Allen,  71  Vt.,  Z77,  45  Atl.,  752 ;  King 
V.  Cochran,  72  Vt.,  107,  47  Atl.,  394. 

35  Battle  v.  Davis,  66  N.  C,  252; 
Justice  V.  Kirlin,  18  Ind.,  588;  Free- 
man V.  Winchester,  18  Miss.,  577; 
Garver  v.  Kent,  70  Ind.,  428 ;  Mori- 
arty  V.  Kent,  71  Ind.,  601;  Harrell 
V.  Kent,  71  Ind.,  602;  Fort  Payne 
Coal  &  Iron  Co.  v.  Webster,  163 
Mass.,  134,  39  N.  K,  786.  And  see 
Homer  v.  Barr  P.  E.  Co.,  180  Mass., 
163,  61  N.  E.,  883,  91  Am.  St.  Rep., 
269. 

36  Battle  v.  Davis,  66  N.  C,  252. 

37  Yeager  v.  Wallace,  44  Pa.  St., 
294.  But  see  Helme  v.  Littlejohn, 
12  La.  An.,  298.  Yeager  v.  Wallace 
was   an  action   of  trover  by  a   re- 


ceiver of  a  partnership  to  recover 
for  the  alleged  conversion  of  firm 
property  before  the  receiver's  ap- 
pointment. Judgment  was  for  plain- 
tiff, which  was  reversed  on  appeal, 
the  court,  Strong,  J.,  holding  as  fol- 
lows, p.  295 :  "But  can  a  receiver  of 
the  property  of  a  partnership  main- 
tain an  action  of  trover  in  his  own 
name  for  the  conversion  of  the  per- 
sonal property  of  a  firm  by  a  wrong- 
doer before  the  appointment  of  a  re- 
ceiver was  made?  He  is  but  an 
officer  of  the  court  which  appoints 
him,  and  does  not  become  the  legal 
owner  of  the  property  which  he  is 
required  to  take  in  charge.  The 
appointment  of  a  receiver  does  not 
transfer  to  him  the  legal  rights  of 
the  partnership  in  any  of  their 
choses  in  possession  or  in  action. 
Trover  can  only  be  maintained  by 
him  who  has  the  legal  right.  How, 
then,   can   the   receiver  sue,   except 


250 


RECEIVERS. 


[CIIAP.  VIII. 


ing  certain  real  estate,  a  receiver  is  appointed  to  take  charge  of 
and  lease  the  premises  pendente  lite,  his  powers  are  to  be  re- 
garded as  identical  with  those  of  a  receiver  in  chancery  gen- 
erally. He  is  not  an  assigiiee  of  the  owner,  and  can  not,  there- 
fore, maintain  an  action  of  forcible  entry  and  detainer  in  his 
own  name,  to  remove  a  lessee  holding  possession  under  a  lease 
executed  prior  to  the  receivership,  and  it  would  seem  to  be  the 
proper  course  for  him  to  apply  for  leave  to  prosecute  the  action 


in  the  name  of  the  firm?  That  he 
can  not,  not  only  seems  manifest 
upon  principle,  but  is  established  by 
authority.  Thus,  in  Taylor  v.  Allen, 
2  Atk..  213,  Lord  Chancellor  Hard- 
wicke  appointed  a  receiver  to  col- 
lect the  assets  of  a  testator,  and  em- 
powered him  to  bring  actions  in 
the  name  of  the  executrix.  In  Pitt 
z\  Snowden,  3  Atk.,  750,  the  same 
chancellor  said,  a  receiver  must  dis- 
train in  the  name  of  him  who  has 
the  legal  right.  This,  however,  can 
not  apply  to  a  case  where  the  ten- 
ant has  attorned  to  the  receiver,  for 
by  the  attornment  the  legal  right 
becomes  vested  in  the  receiver,  and 
he  may  then  distrain  in  his  own 
name.  Daniell's  Chan.  Prac,  1977. 
Indeed  I  do  not  find  it  has  ever 
been  decided  that  a  receiver  can 
sue  in  his  own  name  for  any  debt, 
claim,  or  demand  of  a  party  of 
whose  effects  he  has  been  appointed 
receiver,  or  to  recover  the  posses- 
sion or  control  of  any  real  estate  or 
choses  in  action  of  such  party,  un- 
less some  statute  has  enabled  him. 
He  has  always  been  regarded,  not 
as  having  the  legal  right,  but  as  a 
mere  custodian  to  take  charge  of 
the  property  during  a  pending  liti- 
gation. If  possession  be  withheld 
from  him  by  the  party  whose  prop- 
erty has  been  taken  charge  of  by 
the  court,  delivery  to  the  receiver  is 


enforced  by  attachment.  If  a  third 
person,  not  a  party  to  the  proceed- 
ings in  equity,  withhold  the  prop- 
erty, suit  may  be  brought  by  the  re- 
ceiver with  the  consent  of  the  court, 
but  he  must  bring  it  in  the  name  of 
him  who  has  the  legal  right.  In 
New  York,  it  is  true,  a  receiver  is 
more  than  a  custodian.  He  is  a 
statutory  assignee.  But  this  is  in 
consequence  of  the  statute  of  that 
state  of  April  28,  1845,  Laws,  90,  91, 
and  of  the  code  of  1849.  The  act  of 
1845  empowered  receivers  to  sue  in 
their  own  name  for  any  debt,  claim, 
or  demand  transferred  to  them,  or 
to  the  possession  or  control  of 
which  they  are  entitled  as  re- 
ceivers. In  Wilson  v.  Wilson,  1 
Barb.  Chan.  Rep.,  594,  the  chancel- 
lor thought  the  act  not  broad 
enough  to  transfer  the  title  of  real 
estate  to  the  receiver  by  the  mere 
order  of  the  court,  and  without  an 
actual  conveyance  from  the  party  to 
the  suit  in  whom  such  legal  title 
was  vested.  But  the  code  put  real 
and  personal  estate  on  the  same 
footing.  Porter  v.  Williams  & 
Clark,  5  Seld.,  142.  Without  the 
statutes  of  New  York,  it  was  never 
ruled  in  that  state  that  a  receiver 
had  the  legal  title  even  to  person- 
alty. The  right  to  sue  in  his  own 
name  was  always  rested  upon  the 
act   of   1845,   or   upon   the   code,   or 


CHAP.  VIII.]  ACTIONS.  251 

in  the  name  of  the  lessor.^^  So  a  trustee  in  the  nature  of  a  re- 
ceiver, appointed  by  the  court  to  receive  and  collect  certain 
notes,  is  not  authorized  by  virtue  of  his  appointment  to  sue  in 
his  own  name  on  notes  not  made  to  or  assigned  to  himself,  but 
must  bring  his  action  in  the  name  of  the  person  in  whom  is 
the  legal  title.^^  And  a  receiver  of  a  corporation,  which  is  the 
owner  of  letters  patent,  does  not  by  virtue  of  his  appointment 
acquire  the  title  of  the  corporation  to  such  letters  patent  and 
can  not,  therefore,  maintain  an  action  in  his  own  name  for  an 
infringement.'*^  And  under  a  statute  providing  that  a  com- 
plaint in  a  condemnation  proceeding  must  contain  the  name  of 
the  corporation  or  person  in  charge  of  the  public  use  for  which 
the  property  is  sought,  it  is  held  that  such  action,  when  brought 
upon  behalf  of  a  railway  company,  must  be  brought  in  the 
name  of  the  company  and  not  of  its  receiver ;  and  in  such  case, 
where  improperly  brought  in  the  name  of  the  receiver,  it  is 
proper  to  allow  the  plaintiff  to  amend  the  summons  and  plead- 
ings ;  and  this  may  be  done  even  after  verdict.^l 

§  210.  Exceptions  to  the  irule;  suits  in  name  of  receiver. 
Notwithstanding  the  decided  weight  of  authority  is  in  support 
of  the  rule  laid  down  in  the  preceding  section,  a  contrary  doc- 
trine has  been  strongly  maintained  in  some  of  the  states,  which 
have  recognized  and  upheld  the  receiver's  right  to  institute 

upon  an  act  passed  in  1825,  not  than  an  equitable  interest  in  the 
upon  any  rule  or  course  of  practice  property  or  rights  in  action  corn- 
in  chancery.  See  1  Johns.  Chan.  mitted  to  his  charge,  or  which  in- 
Cases.  In  Wilson  v.  Allen,  6  Barb.  vests  him  with  the  legal  ownership. 
545,  it  is  said  that  at  law  an  ordi-  It  seems,  therefore,  to  follow  that 
nary  receiver  was  not  considered  he  can  not  sue  in  his  own  name, 
as  having  the  legal  title,  so  as  to  and  that  the  present  suit,  being  in 
authorize  him  to  institute  a  suit  in  the  name  of  the  receiver,  was  erro- 
his  own  name,  for  any  debt  or  de-  neously  brought.  The  judgment  is 
mand  transferred  to  him  (under  reversed,  and  a  writ  of  restitution 
the  order  of  his  appointment),  or  to  is  awarded." 

the  possession  or  control  of  which  S8  King  v.  Cutts,  24  Wis.,  627. 

he  was  entitled,  under  an  order  of  39  IngersoU  v.  Cooper,  5  Blackf., 

the    court,    until    the    act    of    1845.  426. 

There  is  no  act  of  the  assembly  in  40  Dick  v.  Struthers,  25  Fed.,  103. 

this  state  that  gives  to  a  receiver  of  41  Bigelow  v.  Draper,  6  N.  Dak., 

a    court    of    equity    anything    more  152,  69  N.  W.,  570. 


252  RECEIVERS.  [chap,  VIII. 

actions  in  his  own  name,  by  virtue  of  his  appointment  and  of 
the  general  powers  thereby  conferred. "^^  Thus,  in  Tennessee, 
it  is  held  that  the  necessary  effect  of  the  delivery  of  a  demand 
or  chose  in  action  to  a  receiver,  duly  appointed  by  a  court  of 
equity,  is  to  invest  him  in  his  capacity  as  receiver  with  such  an 
interest  in  the  debt  to  be  recovered  that  he  alone  is  entitled  to 
sue  therefor,  and  in  his  own  name,  the  right  of  action  being 
divested  from  the  original  parties  of  whose  estate  he  has  been 
appointed  receiver.  And  the  addition  to  his  name  of  words 
indicating  his  capacity  as  receiver  is  regarded  as  a  mere  de- 
scriptio  pcrsonaeA^  So,  in  Louisiana,  it  is  held  that  a  receiver 
of  partnership  assets,  appointed  pending  litigation  for  the  set- 
tlement of  the  firm  business,  is  authorized  by  virtue  of  his  ap- 
pointment to  institute  an  action  in  his  own  name  for  the  recov- 
ery of  money  due  to  the  firm,  and  that  a  judgment  in  his  favor 
in  such  action  is  a  sufficient  protection  to  the  defendant  there- 
in.44  So,  too,  it  is  held  in  Maine,  that  receivers  of  a  bank  may 
maintain  in  their  own  name  an  action  of  forcible  entry  and  de- 
tainer, to  obtain  possession  of  real  estate  to  which  the  bank  is 
entitled.  Their  right  of  action  in  their  own  name,  under  such 
circumstances,  is  based  upon  the  fact  that  the  right  to  posses- 
sion, if  obtained  in  the  name  of  the  bank,  would  require  the  of- 
ficer executing  the  writ  to  put  the  bank  and  not  the  receivers  in 
possession,  while  the  very  purpose  of  the  proceeding  is  to  en- 
able the  receivers  to  obtain  possession. 45  But  it  is  held  in  the 
same  state,  that  the  appointment  of  receivers  to  wind  up  the  af- 
fairs of  a  bank  does  not  prevent  the  bank  from  maintaining  an 
action  in  its  own  name,  at  the  instance  of  the  receivers,  to  re- 
cover upon  a  liability  due  to  the  bank  from  an  indorser  of  a 
promissory  note.46    It  is  held  in  Pennsylvania,  that  when  prop- 

42  See     Wray     v.     Jamison,     10  44  Helme    v.    Littlejohn,    12    La., 
Humph.,  186;  Helme  v.  Littlejohn,      An.,  298. 

12  La.  An.,  298;  Baker  v.   Cooper,  45  Baker  v.   Cooper,  57  Me.,  388. 

57  Me.,  388 ;  Henning  v.  Raymond,  46  American  Bank  v.   Cooper,  54 

35  Minn.,  303.  Me.,  438. 

43  Wray  v.  Jamison,  10  Humph., 
186. 


CHAP.  VIII.]  ACTIONS.  253 

erty  has  come  into  a  receiver's  hands  by  virtue  of  his  appoint- 
ment, and  he  has  sold  it  under  order  of  the  court,  he  may  main- 
tain an  action  of  assumpsit  in  his  own  name  to  recover  the  pur- 
chase price.^'^  And  in  Georgia,  it  is  held  that  a  court  of  equity 
in  appointing  a  receiver  has  power  to  authorize  him  to  bring 
suits  concerning  the  subject-matter  of  his  receivership,  and  that 
when  so  authorized  he  may  sue  in  his  own  name.^^  In  Illinois, 
it  is  held  that  in  an  action  brought  by  receivers  of  the  assets  of 
a  banking  corporation,  to  recover  money  due  to  the  estate,  as 
in  the  foreclosure  of  a  mortgage,  the  bank  itself  need  not  be 
made  a  party  to  the  suit ;  since  its  property  having  passed  into 
the  hands  of  receivers,  the  prima  facie  intendment  is  that  the 
bank  has  no  such  interest  in  the  subject-matter  as  to  render  it  a 
necessary  party,  its  only  right  being  to  call  upon  the  receivers 
for  an  accounting. ^^ 

§  211.  The  question  as  regulated  by  statute.  The  ques- 
tion discussed  in  the  preceding  sections,  as  to  the  receiver's 
right  to  sue  in  his  own  name,  is  sometimes  determined  by  the 
statutes  of  the  state  under  which  he  is  appointed.  And  where 
a  statute  provides  for  appointing  receivers  to  wind  up  the  af- 
fairs of  insolvent  corporations,  and  authorizes  such  receivers 
to  sue  in  the  name  of  the  corporation  or  otherwise,  a  receiver 
appointed  under  the  statute  may  properly  bring  suit  in  his  own 
name  to  recover  upon  notes  due  to  the  corporation. ^^  And 
where,  under  the  laws  of  the  state,  a  receiver  of  an  insolvent 
corporation  is  vested  with  the  legal  title  to  all  the  property  of 
the  corporation,  with  full  authority  to  sue  in  his  own  name  for 

47  Singerly  v.  Fox,  75  Pa.  St.,  112.  tion.    Terry  v.  Bamberger,  44  Conn., 

48  Hardwick  v.  Hook,  8  Ga.,  354.  558.     And  in  the  same  state,  a  re- 

49  Iglehart  v.  Bierce,  36  111.,  133.  ceiver   over   a   foreign   corporation, 

50  Manlove  v.  Burger,  38  Ind.,  appointed  in  another  state,  may  sue 
211;  Hayes  v.  Brotzman,  46  Md.,  in  his  own  name  to  recover  money 
519.  See,  also,  Frank  v.  Morrison,  due  him  for  the  completion  of  con- 
58  Md.,  423.  And  under  the  stat-  tracts  made  originally  with  the  cor- 
utes  of  Connecticut,  a  receiver  over  poration  over  which  he  is  appointed. 
a  corporation  may  bring  suit  in  his  Cooke  v.  Town  of  Orange,  48  Conn., 
own  name  to  recover  for  the  con-  401. 

version  of  property  of  the  corpora- 


254  RECEIVERS.  [chap.  VIII. 

the  recovery  of  debts  due  to  the  corporation,  if  an  indebtedness 
due  to  the  company  has  been  released  and  discharged  in  fraud 
of  the  rights  of  innocent  shareholders,  an  action  to  recover 
such  indebtedness  is  properly  brought  in  the  name  of  the  re- 
ceiver.^^  So  where  laws  of  the  state  governing  the  appointment 
of  receivers  of  corporations  provide  that  such  receivers  shall 
have  full  power  to  sue  for  and  to  collect  any  demands,  or  to 
recover  any  property,  in  the  name  of  the  corporation  for  the 
use  of  its  creditors,  in  the  same  way  and  to  the  same  extent  that 
the  corporation  itself  might  recover,  the  corporation  can  not 
prosecute  an  action  in  its  own  name,  the  right  of  action  being 
vested  in  the  receivers  by  virtue  of  the  statute.  Otherwise, 
actions  might  be  prosecuted  in  the  name  of  a  dissolved  corpo- 
ration, by  unauthorized  persons,  without  right  and  in  viola- 
tion of  the  rights  of  debtors,  creditors  and  shareholders. ^^ 

§  212.  The  same;  trover  by  receiver  of  bank;  suits  by 
receiver  of  insurance  company;  by  receiver  of  insolvent 
state  bank  against  directors.  When  the  receiver's  author- 
ity is  derived,  not  merely  from  the  order  appointing  him,  but 
from  a  statute  under  which  the  appointment  is  made,  his  func- 
tions as  regards  the  bringing  of  suits,  in  matters  concerning 
his  receivership,  must  be  determined  with  reference  to  the  ex- 
tent of  the  powers  conferred  by  the  statute.  And  when  a  stat- 
ute providing  for  the  appointment  of  receivers  of  insolvent 
corporations,  authorizes  the  receiver  to  sue  in  his  own  name, 
or  otherwise,  and  to  recover  all  the  estate,  debts  and  things  in 
action  belonging  or  due  to  the  corporation,  the  term  "chose  in 
action"  will  be  construed  as  extending  to  all  rights  to  personal 
property  not  in  possession,  which  may  be  enforced  by  action, 
whether  growing  out  of  contract  or  tort.  The  receiver  of  a 
banking  corporation,  appointed  under  such  statute,  may,  there- 
fore, maintain  an  action  of  trover  for  the  conversion  of  per- 
sonal property  of  the  bank,  such  as  bonds,  even  though  the 

51  Nathan  v.  Whitlock,  9  Paige  13  Ohio,  269.  See,  also,  Renick  v, 
Ch.,  152.  Bank  of  West  Union,  13  Ohio,  298. 

52  AJinmi  Exporting  Co.  v.  Gano, 


CHAP.  VIII.]  ACTIONS.  255 

alleged  conversion  occurred  before  his  appointment.^^  So 
when  the  court  appointing  a  receiver  over  an  insolvent  insur- 
ance company  is  empowered  by  statute  to  make  such  orders  and 
decrees  as  may  be  necessary  for  winding  up  the  affairs  of  the 
company,  under  the  general  authority  thus  conferred  the  court 
may  authorize  the  receiver  to  sue  in  his  own  name  to  recover 
unpaid  subscriptions  to  the  capital  stock  of  the  company,^'* 
or  to  recover  money  wrongfully  misappropriated  and  wasted 
by  its  officers. ^^  So,  under  a  similar  statute  authorizing  the 
appointment  of  a  receiver  of  an  insolvent  state  banking  cor- 
poration and  empowering  him  to  bring  and  defend  actions  in 
his  own  name  and  to  collect  the  assets  of  the  bank,  it  is  held 
that  such  a  receiver  may  maintain  an  action  to  recover  dam- 
ages from  the  directors  for  their  negligence  in  the  management 
of  the  affairs  of  the  bank ;  and  in  such  case  it  is  not  necessary 
to  allege  that  there  were  unpaid  claims  against  the  bank  or  that 
the  assets  in  the  hands  of  the  receiver  were  insufficient  to  pay 
them.56 

§  213.  On  removal  or  death  of  receiver,  suit  continued 
by  his  successor.  In  New  York,  where  the  laws  of  the 
state  authorize  receivers  to  bring  actions  in  their  own  name 
concerning  matters  pertaining  to  their  receivership,  when  an 
action  is  instituted  by  a  receiver  for  the  recovery  of  money 
due  to  the  estate  over  which  he  is  appointed,  and  the  receiver 
is  afterward  removed  and  another  is  appointed  in  his  stead,  it 
is  proper  to  substitute  the  successor  as  plaintiff  in  the  action. 
And  in  such  case,  the  death  of  the  first  receiver,  after  the  sub- 
stitution, does  not  affect  or  abate  the  right  of  action  in  his 
successor.^"^  So  where  an  action  is  instituted  by  a  banking  cor- 
poration in  the  name  of  its  president,  and  a  receiver  is  subse- 
ts Gillet  V.  Fairchild,  4  Denio,  80.  56Coddington     v.     Canaday,     157 

54  Gill  V.  Balis,  72  Mo.,  424.  Ind.,  243,  61  N.  R,  567. 

55  Alexander  v.  Relfe,  74  Mo.,  495.  57  Sheldon  v.  Ames,  27  How.  Pr., 
See,  as  to  the  power  of  receivers  to      179,  41  Barb.,  54. 

sue  in  their  own  names  under  the 
statutes  of  Missouri,  State  v.  Fich- 
teukamm,  68  Mo.,  289. 


256  RECEIVERS.  [CIIAP.  VIII. 

quently  appointed,  who  is  invested  with  all  the  rights  of  the 
corporation  and  of  the  plaintiff,  as  president,  in  the  subject- 
matter  of  the  action  already  begun,  the  receiver  must  be  made 
a  party  to  such  suit  before  the  court  will  allow  it  to  proceed, 
and  no  order  affecting  his  right  to  be  substituted  as  plaintiff, 
and  to  continue  the  suit,  will  be  made  without  notice  to  him.^^ 
And  when,  after  instituting  an  action  concerning  his  receiver- 
ship, the  receiver  dies  and  a  successor  is  appointed,  who  suc- 
ceeds to  all  the  rights  and  duties  of  the  former,  the  action  must 
be  continued  in  the  name  of  the  new  receiver.  And  the  proper 
method  of  thus  continuing  the  action  and  bringing  the  new  re- 
ceiver into  the  case,  under  the  New  York  practice,  is  said  to 
be  by  proceedings  in  the  nature  of  a  bill  of  revivor,  or  a  supple- 
mental bill.^^  So  in  Georgia,  it  is  held  that  an  action  brought 
by  a  receiver  does  not  abate  by  reason  of  his  death,  but  that  it 
may  be  continued  in  the  name  of  his  successor,  when  the  cause 
of  action  is  one  which  survives.  But  the  appropriate  practice 
in  that  state,  in  substituting  the  successor  as  plaintiff  in  the 
action,  is  said  to  be  by  sci.  fa.  to  the  defendant. ^^  And  in  an 
action  by  a  receiver  against  a  fire  insurance  company  to  reform 
and  enforce  a  policy  issued  to  his  predecessor  in  office,  the  com- 
pany, having  received  the  premium,  will  not  be  heard  to  object 
that  the  former  receiver  had  no  authority  to  contract  for  in- 
surance. In  such  case,  the  policy  containing  a  provision  that 
it  shall  become  void  if  any  change  occurs  in  the  title  or  pos- 
session of  the  property,  whether  by  legal  process,  judicial  de- 
cree or  by  voluntary  conveyance,  the  appointment  of  a  success- 
or to  the  original  receiver  does  not  invalidate  the  policy,  the 
title  being  regarded  as  still  in  the  persons  for  whose  benefit  the 
receiver  holds,  and  the  possession  being  that  of  the  court.^^ 

§  214.  Receiver  substituted  in  lieu  of  original  plaintiff 
on  terms.  When  a  receiver  is  appointed  of  the  effects  and 
estate  of  the  plaintiff  in  an  action,  and  moves  to  be  substituted 

58  Talmage  v.  Pell,  9  Paige,  410.  61  Thompson  v.  Phenix  Insurance 

59  Palmer   v.    Murray,    18    How.,  Co.,  136  U.  S.,  287,  10  Sup.  Ct.  Rep., 
Pr.,  545.  1019. 

60  Searcy  v.  Stubbs,  12  Ga.,  437, 


CHAP.  Vin.]  ACTIONS.  257 

in  lieu  of  the  original  plaintiff  and  to  continue  the  action  in 
his  own  name  as  receiver,  it  is  competent  for  the  court,  in  grant- 
ing the  motion,  to  impose  such  conditions  as  may  be  necessary 
to  promote  the  ends  of  justice.  For  example,  when  an  action 
is  brought  upon  a  note,  the  defense  being  a  failure  or  want  of 
consideration,  and  by  the  fault  or  negligence  of  the  parties 
representing  the  plaintiff,  the  action  has  been  permitted  to 
slumber  for  a  period  of  years  sufficient  to  bar  a  recovery  upon 
the  note,  and  a  receiver  of  the  original  plaintiff,  seven  years 
after  plaintiff's  death,  moves  to  be  substituted  in  his  stead  and 
to  continue  the  action,  the  court  may  properly  impose  upon 
him,  as  a  condition  of  granting  his  motion,  that  he  assume  the 
burden  of  proving  the  consideration  of  the  note.^^  Sq  when  a 
corporation  institutes  an  action  for  the  foreclosure  of  a  mort- 
gage, and  a  receiver  is  afterward  appointed  over  the  corpora- 
tion in  another  state,  in  which  it  was  incorporated,  it  is  proper 
to  substitute  the  receiver  as  complainant  in  the  foreclosure 
suit,  upon  such  terms  as  may  be  appropriate  for  the  protection 
of  any  citizens  of  that  state  who  may  be  creditors  of  the  com- 
pany, and  for  securing  obedience  to  the  orders  of  the  court 
with  respect  to  the  fund  which  may  be  realized  by  the  suit.^^ 
And  when  a  corporation,  plaintiff  in  a  pending  action,  expires 
by  limitation  of  its  charter  and  a  receiver  is  appointed  over  its 
assets  for  the  benefit  of  its  creditors  and  shareholders,  the  re- 
ceiver may  be  substituted  as  plaintiff  in  such  action. ^^  But 
where  a  receiver  has  been  appointed  over  the  plaintiff  in  a  fore- 
closure suit,  the  mere  filing  by  the  receiver  of  an  affidavit  in 
the  foreclosure  to  the  effect  that  he  has  been  so  appointed, 
will  not,  in  the  absence  of  an  order  of  court,  make  him  a 
party  to  such  action. ^^  And  when  judgment  is  obtained  against 
a  defendant  and  a  recovery  had  thereunder,  but  the  judgment  is 

62  Livingston  v.  Olyphant,  2  Rob.,  64  Houston   v.    Redwine,   85    Ga., 
(N.    Y.),    639.      And    see    United      130,  11  S.  K,  662. 

.States  Vinegar  Co.  v.   Spamer,  143  65  Thomas  v.  Van  Meter,  164  111., 

N.  Y.,  676,  38  N.  E.,  731.  304,  45  N.  E.,  405. 

63  National  Trust  Co.  v.  Murphy, 
30  N.  J.  Eq.,  408. 

Receivers — 17. 


258  RECEIVERS,  [chap.  VIII. 

afterward  reversed,  it  is  proper  to  order  restitution  of  the 
money  collected  under  the  judgment  to  be  made  to  a  receiver 
of  the  defendant.^^  And  the  appointment  of  a  receiver  over  a 
corporation  does  not  afford  ground  for  the  continuance  of  an 
action  previously  brought  against  the  corporation. ^'^  Nor  is 
it  error  for  the  court  in  which  an  action  is  pending  against  a 
corporation  at  the  time  of  appointing  a  receiver  of  its  affairs 
to  refuse,  upon  application  of  the  corporation  defendant,  to 
join  the  receiver  as  defendant,  and  if  he  desires  to  defend,  he 
should  himself  make  the  application. ^^ 

§  215.  Foreclosure  of  mortgage  by  successors  to  origi- 
nal receivers  of  bank.  A  mortgage  of  real  estate,  executed 
to  receivers  of  a  banking  corporation  to  secure  an  indebtedness 
due  from  the  mortgagor  to  the  bank,  may  be  foreclosed  by  suc- 
cessors of  the  original  receivers,  in  their  own  name,  in  a  state 
other  than  that  in  which  they  were  appointed.  And  in  such 
foreclosure  proceedings,  the  bank  itself  need  not  be  joined  as  a 
party,  it  being  presumed  to  have  no  property  or  interest  in 
jeopardy,  and  the  proceedings  being  in  reality  for  the  benefit 
of  its  creditors. ^9 

§  216.  Employment  of  counsel  by  receiver;  should  not 
employ  counsel  of  either  party.  The  employment  of  coun- 
sel by  receivers  is  regarded  as  an  appropriate  means  to  attain 
the  end  sought  by  litigation.  The  general  rule,  however,  sub- 
ject to  the  limitations  to  be  hereafter  noticed,  is  that  the  re- 
ceiver should  not  employ  the  counsel  of  either  of  the  parties 
to  the  litigation  in  which  he  was  appointed;  since  their  duty 
being  to  protect  the  interests  of  their  respective  clients  and  to 
watch  the  receiver's  proceedings,  to  the  end  that  a  faithful 
performance  of  his  duties  may  be  insured,  they  are  not  re- 
garded as  competent  to  act  as  counsel  for  the  receiver,  and 
their  undertaking  to  act  in  such  a  capacity  might  frequently 

66  Market  National  Bank  v.   Pa-  68  Mercantile     Insurance     Co.    v. 
cific  National  Bank,  102  N.  Y.,  464,      Jaynes,  87  111.,  199. 

7  N.  E.,  302.  69  Iglehart  v.  Bierce,  36  111.,  133. 

67  Toledo,   W.   &  W.   R.   Co.   v. 
Beggs,  85  111.,  80. 


CHAP.  VIII.]  ACTIONS.  259 

cast  upon  them  inconsistent  and  conflicting  duties,  which  could 
not  be  properly  discharged  by  one  and  the  same  personJ^  It 
is  also  regarded  as  improper,  when  a  receiver  seeks  leave  of 
court  to  bring  an  action  in  relation  to  personal  property  pertain- 
ing to  his  receivership,  to  employ  the  counsel  of  the  persons 
holding  the  property,  or  interested  therein,  which  is  the  sub- 
ject-matter of  the  controversy.'^^  And  when  counsel  for  the 
plaintiff,  in  a  proceeding  for  the  dissolution  of  the  partnership, 
have  also  acted  as  associate  counsel  for  the  receiver,  the  court 

has  refused  to  allow  a  claim  for  compensation  in  their  be- 
half.72 

§  217.  The  rule  limited  to  cases  of  adverse  interest.    It 

is  to  be  observed,  however,  that  the  rule,  as  above  stated,  pro- 
hibiting a  receiver  from  employing  the  counsel  of  either  party 
in  the  cause,  is  limited  in  its  application  to  cases  where  the  re- 
ceiver is  acting  adversely  to  one  of  the  parties  to  the  litigation, 
since  it  is  only  in  such  cases  that  there  can  be  any  impropriety 
in  the  employment  of  such  counsel  by  the  receiver.'^^  And  the 
rule  is  intended  only  for  the  protection  of  the  rights  of  the  par- 
ties themselves,  and  can  not  be  invoked  by  a  stranger  to  the 
original  action  in  which  the  receiver  was  appointed.  Where, 
therefore,  no  objection  is  urged  by  such  parties,  the  receiver 
may  employ  the  counsel  of  either  of  them  to  aid  him  in  the  dis- 
charge of  his  trust ;  and  a  mere  stranger  to  the  original  action 
will  not  be  heard  to  object  that  the  receiver  has  employed 
such  counsel  to  institute  an  action  against  him.'^*  And  when 
a  receiver  is  appointed  in  a  creditor's  suit  brought  to  set  aside 
fraudulent  transfers  of  his  property  by  the  judgment  debtor, 

70  Ryckman  v.   Parkins,  5  Paige,  "^1  In  re  Ainsley,  1  Edw.  Ch.,  576. 

543;  In  re  Ainsley,  1  Edw.  Ch.,  576;  72  Adams  v.  Woods,  8  Cal.,  306. 

Ray  V.   Macomb,  2  Edw.  Ch.,  165 ;  73  Smith   v.   New   York   Consoli- 

Adams    v.    Woods,    8    Cal.,    306;  dated  Stage  Co.,  28  How.  Pr.,  Z77, 

Moore   v.    O'Loghlin,   3   L.    R.    Ir.,  18  Ab.  Pr.,  431. 

405;  Farwell  v.  Great  Western  Tel.  74  Warren  v.   Sprague,   11   Paige, 

Co.,  161  111.,  522,  613,  44  N.  E.,  891.  200,  affirming  S.  C,  4  Edw.  Ch.,  416, 
And    see,    ante,    §    188.      See,    also, 
Blair  v.  St.  L.,  H.  &  K.  R.  Co.,  20 
Fed.,  348. 


260  RECEIVERS.  [chap.  ViU. 

it  is  regarded  as  especially  appropriate  that  the  receiver  should 
employ  the  counsel  for  the  creditors  who  is  familiar  with  the 
litigation  resulting  in  the  receivership.''^ 

§  218.  Receiver  may  bring  action  of  detinue.  A  receiv- 
er, duly  appointed  by  a  court  of  competent  jurisdiction,  may 
maintain  an  action  of  detinue  for  property  which  has  been  in 
his  possession  as  receiver;  for,  while  he  can  not  maintain  the 
action  upon  the  ground  of  a  right  of  property  in  himself  merely 
by  virtue  of  his  appointment,  he  is  yet  entitled  to  its  possession, 
and  the  right  of  possession  is  sufficient  foundation  for  the 
action. "^^  And  he  has  such  a  qualified  or  special  interest  in  the 
property  which  comes  into  his  possession  as  receiver  as  to  en- 
able him  to  maintain  an  action  against  one  who  wrongfully 
takes  it  from  his  possession  and  converts  it  to  his  own  use.'^'^ 

§  219.  Judgment  recovered  by  receiver,  bar  to  subse- 
quent suit  by  plaintiff  in  original  cause.  Where  a  receiver 
has  brought  an  action  and  recovered  judgment  therein,  for 
the  benefit  of  the  plaintiff  in  the  action  in  which  he  was  appoint- 
ed, such  proceedings  constitute  a  bar  to  a  subsequent  suit 
brought  by  such  plaintiff  for  the  same  cause  of  action.  Under 
such  circumstances,  the  receiver  is  regarded  as  the  representa- 
tive of  the  plaintiff,  just  as  an  executor  or  administrator  repre- 
sents the  interests  of  the  estate  of  a  deceased  person.  And  to 
permit  one  at  whose  solicitation  the  receiver  was  appointed  to 
prosecute  a  demand  for  which  judgment  has  already  been  ob- 
tained for  his  benefit  by  the  receiver,  would  be  to  multiply  un- 
necessary litigation. "^8 

§  220.  Suit  by  administrator  subsequently  appointed  re- 
ceiver. To  warrant  a  receiver  in  bringing  an  action  at  law, 
he  must  either  have  in  himself  the  legal  title  to  the  matter  or 
thing  in  controversy,  or  must  bring  the  action  in  the  name  of 
the  person  having  such  legal  title.    When,  therefore,  an  action 

75  Shainwald    v.    Lewis,    8    Fed.,  77  Kehr  v.  Hall,  117  Ind.,  405,  20 
878;  Daniel  v.  Citizens'  Fire-Insur-      N.  E.,  279. 

ance  Co.,  149  Mich.,  626,  113  N.  W.,  78  Tinkham  v.  Borst,  24  How.  Pr., 

17.  246. 

76  Boyle  V.  Towncs,  9  Leigh,  158. 


CHAP.  VIII.]  ACTIONS.  261 

is  brought  by  an  administrator  to  recover  upon  a  promissory 
note  due  to  the  deceased,  and  the  proceedings  are  subsequently 
amended  by  changing  the  character  of  the  plaintiff  from  that  of 
administrator  to  that  of  receiver,  such  an  amendment  is  an 
abandonment  of  the  capacity  in  which  he  originally  sued,  and 
virtually  destroys  the  action.'^^ 

§  221.  Distinction  as  to  receiver's  rights  of  action  found- 
ed upon  title  to  real  estate.  In  Wisconsin,  a  distinction  is 
drawn  between  actions  brought  by  a  receiver  to  remove  ob- 
structions to  title  and  determine  adverse  claims,  or  to  obtain 
a  transfer  or  conveyance  of  title  to  the  receiver,  and  actions 
brought  by  him  to  recover  for  injuries  to  real  estate,  or  for  the 
recovery  of  its  possession.  The  former  class  of  actions  is  re- 
garded as  founded  upon  the  theory  that  the  receiver  has  not 
obtained  title  to  the  realty,  while  the  latter  is  based  upon  the  as- 
sumption of  title  in  himself.  And  a  receiver  in  that  state,  ap- 
pointed in  proceedings  supplementary  to  execution  under  the 
code  of  procedure,  to  take  charge  of  the  estate  of  a  defendant 
in  a  divorce  suit,  against  whom  a  decree  for  alimony  has  been 
rendered,  may  maintain  the  former  class  of  actions;  he  may, 
therefore,  bring  an  action  to  set  aside  a  fraudulent  conveyance 
of  defendant's  real  estate,  made  by  him  with  a  view  to  defeat 
the  decree  for  alimony.^^ 

§  222.  Receiver  may  recover  usury  paid  by  principal. 
Upon  the  question  of  what  rights  of  action  pass  to  a  receiver 
by  virtue  of  his  appointment,  it  has  been  held  in  New  York, 
under  a  statute  conferring  a  right  of  action  upon  a  borrower 
to  recover  back  money  which  he  has  paid  by  way  of  usury, 
that  this  right  of  action  passes  to  his  receiver,  who  may  main- 
tain a  suit  for  the  recovery  of  the  usurious  payments.  But 
since  the  right  of  action  in  such  a  case  is  wholly  dependent  upon 

79  Newell  v.  Fisher,  24  Miss.,  392.  of  a  receiver  under  the  New  York 
And  see,  ante,  §  209.  And  see  Mur-  code  of  procedure,  to  set  aside  a 
tey  V.  Allen,  71  Vt.,  377,  45  Atl.,  fraudulent  conveyance  of  defend- 
752;  King  v.  Cochran,  72  Vt.,  107,  ant's  property,  where  no  assign- 
47  Atl.,  394.  ment  has  been  made  by  defendant 

80  Barker  v.  Dayton,  28  Wis.,  367.  to  the  receiver,  Foster  v.  Town- 
And  see,  as  to  the  right  of  action  shend,  12  Ab.  Pr.,  N.  S.,  469. 


262  RECEIVERS.  [chap.  VIII. 

Statute,  it  can  only  be  sustained  if  brought  within  the  time 
prescribed  by  the  statute.^! 

§  223.  May  recover  rents  on  notice  to  tenant;  action  for 
unpaid  purchase-money.  To  entitle  a  receiver  to  sue  for 
and  recover  rents  accruing  from  property  of  a  defendant  debtor 
over  whose  estate  he  is  appointed,  he  must  give  notice  of  his 
appointment  to  the  tenant,  and  without  such  notice  he  can  not 
maintain  an  action.  The  object  of  the  notice  is  twofold :  first, 
to  protect  the  estate  from  payment  to  the  \Arong  person ;  and, 
secondly,  to  prevent  the  tenant  from  dealing  with  the  former 
owner  in  ignorance  of  the  appointment  of  a  receiver.^^  g^i- 
when  one  has  made  a  deed  of  real  estate,  absolute  upon  its  face, 
but  intended  in  the  nature  of  a  mortgage  as  security  for  a 
loan,  and  the  grantee  sells  the  premises  conveyed,  a  receiver  of 
the  grantor  may  maintain  an  action  against  the  grantee  for  the 
balance  of  the  purchase-money  due,  after  satisfying  the  amount 
loaned. ^^ 

§  224.  May  enforce  an  unpaid  subscription.  When  sev- 
eral persons  enter  into  a  subscription  to  contribute  certain 
sums  to  a  common  object,  and  on  proceedings  in  equity  by 
some  of  the  subscribers  a  receiver  is  appointed  to  take  posses- 
sion of  the  funds  and  assets  realized  by  the  subscription,  it 
would  seem  that  the  receiver  has  the  same  right  of  action  to 
enforce  an  unpaid  subscription  that  the  other  subscribers  would 
have  had.^"*  Nor  does  it  constitute  any  objection  to  such  a 
suit  by  the  receiver  that  he  represents  all  parties  to  the  subscrip- 
tion, including  the  defendant,  whose  subscription  he  is  seeking 
to  enforce  by  action.^^ 

§  225.  Suit  by  receiver  of  corporation;  illegality  of  ap- 
pointment no  defense;  corporation  not  a  proper  party 
plaintiff.     In  an  action  brought  by  the  receiver  of  a  cor- 

81  Palen  v.  Johnson,  46  Barb.,  21.  84  Lathrop  v.  Knapp,  27  Wis.,  214, 
And  see  Palen  v.  Bushnell,  46  opinion  of  Dixon,  C.  J.;  S.  C,  37 
Barb.,  24.  Wis.,  307. 

82  Hunt  V.  Wolfe,  2  Daly,  298.  85  Lathrop  v.  Knapp,  Z7  Wis.,  307. 

83  Van  Dusen  v.  Worrell,  4  Ab. 
Ct.  Ap.  Dec,  473. 


CHAP.  VIII.]  ACTIONS.  263 

poration  against  a  debtor  to  the  corporation,  when  judgment 
was  obtained  on  failure  to  answer,  and  defendant  moved  to 
set  aside  the  judgment  to  enable  him  to  set  up  in  defense  the 
illegality  of  plaintiff's  appointment  as  receiver,  it  was  held  that, 
as  plaintiff  was  acting  under  an  order  of  court,  which  was  ac- 
quiesced in  by  the  corporation  over  whose  assets  he  was  ap- 
pointed receiver,  the  defendant  could  not  object  to  irregulari- 
ties in  the  appointment,  if  enough  appeared  in  the  original  pro- 
ceedings to  give  the  court  jurisdiction.^^  And  where  a  re- 
ceiver of  a  corporation  institutes  an  action  to  recover  money 
due  him  as  such  receiver,  it  is  erroneous  to  join  the  corporation 
as  a  party  plaintiff.^'^ 

§  226.  When  right  of  action  relates  back  to  beginning 
of  principal's  title.  When  a  receiver  is  authorized  and  di- 
rected, by  the  terms  of  the  order  or  decree  appointing  him, 
to  collect,  and,  if  necessary,  to  sue  for  the  hire  of  certain 
property,  his  right  of  action  will  be  held  to  relate  back  to  the 
beginning  of  his  principal's  title;  and  being  substituted  in 
place  of  the  owners  of  the  property,  he  is  subrogated  to  all  their 
rights.^^ 

§  227.  Failure  of  receiver  to  execute  bond  a  ground  for 
nonsuit;  informality  in  bond.  It  has  been  held  that  the 
failure  of  a  receiver  to  execute  a  bond  with  sureties,  as  required 
by  the  order  appointing  him,  was  sufficient  ground  for  a  non- 
suit in  an  action  instituted  by  the  receiver  in  his  official  capa- 
city, since  no  title  could  vest  in  him  until  he  had  complied  with 
the  order  requiring  the  bond.^^  But  a  mere  informality  in  a 
bond  executed  by  a  receiver  appointed  in  a  creditor's  suit,  can 
not  be  taken  advantage  of  by  the  defendant  in  an  action  brought 
by  such  receiver,  and  only  the  judgment  debtor  can  take  advan- 
tage of  such  irregularity.^^ 


86  Jay  V.  De  Groot,  17  Ab.  Pr.,  88  Hardwick  v.  Hook,  8  Ga.,  354. 
36,  note.  89  Johnson  v.  Martin,  1  Thomp.  & 

87  Idaho   Gold   Reduction   Co.  v.  C  (N.  Y.  S.  C),  504. 
Crogham,  6  Idaho,  471,  56  Pac,  164.  90  Morgan  v.  Potter,  17  Hun,  403. 


264  RECEIVERS.  [chap.  VIII. 

§  228.  May  move  for  judgment  against  sheriff  for  mon- 
ey collected.  Where  a  statute  of  the  state  authorizes 
judgment  against  a  sheriff  for  money  collected  by  him  in  his 
official  capacity,  such  judgment  to  be  entered  upon  motion  in 
behalf  of  the  person  entitled  to  the  fund  collected,  a  receiver  of 
such  person,  being  entitled  to  receive  the  fund  in  behalf  of  the 
original  parties,  may  properly  move  for  judgment  against  the 
sheriff.9i 

§  229.  Receiver's  liability  for  costs.  As  regards  the 
liability  of  a  receiver  for  costs  in  actions  instituted  by  him 
concerning  his  receivership,  he  stands  in  much  the  same  relation 
as  an  executor  or  administrator  prosecuting  in  behalf  of  an 
estate,  and  is  entitled  to  the  same  consideration,  being  an  officer 
of  the  court.  And  when  he  has  acted  in  good  faith,  he  should 
not  be  held  liable  for  costs  for  not  proceeding  to  the  trial  of  a 
cause  which  he  has  noticed  for  trial,  but  which  he  has  been 
prevented  from  trying  by  sufficient  reasons,  such  as  the  ab- 
sence of  a  material  and  necessary  witness.^^ 

§  230.  May  garnish  plaintiff  in  original  suit.  Since  a 
receiver  represents  all  parties  in  the  action,  whether  plaintiffs, 
defendants,  or  creditors,  and  may  take  possession  of,  and  exer- 
cise control  over,  all  matters  connected  with  his  receivership, 
he  may,  in  an  action  instituted  by  him  in  his  official  capacity, 
garnish  the  plaintiff  in  the  suit  in  which  he  was  appointed.^^ 

91  Goss  V.  Southall,  23  Grat,  825.  of  procedure,  Kimberly  v.  Stewart, 

92  St.  John  V.  Denison,  9  How.  22  How.  Pr.,  281;  Kimberly  v. 
Pr.,  343.  See,  further,  as  to  costs  Goodrich,  22  How.  Pr.,  424;  Kim- 
against  receivers,  Hubbell  v.  Dana,  berly  v.  Blackford,  22  How.  Pr., 
9   How.   Pr.,  424.     And   see   as   to  443. 

requiring  receivers  to  give  security  93  McDonald  v.   Carney,  8  Kan., 

for  costs  under  the  New  York  code      20. 


CHAP.  VIII.]  ACTIONS.  265 

II,  Pleadings  and  Proofs  in  Actions  by  Receivers. 

§  231.     Receiver  must  set  forth  his  authority  in  traversable  terms. 

232.  Conflict  of  authority;  stringency  of  former  rule  in  New  York. 

233.  Later  New  York  rule  less  stringent;  general  averment  held  suf- 

ficient; rule  in  Minnesota. 

234.  Allegations  required  in  action  by  receiver  in  creditor's  suit. 

235.  Execution  of  bond  by  defendant  to  receiver,  when  an  estoppel; 

former  judgment  an  estoppel. 

236.  Action  by  receiver  of  insolvent  insurance  company;  receiver  of 

partnership. 

237.  Averments  as  to  appointment  of  receiver  of  national  bank. 

238.  Rule  as  to  proof  of  appointment  required  on  the  trial. 

§  231.  Receiver  must  set  forth  his  authority  in  travers- 
able terms.  Upon  the  question  of  the  extent  to  which  a 
receiver,  in  an  action  brought  by  him  in  his  official  capacity, 
should  set  forth  in  his  pleadings  the  authority  under  which  he 
acts  and  the  proceedings  of  the  court  in  the  original  suit  from 
which  he  derives  his  appointment,  the  authorities  are  not  alto- 
gether harmonious  or  reconcilable.  The  general  principle, 
however,  may  be  regarded  as  uncontroverted,  that  a  receiver, 
like  any  other  person  bringing  suit  under  special  authority, 
must  duly  allege  and  set  forth  his  authority  in  the  pleadings, 
and  this  must  be  alleged  in  a  traversable  form,  so  that  issue 
may  be  taken  thereon ;  in  which  event  it  must  be  proven  upon 
the  trial,  in  like  manner  as  any  other  traversable  fact.^^  Stated 
in  other  words,  the  rule  is  that  sufficient  facts  should  be  alleged 
to  show  that  the  appointment  has  actually  been  made,  and 
these  facts  should  be  alleged  in  issuable  form.^^ 

94  Bangs  v.  Mcintosh,  23  Barb.,  see  Nelson  v.  Nugent,  62  Minn.,  203, 
591.  And  see  Stewart  v.  Beebe.  28  64  N.  W.,  392;  Rathfon  v.  Locher, 
Barb.,  34.  215  Pa.  St.,  571,  64  Atl.,  790.    And 

95  White  v.  Low,  7  Barb.,  204;  see  Tiltow  v.  Cascade  O.  M.  Co., 
Rhorer  v.  Middlesboro  T.  &  L.  Co.,  15  V^ash.,  652,  47  Pac,  19,  as  to 
103  Ky.,  146,  44  S.  W.,  448.  See,  proof  of  a  receiver's  authority  to 
as  to  sufficiency  of  allegations  of  sue.  Where  the  plaintiff  in  an  ac- 
the  receiver's  appointment,  under  tion  upon  a  promissory  note  claims 
the  New  York  code  of  procedure,  through  an  indorsement  made  by  a 
and  as  to  the  method  of  taking  ad-  receiver,  the  appointment  and  au- 
vantage  of  their  insufficiency,  Che-  thority  of  the  receiver  must  be 
ney  v.  Fisk,  22  How.  Pr.,  236.    And  shown.      St.    Johns    Table    Co.    v. 


266  RECEIVERS.  [chap.  VIII. 

§  232.  Conflict  of  authority;  stringency  of  former  rule 
in  New  York.  But  in  attempting  to  determine  how  far 
the  receiver's  pleadings  must  set  forth  the  original  proceedings 
or  appointment,  so  as  to  render  them  issuable,  a  want  of  har- 
mony becomes  apparent  in  the  decided  cases.  Under  the 
earlier  decisions  of  the  New  York  courts  bearing  upon  this 
question,  a  somewhat  stringent  rule  was  adopted.  And  it  was 
held  that  the  recei\er  must  set  forth  the  time  and  mode  of  his 
appointment,^^  as  well  as  the  place,^^  in  order  that  defendant 
might  be  enabled  to  take  issue  upon  these  points.  Thus,  when 
the  receiver  of  a  banking  corporation,  deriving  his  appoint- 
ment and  authority  under  a  statute  conferring  upon  him  rights 
of  action  in  his  own  name  for  the  recovery  of  demands  due  the 
corporation,  brought  an  action  of  trover  to  recover  certain 
bonds,  the  property  of  the  bank,  it  was  held  insufficient  that  he 
should  allege  in  his  declaration,  merely  in  general  terms,  that 
he  was  duly  appointed  receiver  of  the  bank,  since  such  an  aver- 
ment was  not  issuable  or  triable ;  and  that  he  should  set  forth 
the  particulars  of  his  appointment,  in  order  that  the  court 
might  determine  whether  he  was  duly  appointed.^s 

§  233.  Later  New  York  rule  less  stringent;  general 
averment  held  sufficient;  rule  in  Minnesota.  The  later 
decisions  in  New  York,  however,  have  very  greatly  relaxed  the 
stringency  of  the  former  rule ;  and  it  is  now  held  that  in  actions 
by  a  receiver  to  recover  upon  obligations  due  to  a  defendant 
debtor,  over  whose  estate  the  receiver  has  been  appointed, 
an  averment  of  his  appointment  in  general  terms,  as  that  he  was 
at  such  a  time  duly  appointed  receiver,  is  sufficient  to  sustain 
the  action;  and  under  such  an  averment  the  receiver  may, 
upon  the  trial,  show  all  the  necessary  facts  conferring  juris- 
diction.99  And  it  is  held  unnecessary  to  set  forth  all  the  pro- 
Brown,  126  Mich.,  592,  85  N.  W.,  98  Gillet  v.  Fairchild,  4  Denio,  80. 
1124.  99  Rockwell  v.  Merwin,  45  N.  Y., 

96  Dayton  v.  Connah,  18  How.  166,  affirming  S.  C,  1  Sweeney,  484, 
Pr.,  326.  8  Ab.   Pr.,   N.    S.,   330.      See.   also, 

97  White  v.   Low,  7  Barb.,  204.        Manley  v.  Rassiga.  13  Hun,  288. 


CHAP.  VIII.]  '  ACTIONS.  267 

ceedings  showing  the  appointment,  it  being  sufficient  if  enough 
is  alleged  to  enable  defendant  to  take  issue.^  And  in  Minne- 
sota it  is  held  that  an  allegation  in  general  terms  by  the  plain- 
tiff that  at  such  a  time,  in  such  an  action  or  proceeding  and  by 
such  a  court,  he  was  duly  appointed  receiver  is  sufficient  and 
that  anything  short  of  this  is  insufficient. 2 

§  234.  Allegations  required  in  action  by  receiver  in 
creditor's  suit.  Where,  however,  a  receiver  of  a  judgment 
debtor,  appointed  on  proceedings  supplementary  to  execution 
by  judgment  creditors,  under  the  New  York  code,  institutes 
an  action  to  set  aside  an  assignment  of  his  property  made  by  the 
debtor,  it  would  seem  to  be  necessary  that  the  receiver  should 
state  the  equities  of  the  creditors  whom  he  represents ;  since  he 
is  only  clothed  with  such  rights  of  action,  for  the  purpose  of 
setting  aside  such  an  assignment,  as  might  have  been  main- 
tained by  the  creditors  themselves.  It  has  accordingly  been 
held  insufficient,  in  such  a  case,  for  the  receiver  to  allege  merely 
that  he  was  appointed  receiver  in  the  creditor's  suit,  but  the 
judgment  and  other  facts  necessary  to  maintain  that  action 
should  be  set  forth.^ 

1  Stewart  v.  Beebe,  28  Barb.,  34.  receiver  thereof."     Held,  upon  de- 

This  was  an  action  by  the  receiver  murrer,  that  this  was  a  sufficient  al- 

of    the    Bowery    Bank,    to    recover  legation    of    plaintiff's    appointment 

upon  a  note  due  to  the  bank.     The  and  title.    It  is  held,  under  the  code 

complaint  alleged  that  "by  an  order  of  Washington,  in  an  action  brought 

of  the  supreme  court  of  the  state  of  by   a    receiver,   that   the    failure   to 

New  York,  made  at  the  city  hall  of  allege  that  he  is  qualified  and  acting 

the  city  of  New  York  on  the  Sth  as    such    receiver    and   to    show    in 

day  of  November,  1857,  the  plaintiff  what  cause  and  by  what  court  he 

was  duly  appointed  receiver  of  the  was  appointed  can  not  be  raised  by 

Bowery  Bank,  of  the  city  of  New  demurrer  to  the  declaration  but  can 

York,    upon    filing   certain    security  be    raised    only   by   motion.     Allen 

therein  mentioned;    which   said   se-  v.   Baxter,  42  Wash.,  434,  85  Pac, 

curity  was  duly  filed  on  the  6th  day  26. 

of   November,    1857;    and   that   the  2  Rossman  v.  Mitchell,  11  Minn., 

plaintiff  thereupon  entered  upon  the  198,  75  N.  W.,  1053. 
duties    of   his    appointment,    and    is  3  Coope  v.  Bowles,  28  How.  Pr., 

now  in  the  lawful  possession  of  the  10,  42  Barb.,  87. 
property  and  effects  of  the  bank  as 


268  RECEIVERS.  [chap.  VIII. 

§  235.  Execution  of  bond  by  defendant  to  receiver,  when 
an  estoppel;  former  judgment  an  estoppel.  While  the 
cases  already  cited  sufficiently  indicate  that  the  receiver  must 
set  forth,  at  least  in  general  terms,  the  authority  by  virtue  of 
which  he  institutes  the  action,  it  may  happen  that  the  defendant 
is  estopped  by  his  own  conduct  or  admissions  from  denying  the 
right  of  the  receiver  to  sue  in  that  capacity.  Thus,  when,  in  an 
action  brought  by  a  receiver,  defendant  demurs  and  his  de- 
murrer is  overruled,  and  he  then  obtains  leave  to  plead  to  the 
merits,  upon  condition  of  his  executing  a  bond  with  sufficient 
sureties,  conditioned  to  abide  the  result  of  the  action,  the  exe- 
cution of  such  bond  will  be  regarded  as  an  admission  by  the 
obligors,  not  only  that  the  plaintiff  was  duly  appointed  re- 
ceiver, but  that  he  was  authorized  to  bring  the  action  men- 
tioned in  the  condition  of  the  bond.  And  when,  in  such  case, 
the  receiver  obtains  judgment  in  the  original  action,  and  then 
brings  suit  upon  the  bond,  it  is  not  necessary  for  him  to  prove 
either  his  appointment  or  his  authority  to  bring  the  action.^ 
So  in  an  action  brought  by  a  receiver  in  which  the  legality  of 
his  appointment  is  put  in  issue  by  the  defendant,  a  judgment 
against  the  same  defendant  in  a  former  suit  between  the  same 
parties,  in  which  the  same  issue  was  tendered,  will  operate  as 
a  bar,  the  former  judgment  being  res  judicata  as  between  the 
parties  upon  the  question  of  the  validity  of  the  receiver's  ap- 
pointment.^ 

§  236.  Action  by  receiver  of  insolvent  insurance  com- 
pany; receiver  of  partnership.  In  Indiana,  it  is  held,  when 
an  action  is  brought  by  a  receiver  of  an  insolvent  insurance 
company  to  recover  an  assessment  upon  premium  notes  due 
to  the  company,  that  it  is  not  necessary  for  the  receiver  to 
present  with  his  pleadings  a  transcript  of  the  decree  against 
the  insurance  company  under  which  he  derives  his  appointment, 
and  by  which  the  assessment  was  made  upon  the  premium 
notes,  since  the  evidence  of  his  right  of  action,  although  essen- 

4  Scott    V.    Buncombe,   49    Barb.,  ^  Griffin  v.   Long  Island   R.    Co., 

73.  102  N.  Y.,  449,  7  N.  E.,  735. 


CHAP.  VIII.]  ACTIONS.  269 

tial  to  a  recovery,  is  not  the  foundation  of  the  action,  and  rests 
only  in  averment.^  And  in  an  action  brought  by  the  receiver 
of  a  partnership  to  recover  an  indebtedness  due  to  the  firm, 
the  omission  of  any  averment  as  to  when  or  by  what  court  he 
was  appointed  will  be  cured  by  verdict.'^ 

§  237.  Averments  as  to  appointment  of  receiver  of  na- 
tional bank.  In  an  action  brought  by  the  receiver  of  a 
national  bank,  appointed  by  the  comptroller  of  the  currency 
under  the  national  banking  act  of  June  3,  1863,  it  is  held  that 
the  fact  of  the  receiver's  appointment,  alleged  in  general  terms, 
is  all  that  is  in  strictness  necessary  to  sustain  the  action.  That 
the  emergency  had  arisen,  and  that  the  adjudication  establish- 
ing it,  which  the  law  requires  to  precede  and  justify  the  ap- 
pointment, had  been  made,  need  not  be  alleged  or  proven  as 
between  the  receiver  and  a  debtor  of  the  bank,  any  further  than 
the  proof  afforded  by  the  appointment  itself,  followed  by  the 
acquisition  of  the  assets.^ 

§  238.  Rule  as  to  proof  of  appointment  required  on  the 
trial.  Upon  the  question  of  the  degree  of  proof  as  to  his 
appointment,  which  is  required  of  a  receiver,  upon  the  trial  of 
an  action  brought  by  him  in  his  official  capacity,  it  has  been 
held,  when  the  only  proof  produced  at  the  trial  was  a  copy  of 
the  order  of  appointment,  and  the  giving  of  a  bond  in  conform- 
ity therewith,  that  the  pendency  of  the  original  action  in  which 

6  Boland  v.  Whitman,  33  Ind.,  64.  ler  of  the  currency,  in  accordance 

7  Griesel  v.  Schmal,  55  Ind.,  475.  with  the  provisions  of  said  act  of 

8  Piatt  V.  Crawford,  8  Ab.  Pr.,  N.  congress,  and  the  amendments 
S.,  297.  In  this  case,  the  receiver  thereof,  by  and  with  the  concur- 
set  forth  in  his  complaint  the  cor-  rence  of  the  secretary  of  the  treas- 
porate  existence  of  the  bank  under  ury;  that  in  accordance  with  the 
the  act  of  Congress,  with  the  follow-  said  provisions  of  said  acts  the 
ing  averment  of  his  appointment :  plaintiff  thereupon  took  possession 
"That  on  said  September  5,  1867,  of  the  books,  records  and  assets  of 
Hiland  R.  Hulburd  was  the  comp-  such  association,  of  every  descrip- 
troller  of  the  currency  of  the  United  tion,  including  the  note  hereinafter 
States ;  and  that  on  said  September  mentioned."  Held,  on  demurrer, 
5,  1867,  this  plaintiff  was  duly  ap-  that  this  allegation  was  sufficient 
pointed  a  receiver  of  said  bank  by  as  to  the  question  of  plaintiff's  ap- 
said  Hiland  R.  Hulburd,  comptrol-  pointment. 


270  RECEIVERS.  [CIIAP.  VIII. 

the  appointment  was  made  might  be  sufficiently  proved  by  the 
recitals  of  the  order,  when  the  court  making  the  appointment 
was  a  court  of  general  jurisdiction,  the  presumption  being  en- 
tertained that  all  things  were  done  which  were  required  by  law 
to  authorize  the  order.^  And  it  has  been  held  to  be  unneces- 
sary for  the  receiver  to  produce  upon  the  trial  a  transcript  of 
all  the  proceedings  in  the  suit  in  which  he  was  appointed,  and 
that  a  certified  copy  of  the  entry  or  order  of  appointment  was 
sufficient  prima  facie  evidence  that  the  court  had  the  proper 
parties  before  it  when  the  order  was  made,  leaving  defendant 
to  rebut  this  presumption  if  possible.^^  And,  in  an  action 
brought  to  recover  for  the  alleged  conversion  of  certain  proper- 
ty consigned  to  defendant  for  shipment,  where  the  defense  is 
that,  at  the  time  of  the  conversion,  defendant's  steamship  line 
was  being  operated  by  a  receiver,  a  certified  copy  of  the  order 
of  appointment  is  sufficient,  and  it  is  not  necessary  that  the  de- 
fendant should  produce  the  entire  record  of  the  receivership 
proceeding.il 

9  Potter  V.  Merchants  Bank,  28  dence.  But  we  think  that  to  re- 
N.  Y.,  641 ;  Hayes  v.  Brotzman,  46  quire  the  receiver  to  produce  in 
Md.,  519.  See,  also,  Frank  v.  Mor-  every  suit  he  may  be  required  to 
risen,  58  Md.,  423.  bring   a   transcript   of   all   the   pro- 

10  Helme  !>.  Littlejohn,  12  La.  An.,  ceedings  in  the  suit  in  which  he  re- 
298.  This  was  an  action  by  the  re-  ceived  his  appointment,  would  in  a 
ceiver  of  a  partnership,  who  upon  great  measure  deprive  the  parties 
the  trial,  to  prove  his  official  ca-  of  the  benefit  of  his  appointment, 
pacity,  introduced  a  certificate  of  and  unnecessarily  increase  the  cost 
the  judge  of  the  court,  certifying  of  every  suit  brought  by  the  re- 
his  appointment  in  the  action  after  ceiver.  We  think  that  the  certified 
considering  the  evidence,  the  plead-  copy  of  the  entry  alone  making  the 
ings  and  the  law.  It  was  objected  appointment  ought  to  be  deemed 
that  the  certificate  did  not  show  prima  facie  proof  that  the  court 
that  the  judge  had  the  proper  par-  had  the  proper  parties  before  it 
ties  before  him,  and  that  the  re-  when  the  appointment  was  made, 
ceiver  should  have  produced  the  leaving  the  opposite  side  to  rebut 
entire  record.     Merrick,  C.  J.,  says  :  the  presumption." 

"There    is    force    in    the    objection  H  Ocean  Steamship  Co.  z*.  Wilder, 

under    the    ordinary    rules    of   evi-      107  Ga.,  220,  33  S.  E.,  179. 


CHAP.  VIII.]  ACTIONS.  271 

III.  Suits  by  Receivers  in  Foreign  Courts. 

§  239.     Receiver's  jurisdiction;  no  extraterritorial  right  of  action. 

240.  The  rule  further  illustrated. 

241.  Departure  from  the  rule  sometimes  allowed  upon  principles  of 

comity. 
241a.  Receiver   may  sue   in   foreign   court   when  he   has  title   or   is 
quasi-assignee. 

242.  Receiver   of  insolvent   corporation   may  prove   debt  in   bank- 

ruptcy  in   another   district. 

243.  Receiver  allowed  to  foreclose  mortgage  in  another  state. 

244.  When  allowed  to  sue  for  property  in  another  state;  assign- 

ment to  receiver;  descriptio  personce. 
244a.  When  jurisdiction  of  foreign  court  not  presumed. 

§  239.  Receiver's  jurisdiction;  no  extraterritorial  right 
of  action.  Upon  the  question  of  the  territorial  extent  of  a 
receiver's  jurisdiction  and  powers,  for  the  purpose  of  institut- 
ing actions  connected  with  his  receivership,  the  prevailing  doc- 
trine, established  by  the  Supreme  Court  of  the  Unted  States 
and  sustained  by  the  weight  of  authority  in  various  states, 
is  that  the  receiver  has  no  extraterritorial  jurisdiction  or 
power  of  official  action,  and  can  not,  as  a  matter  of  right,  go 
into  a  foreign  state  or  jurisdiction  and  there  institute  a  suit 
for  the  recovery  of  demands  due  to  the  person  or  estate  sub- 
ject to  his  receivership.  His  functions  and  powers,  for  the 
purposes  of  litigation,  are  held  to  be  limited  to  the  courts  of 
the  state  within  which  he  was  appointed,  and  the  principles 
of  comity  between  nations  and  states,  which  recognize  the  judi- 
cial decisions  of  one  tribunal  as  conclusive  in  another,  do  not 
apply  to  such  a  case,  and  will  not  warrant  a  receiver  in  bringing 
an  action  in  a  foreign  court  or  jurisdiction.^^    When,  therefore, 

12  Booth  V.  Clark,  17  How.,  322;  51,  128  Fed.,  321,  which  reversed  S. 
Hale  V.  Allison,  188  U.  S.,  56,  23  C,  111  Fed.,  38;  Hilliker  v.  Hale, 
Sup.  Ct.  Rep.,  244,  47  L.  Ed.,  380,  54  C.  C.  A.,  252,  117  Fed..  220,  re- 
affirming S.  C,  45  C.  C.  A.,  270,  versing  S.  C,  109  Fed.,  273;  Fowler 
106  Fed.,  258,  which  affirmed  S.  C,  v.  Osgood,  72  C.  C.  A.,  276,  141 
102  Fed.,  790;  Great  Western  Min-  Fed.,  20;  Brigham  v.  Luddington, 
ing  &  M.  Co.  V.  Harris,  198  U.  S.,  12  Blatchf.,  237;  Hazard  v.  Durant, 
561,  25  Sup.  Ct.  Rep.,  770,  49  L.  Ed.,  19  Fed.,  471 ;  Wigton  v.  Bosler,  102 
1163,  affirming  S.   C,  63  C.   C.  A.,  Fed.,  70;   Edwards  v.   National  W. 


272 


RECEIVERS 


[chap.  VIII. 


upon  a  creditor's  bill  filed  against  a  judgment  debtor  in  the 
courts  of  New  York,  a  receiver  was  appointed  of  all  the  assets 
and  effects  of  the  debtor,  and  the  debtor  afterwards  went  into 
New  Hampshire,  and  took  the  benefit  of  the  national  bankrupt 
act,  and  an  assignee  was  appointed  of  his  estate,  upon  a  bill 
filed  by  the  New  York  receiver,  in  the  District  of  Columbia,  to 
get  possession  of  a  fund  due  to  the  debtor,  it  was  held  upon  ap- 
peal that  the  court  below  properly  dismissed  the  bill,  since  it 
could  not  recognize  the  power  of  a  receiver  to  institute  the 
proceedings  in  a  jurisdiction  other  than  that  of  his  appoint- 


G.  J.  Assn.,  139  Fed.,  795;  Covell 
V.  Fowler,  144  Fed.,  535 ;  Ward  v. 
Pacific  M.  L.  I.  Co.,  135  Cal.,  235, 
67  Pac,  124;  Stockbridge  v.  Beck- 
with,  6  Del.  Ch.,  72,  33  Atl.,  620; 
Holbrook  v.  Ford,  153  III.,  633,  39 
N.  E.,  1091,  27  L.  R.  A.,  324,  46 
Am.  St.  Rep.,'  917;  Parker  v.  Lamb 
&  Sons,  99  Iowa,  265,  68  N.  W., 
686,  34  L.  R.  A.,  704;  Wyman  v. 
Eaton,  107  Iowa,  214,  77  N.  W.,  865, 
43  L.  R.  A.,  695,  70  Am.  St.  Rep., 
193 ;  Homer  v.  Barr  P.  E.  Co.,  180 
Mass.,  163,  61  N.  E.,  883,  91  Am. 
St.  Rep.,  269;  Farmers  &  Merchants 
Insurance  Co.  v.  Needles,  52  Mo., 
17;  Hope  Mutual  Life  Ins.  Co.  v. 
Taylor,  2  Rob.  (N.  Y.),  278;  War- 
ren V.  Union  National  Bank,  7 
Phila.,  156;  Bank  v.  Motherwell 
Iron,  etc.,  Co.,  95  Tenn.,  172,  31  S. 
W.,  1002,  29  L.  R.  A.,  164;  Fillcins 
V.  Nunnemacher,  81  Wis.,  91,  51  N. 
W.,  79.  And  see,  ante,  §  47.  See, 
also,  Graydon  v.  Church,  7  Mich., 
36;  Rust  V.  United  Waterworks  Co., 
17  C.  C.  A.,  16,  70  Fed.,  129.  36 
U.  S.  App.,  167;  Olney  v.  Tanner, 
10  Fed.,  101,  affirmed  on  appeal,  21 
Blatch.,  540;  Bartlett  v.  Wilbur,  53 
Md.,  485 ;  Day  v.  Postal  Telegraph 
Co.,  66  Md.,  354,  7  Atl.,  608;  How- 


ard V.  Chesapeake  &  O.  R.  Co.,  11 
App.  D.  C,  300.  But  see,  contra, 
Metzner  v.  Bauer,  98  Ind.,  425  ;  Hale 
V.  Harden,  37  C.  C.  A.,  240,  95  Fed., 
747,  reversing  S.  C,  89  Fed.,  283; 
Hale  V.  Tyler,  104  Fed.,  757.  And 
see  Runk  v.  St.  John,  29  Barb.,  585. 
See  Hale  v.  Allison,  188  U.  S.,  56, 
23  Sup.  Ct.  Rep.,  244,  47  L.  Ed., 
380,  supra,  as  to  maintaining  the  ac- 
tion in  order  to  prevent  a  multi- 
plicity of  suits.  But  the  rule  does 
not  apply  in  the  case  of  an  action 
brought  by  a  receiver  in  another 
court  of  the  state  of  his  appoint- 
ment. Hause  v.  Newel,  60  Minn., 
481,  62  N.  W.,  817.  And  since  a 
receiver  has  no  extraterritorial  ju- 
risdiction, the  appointment  of  a  re- 
ceiver over  a  foreign  corporation 
which  has  a  local  agent  in  another 
state  does  not  affect  the  service  of 
process  upon  such  agent  in  the 
courts  of  that  state.  Pollock  v.  B. 
&  L.  Assn.,  48  S.  C,  65,  25  S.  E., 
977,  59  Am.  St.  Rep.,  695.  As  to 
the  right  of  the  receiver  of  an  in- 
solvent corporation  to  maintain  an 
action  in  a  foreign  state  for  the  pur- 
pose of  enforcing  the  statutory  lia- 
bility of  stockholders,  see.  post, 
§§  317^  and  317c. 


CHAP.  VIII.] 


ACTIONS. 


273 


ment.^^  Nor  does  the  fact  that  the  receiver  is  appointed  by  a 
federal  court  in  one  circuit,  and  sues  as  receiver  in  the  federal 
court  in  another  circuit,  alter  the  rule,  or  entitle  him  to  main- 
tain the  action,  since  such  courts  exercise  only  a  local  and  limit- 


is  Booth  V.  Clark,  17  How.,  322, 
the  leading  case  upon  the  subject. 
The  court,  Mr.  Justice  Wayne  de- 
livering the  opinion,  say,  p.  338: 
"He  (the  receiver)  has  no  extra- 
territorial power  of  official  action; 
none  which  the  court  appointing 
him  can  confer,  with  authority  to 
enable  him  to  go  into  a  foreign  ju- 
risdiction to  take  possession  of  the 
debtor's  property;  none  which  can 
give  him,  upon  the  principle  of 
comity,  a  privilege  to  sue  in  a  for- 
eign court  or  another  jurisdiction, 
as  the  judgment  creditor  himself 
might  have  done,  where  his  debtor 
may  be  amenable  to  the  tribunal 
which  the  creditor  may  seek.  In 
those  countries  of  Europe,  in  which 
foreign  judgments  are  regarded  as 
a  foundation  for  an  action,  whether 
it  be  allowed  by  treaty  stipulations 
or  by  comity,  it  has  not  as  yet  been 
extended  to  a  receiver  in  chancery. 
In  the  United  States,  where  the 
same  rule  prevails  between  the 
states  as  to  judgments  and  decrees, 
aided  as  it  is  by  the  first  section  of 
the  fourth  article  of  the  constitu- 
tion, and  by  the  act  of  congress  of 
26th  of  May,  1790,  by  which  full  faith 
and  credit  are  to  be  given  in  all  of 
the  courts  of  the  United  States,  to 
the  judicial  sentences  of  the  differ- 
ent states,  a  receiver  under  a  cred- 
itors' bill  has  not  as  yet  been  an 
actor  as  such  in  a  suit  out  of  the 
state  in  which  he  was  appointed. 
This  court  considered  the  effect  of 
that  section  of  the  constitution, 
Receivers — 18. 


and  of  the  act  just  mentioned,  in 
M'Elmoyle  v.  Cohen,  13  Pet., 
324-327.  But,  apart  from  the  ab- 
sence of  any  such  case,  we  think 
that  a  receiver  could  not  be  ad- 
mitted to  the  comity  extended  to 
judgment  creditors  without  an  en- 
tire departure  from  chancery  pro- 
ceedings as  to  the  manner  of  his 
appointment,  the  securities  which 
are  taken  from  him  for  the  per- 
formance of  his  duties,  and  the 
direction  which  the  court  has  over 
him  in  the  collection  of  the  estate 
of  the  debtor,  and  the  application 
and  distribution  of  them.  If  he 
seeks  to  be  recognized  in  another 
jurisdiction,  it  is  to  take  the  fund 
there  out  of  it,  without  such  court 
having  any  control  of  his  subse- 
quent action  in  respect  to  it,  and 
without  his  having  even  official 
power  to  give  security  to  the  court, 
the  aid  of  which  he  seeks,  for  his 
faithful  conduct  and  official  ac- 
countability. All  that  could  be  done 
upon  such  an  application  from  a  re- 
ceiver, according  to  chancery  prac- 
tice, would  be  to  transfer  him  from 
the  locality  of  his  appointment  to 
that  where  he  asks  to  be  recognized, 
for  the  execution  of  his  trust  in  the 
last,  under  the  coercive  ability  of 
that  court;  and  that  it  would  be  dif- 
ficult to  do,  where  it  may  be  asked 
to  be  done,  without  the  court  ex- 
ercising its  province  to  determine 
whether  the  suitor,  or  another  per- 
son within  its  jurisdiction,  Avas  the 
proper  person  to  act  as  receiver." 


274  RECEIVERS.  [chap.  VIII. 

ed  jurisdiction,  and  their  receivers  can  not  sue  in  another  terri- 
torial jurisdiction.!^  Nor  can  the  action  be  maintained  by  rea- 
son of  the  fact  that  the  receiver  sues  in  tlie  name  of  his  princi- 
pal or  that  the  court  of  his  appointment  has  entered  an  order 
directing  him  to  bring  the  suit  in  question. ^^  And  if,  under  the 
law  or  statutes  of  the  state  where  the  receiver  is  appointed, 
he  can  not  maintain  an  action  of  the  kind  which  he  seeks  to 
maintain  in  a  foreign  state,  or  if  the  statute  permits  the  action 
only  after  the  performance  of  conditions  precedent  which  have 
not  been  performed,  it  follows  that  the  action  can  not  be  main- 
tained by  the  receiver  in  the  foreign  state.^^  And  the  refusal 
of  a  court  of  a  state  other  than  that  in  which  the  receiver  was 
thus  appointed  to  entertain  such  an  action  by  the  receiver,  does 
not  amount  to  a  failure  to  give  full  faith  and  credit  to  the  laws 
and  judgment  of  the  state  of  appointment  within  the  meaning 
of  the  federal  constitution. i"^ 

§  240.  The  rule  further  illustrated.  In  further  illustra- 
tion of  the  rule,  it  has  been  held  in  a  garnishee  proceeding  in- 
stituted in  the  courts  of  Pennsylvania,  against  a  debtor  of  a 
corporation  existing  in  and  under  the  laws  of  the  state  of  Ten- 
nessee, where  judgment  was  had  against  the  garnishee,  that  a 
receiver  of  the  Tennessee  corporation,  appointed  in  a  credi- 

l4Brigham     v.     Luddington,     12  23    Sup.    Ct.    Rep.,  244,  47   L.    Ed., 

Blatchf.,  237;   Great  Western   Min-  380,   affirming   S.    C,  45   C.   C.   A., 

ing  &  M.  Co.  V.  Harris,  198  U.  S.,  270,    106   Fed.,  258,   which  affirmed 

561,   25    Sup.    Ct.    Rep.,   770,   49   L.  S.  C,  102  Fed.,  790 ;  Evans  t;.  Nellis, 

Ed.,  1163,  affirming  S.  C,  63  C.  C.  187  U.  S.,  271,  23  Sup.  Ct.  Rep.,  74, 

A.,  51,  128  Fed.,  321,  which  reversed  47  L.  Ed.,  173.     But  see  dictum  in 

S.    C,    111    Fed.,    38;    Edwards    v.  Hanson  v.  Davison,  IZ  Minn.,  454, 

National  W.  G.  J.  Assn.,  139  Fed.,  76  N.  W.,  254.    And  see  the  strong 

795.  dissenting    opinion    of    Mr.    Justice 

15  Great  Western  Mining  &  M.  Canty  in  the  case  last  cited.  And 
Co.  V.  Harris,  198  U.  S.,  561,  25  see,  contra.  Hale  v.  Harden,  37  C. 
Sup.  Ct.  Rep.,  770,  49  L.  Ed.,  1163,  C.  A.,  240,  95  Fed.,  747,  reversing 
affirming  S.  C,  63  C.  C.  A.,  51,  128  S.  C,  89  Fed..  283. 

Fed.,  321,  which  reversed  S.  C.  Ill  17  Finney  v.  Guy,  189  U.  S.,  335, 

Fed.,  38.     And   see   Fowler  v.   Os-  23    Sup.    Ct.   Rep.,   558,  47   L.   Ed., 

good,  72  C.  C.  A.,  276,  141  Fed.,  20.  839,  affirming  S.  C,  106  Wis.,  256, 

16  Hale  V.  Allison,  188  U.  S.,  56,  82  N.  W.,  595,  49  L.  R.  A.,  486. 


CHAP,  viir.] 


ACTIONS. 


275 


tors'  suit  in  that  state,  could  not  contest  plaintiff's  right  to  the 
verdict  obtained  by  them  in  the  garnishee  suit  in  Pennsyl- 
vania.^^  So  when  an  insurance  company,  incorporated  under 
the  laws  of  Illinois,  had  passed  into  the  hands  of  a  receiver 
duly  appointed  in  that  state,  it  was  held  in  Missouri,  that  the 
receiver  could  not  maintain  an  action  in  the  latter  state  upon 
a  note  running  to  the  corporation,  and  that  the  suit  must  be 
brought  in  the  name  of  the  corporation  itself.^^  So  the  re- 
ceiver of  an  insolvent  corporation  can  not  maintain  a  bill  in 
a  foreign  state  for  an  injunction  to  restrain  creditors  of  the 
corporation  in  that  state  from  enforcing  judgments  recovered 
by  them  in  garnishment  proceedings  based  upon  claims  against 
the  corporation. 20  So,  also,  a  receiver  who  has  been  appointed 
by  the  court  of  a  foreign  state  to  wind  up  the  affairs  of  a  cor- 
poration of  that  state  but  who  is  in  no  way  vested  with  any  title 


18  Warren  v.  Union  National 
Bank,  7  Phila.,  156.  See,  also,  Wil- 
litts  V.  Waite,  25  N.  Y.,  577;  Hunt 
V.  Columbian  Insurance  Co.,  55  Me., 
290;  Taylor  v.  Columbian  Insurance 
Co.,  14  Allen,  353. 

19  Farmers  and  Merchants  Insur- 
ance Co.  V.  Needles,  52  Mo.,  17. 
See,  also,  Hope  Mutual  Life  Insur- 
ance Co.  V.  Taylor,  2  Rob.  (N.  Y.), 
278.  In  Farmers  and  Merchants 
Insurance  Co.  v.  Needles,  52  Mo., 
17,  Ewing,  J.,  observes,  p.  18: 
"This  is  an  action  on  a  promissory 
note  alleged  to  have  been  executed 
by  defendant  to  plaintiff.  An 
amended  petition  was  filed,  which 
alleges  substantially  that  the  insur- 
ance company  is  a  corporation  duly 
incorporated  under  the  laws  of  the 
state  of  Illinois,  with  power  to  sue, 
etc.;  that  W.  H.  Benneson  was 
duly  appointed  receiver  by  the  cir- 
cuit court  of  Adams  county,  in  the 
state  of  Illinois,  with  the  rights, 
property  and  assets  of  the  plaintiff, 
in  1869,  and  gave  bond  which  was 


duly  approved,  etc.  That  as  such 
receiver  he  is  in  possession  of  the 
property  and  effects  of  said  corpo- 
ration. The  petition  then  alleges 
the  execution  of  the  note  by  de- 
fendant to  plaintiff,  said  corpora- 
tion, and  that  said  note  is  part  of 
the  assets  and  property  which  came 
to  the  hands  of  said  receiver,  and 
that  the  same  is  due  and  unpaid. 
.  .  .  It  is  admitted  by  the  demur- 
rer that  Benneson  was  duly  ap- 
pointed receiver,  and  as  such  is  in 
possession  of  the  property  and  ef- 
fects of  the  corporation,  including 
the  note  in  controversy.  And  as  it 
does  not  appear  by  any  averment 
in  the  petition  that  the  note  has 
ever  been  assigned  or  transferred 
by  the  payee  thereof,  the  corpora- 
tion only  can  maintain  an  action 
thereon,  unless  the  receiver  as  such 
has  a  right  of  action.  A  receiver 
can  not  sue  in  a  foreign  jurisdic- 
tion for  the  property  of  the  debtor." 
20  Stockbridge  v.  Beckwith,  6  Del. 
Ch.,  72,  33  Atl.,  620. 


276  RECEIVERS.  [chap.  VIII. 

to  the  property  of  the  corporation,  can  not  maintain  an  action 
in  the  federal  court  of  another  state  to  recover  funds  there  lo- 
cated as  against  attaching  creditors  in  the  latter  state,  even 
though  subsequent  to  the  attachment  a  general  conveyance  is 
executed  and  delivered  by  the  corporation  to  the  receiver.21 
And  since  a  receiver's  rights  of  action  in  a  state  other  than  that 
in  which  he  is  appoiitted  are  recognized  only  as  a  matter  of 
comity,  it  is  held  in  Indiana  that  a  receiver  of  an  insolvent  part- 
nership appointed  in  Illinois,  the  firm  residing  and  doing  busi- 
ness in  that  state,  can  not  recover  funds  due  from  a  debtor  to 
the  firm  in  Indiana  which  have  been  attached  by  a  citizen  of 
Connecticut,  Nor,  in  such  case,  does  the  fact  that  the  firm  has 
executed  an  assignment  of  all  its  effects  to  the  receiver  vary 
the  rule,  since  such  assignment,  as  against  non-resident  credi- 
tors, confers  upon  the  receiver  no  better  title  than  that  ac- 
quired under  the  order  appointing  him.22  Nor  can  an  action 
be  maintained  by  a  receiver  in  the  court  of  a  foreign  state  upon 
principles  of  comity,  where  the  courts  of  the  state  in  which  the 
receiver  was  appointed  hold  that  an  action  similar  to  the  one 
brought  in  the  foreign  jurisdiction  can  not  be  maintained  in 
the  state  of  his  appointment.^^  Nor  will  an  action  by  the  re- 
ceiver of  an  insolvent  foreign  insurance  company  be  permitted 
in  the  courts  of  a  foreign  state  upon  principles  of  comity,  where 
the  company  has  failed  to  comply  with  the  statutes  governing 
foreign  insurance  companies  doing  business  in  the  state.^^ 
And  the  doctrine  of  comity  which,  as  will  hereafter  be  shown, 
recognizes  the  right  of  a  receiver  in  certain  cases  to  sue  in 
courts  beyond  his  jurisdiction,  has  never  been  carried  to  the 
extent  of  allowing  a  receiver  in  a  foreign  jurisdiction  to  in- 

21  Zacher  v.  Fidelity  T.  &  S.  Co.,  23  Hale  v.  Allison,  188  U.  S.,  56, 
45  C.  C.  A.,  480,  106  Fed.,  593.  And  23  Sup.  Ct.  Rep.,  244,  47  L.  Ed.,  380, 
see  this  case  as  to  the  right  of  a  affirming  S.  C,  45  C.  C.  A.,  270,  106 
creditor  whose  attachment  is  made  Fed.,  258,  which  affirmed  S.  C,  102 
subsequent  to  the  conveyance  by  the  Fed.,  790. 

corporation  to  the  receiver.  24  Parker   v.    Lamb    &    Sons,   99 

22  Catlin  v.  Wilcox  Silver-Plate  Iowa,  265,  68  N.  W.,  686,  34  L.  R. 
Co.,  123  Ind.,  477,  24  N.  E.,  250.  A.,  704. 


CHAP.  VIII.] 


ACTIONS. 


277 


terfere,  by  attorney  or  otherwise,  in  the  conduct  of  Htigation  in 
a  cause  where  the  local  court  has  already  appointed  its  own  re- 

25 


ceiver. 


§  241.  Departure  from  the  rule  sometimes  allowed  upon 
principles  of  comity.  While,  as  is  thus  seen,  the  courts 
have  generally  denied  the  receiver's  extraterritorial  right  of  ac- 
tion as  a  question  of  strict  right,  it  has  frequently  been  recog- 
nized as  a  matter  of  comity.26  Thus,  it  has  been  held  that 
receivers  of  a  foreign  corporation,  appointed  in  other  states, 
might  sue  in  New  York,  in  their  official  capacity,  in  cases  where 
no  detriment  would  result  to  citizens  of  the  latter  state,  the 
privilege  of  thus  suing  being  regarded  as  based  rather  upon 
courtesy  than  upon  strict  right,  and  the  courts  declining  to 
extend  their  comity  so  far  as  to  work  detriment  to  citizens  of 
their  own  state  who  have  been  induced  to  give  credit  to  the 
foreign   corporation. ^'7     And   the   same   doctrine  prevails   in 


25  Johnson  v.  Southern  B.  &  L. 
Assn.,  99  Fed.,  646. 

26Runk  V.  St.  John,  29  Barb., 
585;  Hoyt  v.  Thompson,  5  N.  Y., 
320,  reversing  S.  C,  3  Sandf.,  416; 
Bagby  v.  A.,  M.  &  O.  R.  Co.,  86  Pa. 
St.,  291 ;  Bank  v.  McLeod,  38  Ohio 
St.,  174;  Comstock  v.  Frederickson, 
51  Minn.,  350,  53  N.  W.,  713  ;  Oilman 
V.  Ketcham,  84  Wis.,  60,  54  N.  W., 
395;  Falk  v.  Janes,  49  N.  J.  Eq., 
484,  23  Atl.,  813 ;  Metzner  v.  Bauer, 
98  Ind.,  425;  McAlpin  v.  Jones,  10 
La.  An.,  552;  Lycoming  Fire  Insur- 
ance Co.  V.  Wright,  55  Vt.,  526; 
Barley  v.  Gittings,  15  App.  D.  C, 
427;  dictum  in  Person  v.  Leary,  127 
N.  C,  114,  37  S.  E.,  149;  Sands  v. 
Greeley  &  Co.,  31  C.  C.  A.,  424,  88 
Fed.,  130,  59  U.  S.  App.,  610;  Lewis 
V.  Clark,  64  C.  C.  A.,  138,  129  Fed., 
570;  Rogers  v.  Riley,  80  Fed.,  759; 
Lewis  V.  American  N.  S.  Co.,  119 
Fed.,  391.  And  see  Bidlack  v.  Ma- 
son, 26  N.J.  Eq.,  230;  Sobernheimer 


V.  Wheeler,  45  N.  J.  Eq.,  614,  18 
Atl.,  234;  Hunt  v.  Columbian  In- 
surance Co.,  55  Me.,  290;  Taylor  v. 
Columbian  Insurance  Co.,  14  Allen, 
353 ;  Rogers  v.  Haines,  103  Ala.,  198, 
15  So.,  606;  Phenix  Insurance  Co. 
V.  Schultz,  25  C.  C.  A.,  453,  80  Fed., 
337,  42  U.  S.  App.,  483,  reversing 
S.  C,  77  Fed.,  375.  As  to  the  proof 
of  the  appointment  of  a  foreign  re- 
ceiver in  an  action  brought  by  him 
in  a  court  of  another  state,  see  Per- 
son V.  Leary,  126  N.  C,  504,  36  S. 
E.,  35. 

27Runk  V.  St.  John,  29  Barb., 
585;  Hoyt  v.  Thompson,  5  N.  Y., 
320,  reversing  S.  C,  3  Sandf.,  416; 
Sands  v.  Greeley  &  Co.,  31  C.  C.  A., 
424,  88  Fed.,  130,  59  U.  S.  App.,  610. 
In  Runk  v.  St.  John,  29  Barb.,  585, 
the  court,  Gierke,  J.,  say:  "The 
plaintiffs  are  receivers  of  a  corpo- 
ration chartered  in  the  states  of 
Pennsylvania  and  New  Jersey,  and 
were    appointed    under    the    decree 


278  RECEIVERS.  [chap.  VIII. 

Minnesota. 28  And  in  Indiana,  it  is  held,  as  a  matter  of  com- 
ity, that  receivers  duly  appointed  and  qualified  in  another  state 
may,  to  the  extent  of  their  authority,  maintain  actions  in  the 
courts  of  Indiana. 29  Upon  similar  grounds  of  comity  it  is 
held  in  Pennsylvania,  that  when  a  receiver  is  appointed  over  a 
railway  in  another  state,  the  courts  of  Pennsylvania  will  rec- 
og"nize  his  right  to  property  of  the  railway  company  in  Penn- 
sylvania, when  not  in  conflict  with  the  rights  of  citizens  of 
that  state.  And  in  such  case,  a  creditor  residing  in  the  state 
in  which  the  receiver  is  appointed  will  not  be  permitted  by 
attachment  proceedings  in  Pennsylvania,  to  reach  the  assets 
and  credits  of  the  company  claimed  by  the  receiver.^^  So  a, 
receiver  over  a  railway  appointed  in  foreclosure  proceedings  in 
Kentucky,  with  full  power  to  take  possession  of  all  property  of 
the  company  and  to  institute  all  necessary  actions  in  his  own 
name,  may  maintain  an  action  in  Ohio,  to  recover  rolling  stock 
of  the  company  covered  by  the  mortgages,  which  has  been 
seized  in  Ohio,  by  a  Kentucky  creditor,  pending  the  applica- 
tion for  the  receiver  and  before  his  appointment.^^    And  when 

dissolving  the  corporation,  made  by  rights  of  creditors  in  this  state.    All 

the  court  of  chancery  in  the  latter  that   has   been   settled   by   the   deci- 

state,  and  were  confirmed  by  an  act  sions    to    which    we    have   been    re- 

of    the    legislature    of    the    former.  ferred  on  this  subject,  is,  that  our 

The  defendant's  counsel  denies  the  courts   will   not   sustain  the   lien   of 

capacity  of  receivers,   appointed   in  foreign    assignees    or    receivers,    in 

other  states  and  countries,  to  sue  in  opposition  to  a  lien  created  by  at- 

the  courts  of  this  state.     The  laws  tachment  under  our  own  laws.     In 

and  proceedings  of  other  sovereign-  other  words,  we  decline  to  extend 

ties  have  not,  indeed,  such  absolute  our   wonted   courtesy  so   far  as  to 

and  inherent  vigor  as  to  be  effica-  work   detriment  to   citizens  of  our 

cious  here  under  all  circumstances.  own   state,   who  have  been   induced 

But  in  most  instances,  they  are  rec-  to  give  credit  to  the  foreign  corpo- 

ognized     by    the    courtesy     of    the  ration." 

courts  of  this   state;   and  the   right  28  Comstock   v.    Frederickson,    51 

of  foreign  assignees  or  receivers  to  Minn.,  350,  53  N.  W.,  713. 

collect,    sue    for,    and    recover    the  29  Metzner  v.  Bauer,  98  Ind.,  425. 

property  of  the  individuals  or  cor-  30  Bagby  v.  A.,  M.  &  O.  R.  Co., 

porations  they  represent,  has  never  86  Pa.  St.,  291. 

been    denied,    except    where    their  31  Bank  v.  McLeod,  38  Ohio  St., 

claim    came    in    conflict    with    the  174. 


CHAP.  VIII.]  ACTIONS.  279 

property  to  which  a  receiver  is  entitled  has  been  fraudulently 
removed  beyond  the  jurisdiction  of  the  court  appointing  him 
and  into  another  state,  he  has  been  allowed  to  maintain  an 
action  in  such  other  state  for  its  recovery.^2  Sq  ^  receiver  over 
a  foreign  corporation,  appointed  in  the  state  of  its  creation, 
may  be  admitted  to  defend  an  action  brought  against  the  corpo- 
ration in  New  Jersey,  both  as  a  matter  of  comity  and  under  a 
statute  subjecting  foreign  corporations  to  the  provisions  of 
the  state  law.  And  when  thus  admitted  to  defend  an  action 
brought  upon  a  mortgage  given  by  the  corporation,  he  may 
question  its  validity,  being  regarded  for  that  purpose  as  the 
representative  both  of  the  corporation  and  of  its  creditors.^^  It 
is  also  held  in  New  Jersey,  that  a  New  York  receiver,  appoint- 
ed in  proceedings  supplementary  to  execution  in  behalf  of  a 
judgment  creditor  residing  in  New  Jersey,  may  maintain  an 
action  in  the  latter  state  for  the  recovery  of  the  debtor's  prop- 
erty located  there,  the  rights  of  no  New  Jersey  creditors  being 
impaired  by  the  proceeding.^^  So  a  receiver  over  a  partner- 
ship, appointed  in  another  state,  may  maintain  an  action  in 
New  Jersey  to  set  aside  a  sale  of  partnership  assets  made  in 
the  latter  state  by  one  partner  in  fraud  of  the  rights  of  his  co- 
partner, no  New  Jersey  creditors  being  affected  and  the  only 
person  to  be  benefited  by  the  suit  being  the  partner  who  has  been 
defrauded.35  And  it  is  held  in  Wisconsin,  that  a  receiver  ap- 
pointed in  New  York  in  a  suit  for  the  dissolution  of  a  corpora- 
tion of  that  state  in  which  creditors  have  been  enjoined  from 
bringing  actions  against  the  corporation,  may  recover  funds 
in  Wisconsin  which  have  been  attached  by  a  New  York  creditor 
after  the  receiver's  appointment,  the  rights  of  the  New  York 
receiver  being  recognized  in  such  case  upon  principles  of  com- 
ity.36     So,  upon  principles  of  comity,  a  foreign  receiver  may 

32  McAlpin  V.  Jones,  10  La.  An.,  34  Palk  v.  Janes,  49  N.  J.  Eq.,  484, 
552.     See,  also,   Paradise  v.   Farm-      23  Atl.,  813. 

ers  &  Merchants  Bank,  5  La.  An.,  35  Sobernheimer    v.    Wheeler,    45 

710.  N.  J.  Eq.,  614,  18  Atl.,  234. 

33  National   Trust   Co.   v.   Miller,  36  Gilman   v.   Ketcham,   84   Wis., 
33  N.  J.  Eq.,  155.  60,  54  N.  W.,  395. 


280  RECEIVERS.  [chap.  VIII. 

maintain  an  action  to  recover  real  estate  in  the  possession  of 
defendant,  where  the  action  will  not  result  in  detriment  to  citi- 
zens of  the  state.^'^  And  it  has  been  held  that  a  receiver  ap- 
pointed by  a  court  of  Virginia  over  an  insolvent  corporation  of 
that  state  may  intervene  in  a  receivership  proceeding  against 
the  corporation  in  which  a  receiver  has  been  appointed  by  a 
court  of  the  District  of  Columbia  and  that  it  was  error  to  dis- 
miss such  petition  before  a  final  decree  in  the  administration 
of  the  affairs  of  the  corporation  by  the  court  of  the  District  of 
Columbia,  since  the  Virginia  receiver  would  be  entitled  at 
least  to  receive  for  transmission  to  the  court  of  his  appoint- 
ment whatever  surplus  there  might  be  after  the  payment  of 
costs  and  claims  by  the  court  of  the  District  of  Columbia. ^^ 
And  a  receiver  appointed  by  the  courts  of  Tennessee  over  an 
insolvent  building  and  loan  association  of  that  state  may  main- 
tain a  bill  in  equity  in  the  federal  court  in  Kentucky  to  enforce 
the  liability  of  stockholders  in  the  insolvent  corporation,  where 
there  are  no  domestic  creditors  whose  interests  would  be  im- 
paired by  the  action. ^^  And  where  a  receiver  had  been  ap- 
pointed over  a  corporation  which  was  thereupon  dissolved, 
and  the  receiver  had  become  the  successor  of  the  corporation 
and  the  only  person  who  might  enforce  its  rights,  it  was  held 
that  he  could  maintain  an  action  in  a  foreign  state  to  recover 
an  indebtedness  due  the  corporation.'*^  It  is  thus  apparent  that 
the  exceptions  to  the  rule  denying  to  receivers  any  extraterri- 
torial right  of  action  have  become  as  well  recognized  as  the 
rule  itself,  and  the  tendency  of  the  courts  is  constantly  toward 
an  enlarged  and  more  liberal  policy  in  this  regard.  And  it  is 
believed  that  the  doctrine  will  ultimately  be  established  giving 
to  receivers  the  same  rights  of  action,  in  all  states  of  the 
Union,  with  which  they  are  invested  in  the  state  or  jurisdiction 
in  which  they  are  appointed. 

37  Small  V.  Smith,  14  S.  Dak,  39  Rogers  v.  Riley,  80  Fed.,  759. 
621,  86  N.  W.,  649,  86  Am.  St.  Rep.,  40  Avery  v.  Boston  S.-D.  &  T. 
807.                                                          Co.,  72  Fed.,  700. 

38  Barley  v.  Gittings,  15  App.  D, 
C,  427. 


CHAP.  VIII.]  ACTIONS.  281 

§  241a.  Receiver  may  sue  in  foreign  court  when  he  has 
title  or  is  quasi-assignee.  The  rule  as  above  announced  has 
reference  to  cases  of  ordinary  receivers  appointed  under  gen- 
eral chancery  powers,  where  the  receiver  is  vested  with  no  sort 
of  legal  title  but  is  regarded  as  a  mere  custodian  of  the  fund 
or  property  while  it  remains  under  the  control  of  the  court. 
And  where,  by  the  law  or  statutes  of  a  state,  a  receiver  is  made 
a  quasi-assignee  and  is  thus  vested  with  the  title  to  the  fund  or 
property,  his  right  to  maintain  actions  connected  with  his 
trust  in  the  courts  of  states  other  than  that  of  his  appointment 
is  well  recognized.^^ 

§  242.  Receiver  of  insolvent  corporation  may  prove  debt 
in  bankruptcy  in  another  district.  It  has  also  been  held 
that  a  receiver  of  an  insolvent  corporation,  appointed  by  the 
courts  of  a  particular  state,  may  prove  a  debt  in  bankruptcy 
due  to  the  estate  which  he  represents,  although  the  proceedings 
in  bankruptcy  are  pending  in  a  federal  court  in  a  state  other 
than  that  in  which  the  receiver  was  appointed.  The  federal 
court  in  which  the  bankruptcy  proceedings  are  pending  will,  it 
is  held,  take  judicial  notice  of  the  laws  of  all  the  states  and  of 
the  powers  of  the  state  officers,  whether  executive  or  judicial. 
And  the  receiver,  being  clothed  with  full  power  to  represent 
the  corporation  by  the  laws  of  the  state  where  he  is  appointed, 
stands,  by  virtue  of  his  appointment,  in  the  shoes  of  the  cor- 
poration, and  will  be  allowed  to  prove  a  claim  in  bankruptcy 
in  the  federal  court  of  another  district  as  fully  as  if  vested  with 
his  powers  as  receiver  by  virtue  of  a  decree  of  a  court  within 
the  district  in  which  the  proceedings  in  bankruptcy  are  pend- 
ing.42 

4lBernheimer    v.    Converse,    206  377,  45  Atl.,  752;  King  v.  Cochran, 

U.   S.,   516,  27   Slip.   Ct.   Rep.,  755,  72  Vt.,  107,  47  Atl.,  394.     And  see, 

51  L.  Ed.,  1163;  Goss  v.  Carter,  84  post,  §  317c. 

C.  C.  A.,  402,  156  Fed.,  746;  Con-  42  h^;  ^ar?^  Norwood,  3  Biss.,  504. 

verse  v.  Hears,  162  Fed.,  767;  Ho-  "To   my   mind,"   says    Blodgett,   J., 

warth  V.  Lombard,  175  Mass.,  570,  p.  512,   "there  is,   to   say  the  least, 

579,    56   N.   E.,   888,   891 ;    King   v.  a  strong  analogy  between  the  right 

Cochran,  76  Vt.,  141,  56  Atl.,  667.  of  the  receiver  in  this  case  to  prove 

And   see   Miirtey  v.   Allen,  71    Vt.,  the  debt   due   the   estate  he    repre- 


282 


RECEIVERS. 


[chap.  VIII. 


§  243.  Receiver  allowed  to  foreclose  mortgage  in  an- 
other state.  When  a  citizen  of  one  state  has  recognized 
the  appointment  of  a  receiver  in  another  state,  by  incurring  ob- 
ligations to  him  in  his  official  capacity,  sufficient  to  create  a 
right  of  action,  there  would  seem  to  be  no  satisfactory  reason, 


sents,  and  the  right  of  the  executor 
or  administrator  appointed  in  an- 
other state  to  represent  the  right 
of  a  deceased  creditor  before  this 
court,  and  prove  a  debt  due  his  tes- 
tator or  intestate,  and  such  right 
has  never  been  drawn  in  question. 
Under  authority  of  all  the  bank- 
rupt laws  which  have  been  passed 
by  the  congress  of  the  United 
States,  the  practice  has  been  uni- 
form, so  far  as  I  can  ascertain,  to 
allow  guardians,  executors,  admin- 
istrators, and  all  persons  acting  in 
a  representative  capacity,  to  appear 
before  the  bankrupt  court  and 
prove  the  claims  pertaining  to  the 
estate  which  they  severally  repre- 
sent. If  the  bankruptcy  proceed- 
ings in  this  case  were  pending  be- 
fore a  United  States  court  in  the 
state  of  New  York,  there  can  be 
no  doubt  that  such  a  court  would 
recognize  the  rights  of  the  receiver 
in  this  case,  and  allow  him  to  prove 
this  claim.  Why  should  a  federal 
court  of  the  state  of  New  York 
recognize  the  authority  of  this  re- 
ceiver, appointed  under  the  laws  of 
the  state  of  New  York,  without  any 
relation  to  the  federal  laws  or  the 
bankrupt  law,  any  more  than  this 
court  should?  Do  state  lines  make 
any  difference?  The  federal  courts 
take  judicial  notice  of  the  laws  of 
all  the  states  and  of  the  powers  of 
all  state  officers,  whether  executive 
or  judicial.  It  seems  to  me  it 
would  be  applying  a  very  narrow 
rule  to  the  provisions  of  the  bank- 


rupt law,  and  limit  the  usefulness 
of  that  statute  very  considerably,  if 
the  federal  courts  should  require  all 
executors,  administrators,  guard- 
ians of  minors,  or  conservators  of 
insane  or  idiotic  persons,  as  a  con- 
dition precedent  to  the  proving  of 
their  claims  against  the  estate  of 
their  debtors,  to  take  out  auxiliary 
or  supplemental  letters  of  adminis- 
tration or  guardianship  from  the 
state  courts,  within  the  jurisdiction 
of  the  court  where  the  bankruptcy 
proceedings  were  pending.  The 
bankrupt  law  is  national  in  its  ap- 
plication. It  is  intended  to  serve 
all  creditors  alike,  and  gives  all 
creditors  acting  in  a  representative 
capacity,  resident  out  of  the  dis- 
trict, as  well  as  those  within  the 
district  wherein  the  proceedings 
are  pending,  all  the  rights  to  prove 
their  debts  which  natural  persons 
might  exercise,  and  it  seems  to  me 
that  this  court  would  do  gross  in- 
justice to  the  principles  of  the  law 
to  hold  that  this  receiver,  clothed 
as  he  is  with  full  powers,  by  the 
laws  of  the  state  of  New  York,  to 
represent  the  estate  of  the  Lorillard 
Insurance  Company,  and  standing, 
by  virtue  of  the  decree  of  the  su- 
preme court  of  the  state  of  New 
York,  in  the  shoes  and  place  of  the 
Lorillard  Fire  Insurance  Company, 
should  not  be  allowed  to  prove  his 
debt  here  as  fully  as  if  he  had  been 
vested  with  those  powers  by  virtue 
of  a  decree  from  any  court  within 
this   district." 


CHAP.  VIII.]  ACTIONS.  283 

either  upon  principle  or  authority,  why  the  receiver  should  not 
be  allowed  to  maintain  his  action  in  the  state  where  such  citizen 
resides.  It  has  accordingly  been  held,  when  a  mortgage  of 
property  situated  in  one  state  was  executed  to  receivers  ap- 
pointed by  the  courts  of  another  state,  and  the  receivers  re- 
signed, and  successors  were  duly  appointed,  that  such  succes- 
sors to  the  original  receivers  might  maintain  an  action  in  their 
own  names  to  foreclose  the  mortgage  in  the  state  where  the 
premises  were  located,  and  that  the  use  of  the  word  receivers, 
in  such  cases,  was  merely  a  description  of  the  person.^^  And 
when  a  receiver  obtains  judgment  in  an  action  brought  by  him 
in  the  state  of  his  appointment,  he  may  then  maintain  an  action 
upon  such  judgment  in  another  state,  since  he  then  sues  in 
the  capacity  of  a  judgment  creditor  rather  than  that  of  a  re- 
ceiver.^'* 

§  244.  When  allowed  to  sue  for  property  in  another 
state;  assignment  to  receiver;  descriptio  personae.  When 
the  rights  of  the  receiver  do  not  rest  merely  upon  his  appoint- 
ment by  the  courts  of  another  state,  but,  in  addition  thereto, 
and  for  the  purpose  of  carrying  out  the  objects  of  the  receiv- 
ership, the  defendant  over  whom  he  is  appointed  has  made  an 
assignment  of  all  his  property  to  the  receiver,  sufficient  to  pass 
the  title  to  real  estate,  which  assignment  is  recorded  in  the 
proper  recorder's  office  in  another  state  where  real  property 
of  the  defendant  is  situated,  the  receiver  may,  by  virtue  of 
such  assignment,  bring  an  action  in  that  jurisdiction  concern- 
ing the  property.  In  such  case,  he  sues,  not  strictly  in  his 
official  capacity  as  receiver  by  virtue  of  his  appointment  in  the 
former  state,  but  in  his  capacity  as  assignee.  And  he  need  not 
go  behind  the  assignment  and  prove  the  prior  proceedings,  or 
any  order  of  the  court  appointing  him,  but  the  matters  in  the 
assignment  will  be  taken  as  true  until  disproven.^^  So,  where 
a  mortgage  which  a  foreign  receiver  seeks  to  foreclose  in  an- 

43  Iglehart  v.  Bierce,  36  111.,  133.         45  Graydon  v.  Church,  7  Mich.,  36. 

44  Wilkinson  v.  Culver,  25  Fed., 
639.  23  Blatchf.,  416. 


284  RECEIVERS.  [chap.  vni. 

other  state,  has  actually  been  assigned  to  him  by  the  mort- 
gagee, he  becomes  vested  with  the  legal  title  and  may  maintain 
an  action  in  another  state  regardless  of  any  considerations  of 
comity.^^  And  in  such  case,  his  designation  in  the  pleadings 
as  receiver  may  be  treated  as  a  descriptio  pcrsonceA'^  So  a 
receiver  appointed  by  the  court  of  a  foreign  state  may  maintain 
his  action  in  the  federal  court  of  another  state  to  recover  pos- 
session of  real  property  there  located,  where  he  is  relying  upon 
a  conveyance  from  the  former  owners  and  not  alone  upon  the 
decree  vesting  title  in  him.'*^  And  where  a  statute  creating  the 
liability  of  stockholders  in  a  corporation,  provides  that  the 
court  may  appoint  a  receiver  to  enforce  such  liability,  with 
power  to  maintain  actions  in  other  jurisdictions,  such  a  re- 
ceiver, appointed  by  the  court  of  one  state,  may  maintain  an 
action  against  a  stockholder  in  a  foreign  state  to  enforce  his 
liability.49  So  when  a  court,  having  jurisdiction  of  the  parties 
and  of  the  subject-matter,  and  having  the  property  in  contro- 
versy within  its  control,  appoints  a  receiver  over  such  property, 
who  reduces  it  to  actual  possession,  and  sends  it  under  the  order 
of  the  court  into  another  state  for  sale,  where  it  is  attached, 
the  receiver  may  maintain  replevin  in  the  latter  state  to  recover 
the  property.  And  in  such  case,  third  persons,  not  parties  to 
the  original  suit  in  which  the  receiver  was  appointed,  can  not 
avail  themselves  of  irregularities  in  his  appointment.^^  But 
the  courts  of  Texas  have  refused  to  recognize  a  title  acquired 
by  a  receiver  appointed  in  another  state  to  real  estate  in  Texas, 
as  against  creditors  in  that  state,  upon  the  ground  that  the  re- 
ceiver has  no  official  capacity  or  power  beyond  the  jurisdiction 
of  the  court  creating  him.  Thus,  when  attaching  creditors  in 
Texas  levied  upon  lands  of  a  Tennessee  corporation,  over  which 
a  receiver  had  been  appointed  in  the  latter  state,  and  to  whom 
a  conveyance  of  the  lands  had  been  executed  under  his  receiv- 

46  Hale  V.  Harris,  112  Iowa,  372,  48  Oliver  v.   Clark,  45   C.   C.  A., 

83  N.  W.,  1046.  360,  106  Fed.,  402. 

47Graydon   v.    Chufch,   7    Mich.,  49  Burr  v.   Smith,   113  Fed.,  858. 

36;  Hale  v.  Harris,  112  Iowa,  372,  50  Cagill  z/.  Wooldridge,  8  Baxter, 

83  N.  W.,  1046.  580.    And  see,  ante,  §  162o. 


CHAP.  VIII.]  ACTIONS.  285 

ership,  it  was  held  that  the  title  thus  acquired  could  not  pre- 
vail as  against  the  attachment  proceedings. ^^ 

§  244a.  When  jurisdiction  of  foreign  court  not  pre- 
sumed. In  an  action  brought  by  a  receiver  deriving  his 
appointment  from  the  courts  of  another  state,  if  the  jurisdic- 
tion of  the  court  appointing  him  is  denied  by  answer,  and  no 
proof  is  offered  as  to  the  powers  of  such  court,  either  from  the 
laws  of  the  state  or  otherwise,  its  jurisdiction  to  appoint  a  re- 
ceiver will  not  be  presumed,  when  it  does  not  appear  from  the 
record  whether  it  was  a  court  of  general  or  of  special  juris- 
diction.^2 

51  Moseby   v.   Burrow,   52   Tex.,  52  Kronberg   v.    Elder,    18   Kan., 

396.  150. 


286  RECEIVERS.  [chap.  VIII. 


IV.  Defenses  to  Actions  by  Receivers. 

§  245.  General  rule;  same  defenses  available  as  against  original  party. 

246.  Defense  of  fraud  not  available  where  all  parties  participated. 

247.  General  rule  as  to  set-ofTs;  its  applications. 

248.  Rule  applied  to  suit  by  receiver  of  insolvent  corporation. 

249.  Set-ofif    accruing    after    receiver's    appointment    not    allowed; 

counter-claim  for  services  rendered  receiver. 

250.  Set-off  inadmissible  when  receiver  represents  creditors. 

251.  Suit   to   recover   notes   of  bank   illegally   transferred;   counter- 

claim denied. 

252.  Suit  by  receiver  of  insolvent  debtor  on  notes;  judgment  against 

receiver  not  a  set-ofif. 

253.  Rent  due  on  premises  used  by  partnership  not  a  set-off  in  suit 

by  receiver  of  firm. 
253a.  Notes  not  subject  to  attachment  in  another  state. 

§  245.  General  rule;  same  defenses  available  as  against 
original  party.  Since  the  appointment  of  a  receiver  in  limine 
does  not  affect  any  questions  of  right  involved  in  the  action, 
and  does  not  change  any  contract  relations  or  rights  of  action 
existing  between  parties,^^  it  follows  as  a  general  rule  that  in 
ordinary  actions  brought  by  a  receiver  in  his  official  capacity,  to 
recover  upon  an  obligation  or  demand  due  to  the  person  or 
estate  which  has  passed  under  the  receiver's  control,  the  de- 
fendant may  avail  himself  of  any  matter  of  defense  which  he 
might  have  urged  had  the  action  been  brought  by  the  original 
party  instead  of  by  his  receiver.^^  For  example,  when  a 
banking  corporation  advances  money  to  a  depositor,  upon  his 

53  Williams  v.  Babcock,  25  Barb.,  234;  Newport  Cotton  Mill  Co.  v. 
109;  Bell  v.  Shibley,  2,2>  Barb.,  610.  Mims,  103  Tenn.,  465,  53  S.  W.,  736. 
And  see  Savage  v.  Medbury,  19  See,  also,  Williams  v.  Babcock,  25 
N.  Y.,  32;  Shaughnessy  v.  The  Barb.,  109;  Thomas  v.  Whallon,  31 
Rensselaer  Insurance  Co.,  21  Barb.,  Barb.,  172;  Colt  v.  Brown,  12  Gray, 
605.  233 ;  Van  Wagoner  v.  Paterson  Gas 

54  Moise  V.  Chapman,  24  Ga.,  249 ;  Light  Co.,  3  Zab.,  283 ;  Berry  v. 
Cox  V.  Volkert,  86  Mo.,  505 ;  Deven-  Brett,  6  Bosw.,  627;  Hyde  v.  Lynde, 
dorf  V.  Beardsley,  23  Barb.,  656;  4  N.  Y.,  387;  People's  State  Bank 
Marion  Trust  Co.  v.  Blish,  170  Ind.,  v.  Francis,  8  N.  Dak.,  369.  79  N. 
686,  84  N.  R,  814,  85  N.  E.,  344;  W.,  853. 

Hutchins  v.  Langley,  27  App.  D.  C, 


CHAP.  VIII.]  ACTIONS.  287 

agreement  that  his  balance  on  deposit,  and  that  of  the  firm  of 
which  he  is  a  member,  shall  be  applied  in  payment  of  the  ad- 
vances, such  agreement  amounts  to  an  equitable  appropriation 
of  the  balances,  and  if  the  bank  passes  into  the  hands  of  a  re- 
ceiver before  the  balances  are  actually  thus  applied,  and  an  ac- 
tion is  brought  for  the  receiver's  use  upon  a  note  given  for  such 
advances,  the  defendant  is  entitled  to  have  such  balances  de- 
ducted from  the  amount  due,  to  the  same  extent  as  if  they  had 
actually  been  thus  applied  on  the  books  of  the  bank.^^ 

§  246.  Defense  of  fraud  not  available  where  all  parties 
participated.  Where,  however,  the  defense  relied  upon 
in  an  action  brought  by  a  receiver  of  a  corporation  is  that  the 
note  or  obligation  upon  vv'hich  the  receiver  sues  was  given  with- 
out consideration,  and  in  aid  of  a  fraudulent  and  illegal  trans- 
action, such  defense  can  not  be  maintained  if  it  is  apparent 
that  all  parties  to  the  transaction,  including  the  defendant  him- 
self, were  participants  in  the  fraud.  ^^ 

§  247.  General  rule  as  to  set-offs;  its  applications.  The 
question  as  to  the  grounds  which  may  be  urged  in  defense  of 
actions  brought  by  receivers  is  most  frequently  presented  in 
cases  where  it  is  sought  to  interpose  a  demand  due  to  the  de- 
fendant by  way  of  set-off  to  the  receiver's  action.  The  general 
principle  governing  this  subject  is,  as  regards  demands  or 
choses  in  action  in  favor  of  the  original  party  over  whom  a 
receiver  is  appointed,  that  the  reciever  takes  such  choses  in  ac- 
tion subject  to  any  equitable  set-offs  which  defendant  might 
have  urged  against  the  original  party  holding  the  legal  title.^'^ 
Thus,  when  receivers  of  a  banking  corporation  institute  an  ac- 
tion upon  a  promissory  note  or  bill  of  exchange  due  to  the  bank, 
the  defendant  will  be  allowed  to  set  off  against  such  demand 

55  Chase   v.   Petroleum   Bank,  66  strong,  146  U.  S.,  499,  13  Sup.  Ct. 
Pa.  St.,  169.  Rep.,  148,  reversing  S.  C,  36  Fed., 

56  Farmers  &  Mechanics  Bank  v.  63;    Nix  v.   Ellis,   118  Ga.,   345,  45' 
Jenks,  7  Met.,  592.  S.   E.,  404,   98   Am.    St.    Rep.,    111. 

57  Colt  V.   Brown,   12  Gray,  233;  See,  also,  Hade  v.  McVay,  31  Ohio 
Armstrong  v.  Warner,  49  Ohio  St.,  St.,  231. 

376,  31  N.  E.,  877;  Scott  v.  Arm- 


2SS  RECEIVERS.  [CIIAP.  VIII. 

bills  and  notes  of  the  bank,  received  by  him  in  the  ordinary 
courses  of  business  before  the  insolvency  of  the  bank,  or  be- 
fore the  injunction  sequestrating  and  setting  apart  the  assets 
of  the  bank  for  the  benefit  of  its  creditors. ^^  But  the  bills  of 
the  bank  received  after  such  injunction  will  not  be  allowed  as  a 
set-off.^^  In  accordance  with  the  same  general  principle,  it  is 
held  that  in  an  action  by  a  receiver  of  an  insolvent  insurance 
company,  to  recover  upon  a  premium  note  given  for  a  policy  of 
insurance,  the  maker  of  the  note  may  set  off  a  demand  in  his 
favor  against  the  company,  which  was  liquidated  before  the  re- 
ceiver's appointment.^*^  But  in  an  action  by  a  receiver  of  an 
insolvent  bank  to  recover  upon  a  demand  due  to  the  bank,  if 
defendant  seeks  to  set  off  a  demand  against  the  bank,  the  bur- 
den of  proof  rests  upon  him  to  show  that  such  demand  accrued 
in  his  favor  before  the  receivership. ^^  And  in  such  case,  a 
cause  of  action  or  demand  against  the  bank,  which  is  assigned 
to  the  defendant  after  the  filing  of  the  bill  for  a  receiver,  or 
after  his  appointment,  can  not  be  set  off  against  the  receiver's 
action. ^2  ^n^j  where  a  corporation  had  made  a  lease  of  cer- 
tain property  to  another  corporation  and  at  the  same  time  and 
as  part  of  the  same  transaction  had  made  a  conveyance  of  cer- 
tain other  property  to  the  corporation  with  covenants  of  war- 
ranty and  of  seisin,  which  were  in  fact  broken  when  made  be- 
cause of  the  existence  of  a  prior  mortgage  upon  the  property, 
and  the  grantor  corporation  afterward  became  insolvent  and 
a  receiver  was  appointed  who  obtained  judgment  against  the 
grantee  for  rentals  due  under  the  lease,  and  after  the  rendition 
of  such  judgment  the  holder  of  the  prior  mortgage  instituted 
foreclosure  proceedings  by  which  the  grantee  was  totally  de- 

58  Colt  V.   Brown,   12  Gray,  233;  59  Colt  v.  Brown,  12  Gray,  233. 

Van     Wagoner    v.     Paterson     Gas  60  Berry  v.   Brett,  6   Bosw.,  627. 

Light  Co.,  3  Zab.,  283.     And  see,  61  Smith  v.  Mosby,  9  Heisk.,  501. 

further,  as  to  set-offs  which  may  be  62  Lanier  v.  Gayoso  Savings  Insti- 

allowed    by    receivers    of    banking  tution,  9  Heisk.,  506,  Van  Dyck  v. 

corporations,  State  Bank  v.  Receiv-  McQuade,  85  N.  Y.,  616;   Stone  v. 

ers  of  Bank  of  New  Brunswick,  2  Dodge,  96  Mich.,  514,  56  N.  W.,  75. 
Green  Ch.,  266. 


CHAP.  VIII.]i  ACTIONS.  289 

I 

prived  of  the  property,  it  was  held  that  since,  at  the  time  of  the 
rendition  of  the  judgment,  the  full  damage  to  the  grantee  re- 
sulting from  the  breach  of  warranty  was  unascertained  and 
unliquidated  and  could  therefore  not  be  set  off  in  the  action, 
such  damage  was  entitled  to  be  set  off  in  equity  in  a  proceeding 
brought  by  the  receiver  for  the  enforcement  of  the  judgment.^^ 
§  248.  Rule  applied  to  suit  by  receiver  of  insolvent  cor- 
poration. The  general  rule  above  stated  as  to  set-offs  in 
this  class  of  actions  is  recognized  in  New  Jersey,  in  actions 
brought  by  a  receiver  of  an  insolvent  corporation  appointed 
under  a  statute  for  the  prevention  of  frauds  by  incorporated 
companies,  the  statute  fixing  the  functions  of  such  receivers 
and  authorizing  them  to  allow  just  set-offs  in  all  cases  where 
it  shall  appear  that  they  ought  to  be  allowed  according  to  law 
or  equity.  The  transfer  of  the  property  from  the  corporation 
to  its  receivers  in  such  case,  being  by  operation  of  law,  passes 
all  rights  of  the  corporation  in  the  same  condition,  and  subject 
to  the  same  equities,  as  when  held  by  the  corporation  itself. 
And  when  the  receivers  of  an  insolvent  banking  corporation, 
appointed  under  such  a  statute,  sue  upon  a  note  due  to  the 
bank,  the  makers  of  such  note  may  set  off  against  the  demand 
the  amount  of  their  deposit  in  the  bank  at  the  time  of  its  in- 
solvency.^*    The  rule  is  otherwise,  however,  when  the  debts 

63  Central  Appalachian  Co.  v.  regarded  as  voluntary  assignees  and 
Buchanan,  33  C.  C.  A.,  598,  90  Fed.,  personal  representatives  of  the  cor- 
454,  62  U.  S.  App.,  195 ;  S.  C,  33  poration.  The  statute,  moreover,  in 
C.  C.  A.,  682,  91  Fed.,  1001.  cases  of  mutual  dealing  between  the 

64  Van  Wagoner  v.  Paterson  Gas  corporation  and  any  other  person 
Light  Co.,  3  Zab.,  283.  "The  as-  or  persons,  expressly  authorizes  the 
signment  to  the  receiver,"  says  receivers  to  allow  just  set-offs  in 
Green,  C.  J.,  p.  292,  "being  by  op-  favor  of  such  persons  in  all  cases  in 
eration  of  law,  passes  the  rights  which  it  shall  appear  to  the  receiv- 
and  property  of  the  corporation  pre-  ers  that  the  same  ought  to  be  al- 
cisely  in  the  same  plight  and  con-  lowed  according  to  law  and  equity. 
dition,  and  subject  to  the  same  equi-  The  claim  of  the  defendants  in  this 
ties,  as  the  corporation  held  them.  case  does  not,  as  has  been  seen  from 
The  receivers  are  not  assignees  for  technical  considerations,  constitute 
a  valuable  consideration,  in  the  or-  a  set-off  at  law.  But  as  the  claim 
dinary  sense  of  that  term,  but  are  was  a  clear,  legal  and  equitable  set- 
Receivers — 19. 


290  RECEIVERS  [chap.  VIII. 

do  not  exist  Between  the  parties  in  the  same  right  or  capacity. 
Thus,  when  the  action  is  brought  by  a  receiver  of  an  insolvent 
bank  against  a  shareholder  to  recover  an  unpaid  subscription 
to  capital  stock,  the  defendant  can  not  set  off  the  amount  of  his 
individual  deposit  in  the  bank,  since  the  capital  stock  is  a  trust 
fund  for  the  benefit  and  security  of  creditors,  and  to  allow  a 
shareholder  to  set  off  a  debt  due  to  him  from  the  bank  in  such 
case  would  give  him  preference  as  a  creditor.^^ 

§  249.  Set-off  accruing  after  receiver's  appointment  not 
allowed;  counter-claim  for  services  rendered  receiver.  It 
is  also  to  be  observed  that  the  rule  recognizing  such  set-offs 
to  actions  brought  by  receivers  as  might  have  been  urged  in 
defense  of  the  action  as  between  the  original  parties,  does  not 
extend  to  demands  in  defendant's  favor  accruing  after  the 
receiver's  appointment.  And  in  an  action  upon  a  promissory 
note,  brought  by  a  receiver  of  the  payee  against  the  maker,  the 
defendant  will  not  be  allowed  to  set  off  a  demand  alleged  to  be 
due  to  him  from  the  payee,  but  which  had  not  accrued  before 
maturity  of  the  note,  or  before  the  receiver  was  appointed.^^ 
And  where  a  receiver  has  been  appointed  to  wind  up  the  affairs 
of  a  banking  association,  a  debtor  of  the  firm  can  not  set  off 
against  his  indebtedness  the  amount  of  a  check  of  the  firm  which 
he  had  acquired  with  knowledge  of  the  suspension,  even  though 
he  acquired  it  prior  to  the  appointment  of  the  receiver.^'^  But 
in  an  action  brought  by  a  receiver  in  his  official  capacity  to  re- 
cover upon  a  note  due  to  the  estate  over  which  he  is  appoint- 
ed, the  defendant  is  entitled  by  way  of  counter-claim  to  a  de- 
mand for  services  which  he  has  rendered  to  the  receiver,  under 

off  against  the  bank  at  the  time  of  against  the  demand  of  the  receiv- 

the  insolvency,  and  as  the  receivers  ers." 

took  the  rights  and  property  of  the  65  Williams  v.  Traphagen,  38  N. 

corporation  in  the  same  plight  and  J.  Eq.,  57. 

condition,  and  subject  to  the  same  66  United     States    Trust    Co.    v. 

equities    that   the   bank   held   them,  Harris,  2  Bosw.,  75. 

it  is  clear  that  the  claim  of  the  de-  67  Jn  re  Hamilton,  26  Ore.,  579, 

fendants    is    an    equitable    set-off  38  Pac,  1088. 


CHAP.  VIII.J  ACTIONS.  291 

an  employment  by  the  latter  for  the  benefit  of  the  estate.^^ 
And  one  who  has  rendered  services  to  a  corporation  pending 
an  action  for  the  appointment  of  a  receiver  over  its  property, 
but  before  the  property  passes  into  the  receiver's  hands,  may 
set  off  the  value  of  such  services  against  a  demand  due  from 
him  to  the  corporation  prior  to  the  receivership,  but  can  not 
set  off  an  account  for  services  rendered  after  the  receivership.^^ 

§  250.  Set-off  inadmissible  when  receiver  represents 
creditors.  When  the  receiver,  for  the  purposes  of  the  liti- 
gation, is  the  representative,  not  of  the  title  or  interest  of  the 
original  party,  but  of  creditors  for  w^hose  benefit  he  sues,  a  dif- 
ferent principle  prevails,  and  in  such  case  no  set-off  can  be  al- 
lowed in  favor  of  the  defendant  upon  a  demand  against  the  or- 
iginal party,  which  is  not  binding  against  the  receiver  in  the 
capacity  in  which  he  acts.  Thus,  in  an  action  brought  by  re- 
ceivers of  an  insolvent  corporation  against  a  shareholder,  for 
the  recovery  of  illegal  dividends  paid  by  the  corporation  while 
in  a  condition  of  insolvency,  the  defendant  can  not  set  off 
against  the  demand  of  the  receivers  a  claim  growing  out  of  in- 
dependent matters  between  the  corporation  and  himself.  The 
foundation  of  the  action  being  the  illegal  payment  of  dividends 
in  fraud  of  the  creditors,  and  the  reparation  sought  being  the 
restoration  of  the  fund  for  the  creditors'  benefit,  the  receiver 
is  regarded  as  the  representative  of  the  creditors  and  not  of  the 
corporation,  and  hence  the  defense  is  unavailable.*^^ 

§  251.  Suit  to  recover  notes  of  bank  illegally  trans- 
ferred; counter-claim  denied.  It  is  also  held,  that  in  an  ac- 
tion by  receivers  of  an  insolvent  banking  corporation,  to  recov- 
er notes  of  the  bank  illegally  transferred  to  one  of  its  directors 
knowing  the  insolvent  condition  of  the  bank,  the  defendant  can 
not  be  allowed  by  way  of  counter-claim  the  amount  actually 
paid  by  him  for  the  notes,  since  such  defense  rests  upon  his 
own  illegal  conduct."^^ 

68  Davis  V.  Stover,  58  N.  Y.,  473.  70  Osgood  v.  Ogden,  4  Keyes,  70. 

69  Cook  V.  Cole,  55  Iowa,  70,  7  71  Gillet  v.  Phillips,  13  N.  Y.,  114. 
N.  W.,  419. 


292  RECEIVERS  [chap.  VIII. 

§  252.  Suit  by  receiver  of  insolvent  debtor  on  notes; 
judgment  against  receiver  not  a  set-off.  In  an  action  by 
the  receiver  of  an  insolvent  debtor,  appointed  in  behalf  of  cred- 
itors, upon  notes  due  to  the  debtor,  the  maker  of  such  notes 
can  not  set  off  against  the  action  a  judgment  which  he  has  ob- 
tained against  the  receiver  upon  a  note  of  the  debtor,  since  this 
would  virtually  give  the  defendant  a  preference  over  the  other 
creditors;  and  the  judgment  in  defendant's  favor  against  the 
receiver  is  treated  as  being  only  a  legal  determination  of  the 
amount  and  validity  of  defendant's  demand,  and  not  that  it 
shall  take  preference  over  demands  of  other  creditors. '^^ 

§  253.  Rent  due  on  premises  used  by  partnership  not  a 
set-off  in  suit  by  receiver  of  firm.  Where  the  assets  of  a 
partnership  pass  into  the  hands  of  a  receiver  to  await  a  settle- 
ment between  the  partners,  and  are  sold  by  him  under  order  of 
the  court,  in  an  action  brought  by  the  receiver  to  recover  the 
purchase  price,  the  purchaser  can  not  set  off  a  claim  or  demand 
which  he  himself  holds  against  the  partnership,  as  for  rent  of 
premises  occupied  by  the  firm;  since  to  allow  such  a  set-off 
would  be  to  give  the  defendant  a  preference  over  other  cred- 
itors.'^^ 

§  253a.  Notes  not  subject  to  attachment  in  another 
state.  When  receivers  over  an  insolvent  corporation  in 
New  York,  receive  as  part  of  the  assets  of  the  corporation  notes 
due  from  a  resident  of  Massachusetts,  it  is  no  defense  to  an 
action  brought  by  the  receivers  upon  such  notes  in  New  York, 
that,  after  the  receivers'  appointment,  the  notes  were  attached 
in  an  action  brought  by  a  creditor  of  the  corporation  in  Massa- 
chusetts. In  such  case,  the  notes  being  transferred  to  receivers 
in  New  York,  for  the  benefit  of  creditors,  they  are  not  subject 
to  the  jurisdiction  of  the  courts  of  another  state.*^^ 

72  Clark  v.  Brockway,  3  Keyes,  74  Osgood  v.  Maguire,  61  N.  Y., 
13;  S.  C,  1  Ab.  Ct.  Ap.  Dec,  351.      524. 

73  Singerly  v.  Fox,  75  Pa.  St.,  112. 


CHAP.  VIII.]  ACTIONS.  293 


V.  Actions  Against  Receivers. 

§  254.  Receiver  may  not  be  sued  without  leave  of  court;  exceptions 
to  the  rule. 

254a.  Conflict  of  authority  as  to  leave  being  jurisdictional;  presump- 
tion as  to  leave;  court  may  fix  forum. 

254&.  Usual  practice  by  petition;  trial  by  jury;  action  for  tort;  dis- 
missal of  action  begun  without  leave;  granting  leave  dis- 
cretionary; no  appeal  from  order  granting  leave. 

254c.  Practice  on  petitions  of  intervention. 

254J.  Revocation  of  leave  to  sue;  leave  may  be  conditional. 

255.  Court  itself  may  give    relief   on    motion,   or  may  authorize  suit; 

receiver  of  railway;  liability  not  a  personal  one. 

256.  Courts  may  enjoin  unauthorized  suits  against  their  receivers; 

illustrations. 

257.  Suit  against  receiver  for  mere  trespass  not  enjoined. 

258.  Receiver   as   a  party   to   action   against   original   debtor;   must 

file  plea;  receiver  as  party  to  appeal. 

259.  Effect  of  receiver  over  one  defendant  in  foreclosure  suit. 

260.  Receivers  of  corporations  as  parties  defendant. 

261.  Receiver's  appearance  waives  objection  as  to  want  of  leave. 

262.  Courts  will  not  enjoin  their  own  receivers;  relief  granted  in 

receivership   proceeding;    mandatory   injunction   against    re- 
ceiver. 

263.  Rival  claimants  against  receiver;  bill  of  interpleader. 

264.  Receivers   not   allowed   to   waive   defense;   when   receiver   not 

required  to  make  particular  defense. 
264o.  When   receiver  may  appeal    from   orders   entered   in   receivership 

cause. 
264&.  Receiver  can  not  appeal  from  administrative  orders;  nor  from  order 

of  distribution;  costs  on  unauthorized  appeal. 

265.  Notice  of  application  for  leave  to  sue  receiver;  when  corporate 

creditors  not  necessary  parties  to  action  by  stockholders  against 
receiver  of  corporation. 

266.  English  practice  as  to  defending  actions  of  ejectment  against 

receivers. 

267.  When  receiver  not  entitled  to  costs. 

268.  Effect  of  receiver's  discharge. 

268a.  When  receiver  concluded  by  judgment. 

§  254.  Receiver  may  not  be  sued  without  leave  of  court ; 
exceptions  to  the  rule.  A  receiver  being  an  officer  of  the 
court,  acting  under  its  direction,  and  in  all  things  subject  to  its 
authority,  it  is  contrary  to  the  established  doctrine  of  courts 
of  equity  to  permit  him  to  be  made  a  party  defendant  to  liti- 


294 


RECEIVERS. 


[CIIAP,  VIII. 


gation,  unless  by  consent  of  the  court  appointing  him.  And  it 
is  in  all  cases  necessary  that  a  person  desiring  to  bring  suit 
against  a  receiver  in  his  official  capacity,  should  first  obtain 
leave  of  the  court  by  which  he  was  appointed,  since  the  courts 
will  not  permit  the  possession  of  their  receivers  to  be  disturbed 
by  suit  or  otherwise,  without  their  consent  and  permission.'^^ 
The  rule  is  established  for  the  protection  of  receivers  against 


75  Taylor  v.  Baldwin,  14  Ab.  Pr., 
166;  Wray  v.  Hazlett,  6  Phila.,  155; 
DeGroot  v.  Jay,  30  Barb.,  483,  9  Ab. 
Pr.,  364;  Miller  v.  Loeb,  64  Barb., 
454;  Randfield  v.  Randfield,  3  DeG., 
F.  &  J.,  It^i,  reversing  S.  C.,  1  Dr. 
&  Sm.,  310;  Barton  v.  Barbour,  104 
U.  S.,  126,  affirming  S.  C,  3  i\Iac- 
Arthur,  212;  Comer  v.  Felton,  10 
C.  C.  A.,  28,  61  Fed.,  731,  22  U.  S. 
App.,  313:  Ridge  v.  Manker,  67  C. 
C.  A.,  596,  132  Fed.,  599;  Thompson 
V.  Scott,  4  Dill.,  508,  3  Central  Law 
Journal,  IZT ;  Kennedy  v.  I.,  C.  & 
L.  R.  Co.,  3  Fed.,  97,  2  Flippin,  704; 
Searle  v.  Choate,  25  Ch.  D.,  723; 
Southern  Granite  Co.  v.  Wads- 
worth,  115  Ala.,  570,  22  So.,  157; 
Baker  v.  Carraway,  133  Ala.,  502, 
31  So.,  933 ;  Links  v.  Connecticut 
River  B.  Co.,  66  Conn..  277,  33  Atl., 
1003 ;  Graffenried  v.  Brunswick  & 
Albany  R.  Co.,  57  Ga.,  22 ;  Mulcahey 
V.  Strauss,  151  111.,  70,  Zl  N.  E., 
702;  St.  Louis,  A.  &  S.  R.  Co.  v. 
Hamilton,  158  111.,  366,  41  N.  E., 
ni;  Keen  v.  Breckenridge,  96  Ind., 
69;  Wayne  Pike  Co.  v.  State,  134 
Ind.,  672,  34  N.  E.,  440;  Meredith 
Village  Savings  Bank  v.  Simpson, 
22  Kan.,  414 ;  Chalmers  v.  Littlefield, 
103  Me.,  271,  69  Atl.,  100;  Burk  v. 
Muskegon  M.  &  F.  Co.,  98  Mich.,  614, 
57  N.  W.,  804;  Earle  v.  Humphrey, 
121  Mich.,  518,  80  N.  W..  370;  Smith 
V.  St.  Louis  &  S.  F.  Ry.  Co.,  151 
Mo.,  391,  52  S.  W.,  378,  48  L.  R.  A., 


368,  and  note;  Melendy  v.  Barbour, 
78  Va.,  544.  See,  also,  Evelyn  v. 
Lewis,  3  Hare,  472;  In  re  Persse, 
8  Ir.  Eq.,  Ill;  Parr  v.  Bell,  9  Ir. 
Eq.,  55 ;  Tink  v.  Rundle,  10  Beav., 
318;  Payne  v.  Baxter,  2  Tenn.  Ch., 
517;  Schmidt  v.  Gayner,  59  Minn., 
303,  61  N.  W.,  ZZZ,  62  N.  W.,  265 ; 
Sligh  V.  Shelton  S.  R.  Co.,  20  Wash., 
16,  54  Pac,  763 ;  Littlefield  v.  Maine 
Central  R.  Co.,  104  Me.,  126,  — 
Atl.,  — .  See,  contra,  Kinney  v. 
Crocker,  18  Wis.,  74;  Paige  v. 
Smith,  99  Mass.,  395;  St.  Joseph  & 
Denver  City  R.  Co.  v.  Smith,  19 
Kan.,  225.  In  Tennessee  it  would 
seem  that  an  action  for  the  recovery 
of  damages  for  personal  injuries 
may  be  maintained  against  the  re- 
ceiver of  a  railway  company  with- 
out the  leave  of  the  appointing 
court,  although  all  questions  as  to 
the  manner  of  the  payment  of  any 
judgment  will  be  left  entirely  for 
the  determination  of  that  court. 
Burke  v.  Ellis,  105  Tenn.,  702,  58 
S.  W.,  855.  See  Walker  v.  Green, 
60  Kan.,  20,  55  Pac,  281,  as  to  the 
practice  of  giving  leave  generally  to 
all  persons  to  institute  suits  in 
courts  of  competent  jurisdiction 
against  a  receiver  without  leave  of 
the  ap{)ointing  court.  By  section  3 
of  the  act  of  congress  approved 
March  3,  1887  (c.  373,  24  Stat.,  554), 
as  revised  and  corrected  by  an  act 
approved  August   13,   1888    (c.  866, 


CHAP.  VIII.] 


ACTIONS. 


295 


unnecessary  and  expensive  litigation,  and  in  most  instances  a 
party  aggrieved  may  have  ample  relief  by  application  on  mo- 
tion to  the  court  appointing  the  receiver.  And  when  an  action 
is  instituted  against  a  receiver  in  his  official  capacity,  without 
first  obtaining  leave  of  the  court,  the  plaintiff  in  such  action  is 
guilty  of  a  contempt  of  court  and  will  be  punished  according- 
ly."^^ It  is  not,  however,  usual  for  the  court  to  refuse  leave  to  a 
person  upon  application  to  contest  a  right  which  he  claims  as 
against  a  receiver,  unless  it  is  perfectly  apparent  that  there  is 
no  foundation  for  the  demand.''"^  But  to  warrant  a  court  in 
granting  leave  to  sue  its  receiver,  the  applicant  should  show  by 
his  petition  at  least  a  probable  ground  of  recovery ;  and  when, 
upon  the  face  of  his  petition,  it  is  apparent  that  he  has  no  cause 


25  Stat.,  436),  it  is  enacted  as  fol- 
lows :  "That  eveo'  receiver  or  man- 
ager of  any  property  appointed  by 
any  of  the  courts  of  the  United 
States  may  be  sued  in  respect  of 
any  act  or  transaction  of  his  in  car- 
rying on  the  business  connected  with 
such  property,  without  the  previous 
leave  of  the  court  in  which  such 
receiver  or  manager  was  appointed ; 
but  such  suit  shall  be  subject  to  the 
general  equity  jurisdiction  of  the 
court  in  which  such  receiver  or 
manager  was  appointed,  so  far  as 
the  same  shall  be  necessary  to  the 
ends  of  justice."  1  U.  S.  Comp. 
Stat.  1901,  p.  582 ;  4  Fed.  Stat.  Ann., 
p.  387.  As  to  the  construction  of 
this  act,  see,  post,  §  395&. 

76  Thompson  v.  Scott,  4  Dill.,  508; 
S.  C,  3  Central  Law  Journal,  7Z7 ; 
Taylor  v.  Baldwin,  14  Ab.  Pr.,  166 ; 
Lane  v.  Capsey  (1891),  3  Ch.,  411; 
Southern  Granite  Co.  v.  Wadsworth, 
115  Ala.,  570,  22  So.,  157;  DeGroot 
V.  Jay,  30  Barb.,  483,  9  Ab.  Pr.,  364. 
In  the  latter  case,  as  reported  in  30 
Barb.,  483,  the  court  observe,  p.  484: 
"The  receiver  is  the  officer  of  the 


court,  and,  by  the  well-settled  prac- 
tice, permission  of  the  court  was 
necessary  to  warrant  an  action 
against  him.  This  rule  is  essential 
for  the  protection  of  receivers 
against  unnecessary  and  oppressive 
litigation,  and  should  be  carefully 
maintained.  It  is  a  contempt  of  the 
court  to  sue  a  receiver  without  such 
permission.  In  most  cases  of  claims 
against  a  receiver,  or  the  fund  or 
property  in  his  hands,  the  remedy 
by  special  motion  is  adequate.  Any 
person  having  such  a  claim  may  re- 
sort to  this  summary  remedy.  The 
fund  or  property  being  held  by  the 
court,  by  its  receiver,  in  trust  for 
those  entitled  to  it,  or  to  be  paid 
out  of  it,  the  court  may  administer 
justice  to  claimants  without  suit, 
upon  special  application.  In  the 
present  case,  all  the  relief  sought, 
to  which  the  plaintiff  is  entitled, 
might  be  obtained  in  that  mode. 
And  that  mode  is  commended  by 
considerations  of  economy  as  well 
as  expedition." 

77  Randfield  v.  Randfield,  3  DeG., 


296  RECEIVERS.  [chap.  VIII. 

of  action,  leave  will  not  be  granted. "^^  And  it  is  necessary  to 
aver  in  the  complaint  or  declaration  against  a  receiver,  that 
leave  of  court  has  been  granted  to  bring  the  action,  and  the  ab- 
sence of  such  an  averment  is  fatal  upon  demurrer.'^^  But  per- 
mission to  bring  suit  against  a  receiver  is  regarded  as  extend- 
ing to  his  successor  in  office.  When,  therefore,  by  leave  of  the 
court  appointing  him  an  action  is  brought  against  a  receiver, 
who  resigns  pending  such  action,  his  successor  being  then 
joined  as  a  defendant,  it  constitutes  no  objection  to  maintaining 
the  action  that  no  permission  was  granted  to  bring  suit  against 
such  successor.^^  And  where  an  action  is  brought  against  a 
receiver  appointed  by  the  court  of  a  foreign  state  to  remove  a 
cloud  upon  the  title  of  real  estate,  and  the  receiver  is  in  neither 
the  actual  nor  the  constructive  possession  of  the  property,  leave 
of  the  appointing  court  to  institute  the  action  is  not  necessary.^! 
And  a  mortgagee  of  chattels  belonging  to  an  insolvent  corpora- 
tion in  the  hands  of  a  receiver  may  maintain  an  action  to  en- 
force his  mortgage  without  first  procuring  leave  of  the  court 
which  has  appointed  the  receiver,  where  the  property  is  in  the 
possession  of  a  third  person  claiming  to  have  purchased  it 
and  has  never  been  in  the  possession  of  the  receiver.^2  jsjor 
does  the  general  rule  apply  where  the  unauthorized  suit  against 
the  receiver  was  instituted  in  a  court  of  the  same  county,  al- 
though of  a  different  district,  as  that  of  the  court  of  appoint- 
ment and  one  over  which  the  same  judge  presides.  The  rea- 
son for  the  general  rule  is  to  prevent  the  unauthorized  inter- 
ference by  one  court  with  the  possession  of  another,  and  in  such 

F.  &  J.,  766,  reversing  S.  C,  1  Dr.  804;  Earle  v.  Humphrey,  121  Mich., 

&  Sm.,  310.  518,  80  N.  W.,  370. 

78  Jordan  v.  Wells,  3  Woods,  527.  80  Fordyce  v.  Dixon,  70  Tex.,  694, 

79  Keen  v.  Breckenridge,  96  Ind.,  8  S.  W.,  504. 

69;   Malott  v.   State,  158  Ind.,  678,  81  Egan    v.    North    American    L. 

64  N.  E.,  458;  St.  Louis,  A.  &  S.  Co.,  45  Ore.,  131,  76  Pac,  774,  77 

R.  Co.  V.  Hamilton,  158  111.,  366,  41  Pac,  392. 

N.  E.,  777;  Burk  v.   Muskegon  M.  82  Kidder  v.   Beavers,  33  Wash., 

&  F.  Co.,  98  Mich.,  614,  57  N.  W.,  635,  74  Pac,  819. 


CHAP.  VIII.]  ACTIONS  297 

case,  the  reason  failing,  the  rule  ceases  to  apply.^^  And  a 
trustee  appointed  by  a  court  of  equity  to  execute  the  trusts 
created  by  a  will  does  not  stand  in  the  position  of  a  receiver  in 
the  respect  under  discussion,  and  it  is  therefore  not  regarded 
as  a  contempt  to  institute  proceedings  against  such  a  trustee 
without  first  obtaining  the  consent  of  the  court  which  made  the 
appointment.^'* 

§  254a.  Conflict  of  authority  as  to  leave  being  jurisdic- 
tional; presumption  as  to  leave;  court  may  fix  forum. 
The  authorities  are  far  from  reconcilable  upon  the  question 
whether  the  want  of  leave  to  bring  an  action  against  a  receiver 
is  jurisdictional,  and  therefore  fatal  to  maintaining  the  action, 
or  whether  it  is  merely  an  omission,  which  will  subject  the  par- 
ty suing  without  such  leave  to  proceedings  for  contempt  of  the 
court  appointing  the  receiver,  but  without  impairing  the  juris- 
diction of  that  court  to  proceed  with  and  determine  the  cause. 
While  the  better  considered  authorities  formerly  supported  the 
proposition  that  leave  to  sue  the  receiver  was  jurisdictional  in 
its  na^are,  the  great  weight  of  authority,  as  the  result  of  the 
later  decisions,  sustains  the  opposite  view,  and  it  is  accordingly 
held  that  the  failure  to  obtain  leave  is  not  jurisdictional  and 
that  its  omission  is  not  fatal  to  maintaining  the  action. ^^    And 

83  RatcHff  V.  Adler,  71  Ark.,  269,  v.  Bearse,  194  Mass.,  596,  80  N.  K, 

72  S.  W.,  896.  623 ;  Flentham  v.  Steward,  45  Neb., 

84Nevitt  V.   Woodburn,   190  111.,  640,  63  N.  W.,  924;  dictum  in  Wil- 

283,  60  N.  E.,  500.  son  v.  Rankin,  129  N.  C,  447.  40  S. 

85  Kinney  t;.  Crocker,  18  Wis.,  74;  E.,  310;  Tobias  v.  Tobias,  51  Ohio 
Lyman  v.  Central  Vermont  R.  Co.,  St.,  519,  38  N.  E.,  317;  Sigwald  v. 
59  Vt.,  167,  10  Atl.,  346;  Roxbury  City  Bank,  82  S.  C,  382,  — S.  E.,  — ; 
V.  Central  Vermont  R.  Co.,  60  Vt,  Payson  v.  Jacobs,  38  Wash..  203.  80 
121,  14  Atl.,  92;  St.  Joseph  &  Den-  Pac,  429;  Ridge  v.  Manker,  67  C. 
vcr  City  R.  Co.  v.  Smith,  19  Kan.,  C.  A..  596,  132  Fed.,  599.  See,  con- 
225;  Mulcahey  v.  Strauss,  151  111.,  ira,  Barton  v.  Barbour,  104  U.  S., 
70,  37  N.  E.,  702;  Shedd  v.  Seefeld,  126,  affirming  S.  C,  3  MacArthur, 
230  111.,  118,  82  N.  E.,  580;  Fox  212;  Keen  v.  Breckenridge,  96  Ind., 
River  Paper  Co.  v.  Western  En-  69;  Brown  v.  Rauch,  1  Wash.,  497 
velope  Co.,  109  111.  App.,  393;  Man-  (Territorial  Supreme  Court)  ;  Mar- 
ker V.  Loan  Association,  124  Iowa,  tin  v.  Atchison,  2  Idaho,  590,  33 
341;   American   Steel   &  Wire   Co.  Pac,  47.    And  see,  post,  §  261.    In 


298  RECEIVERS.  [chap.  VIIL 

where  the  want  of  leave  to  sue  a  receiver  is  held  not  to  be  juris- 
dictional, the  objection  is  not  available  upon  appeal  unless  it  has 
been  properly  urged  in  the  lower  court.^*^  And  in  a  collateral 
proceeding,  the  court  will  presume,  if  necessary,  that  such  leave 
was  obtained  where  the  record  is  silent.^'^  But  where  the  want 
of  leave  to  bring  the  action  is  held  to  go  to  the  jurisdiction  of 
the  court  and  is  not  merely  error,  the  question  may  be  raised 
at  any  stage  of  the  cause  and  even  upon  appeal  from  a  judg- 
ment against  the  receiver,  and  when  he  has  not  raised  the  ques- 
tion in  the  court  below.^^  And  upon  an  application  to  the  court 
for  leave  to  sue  its  receiver,  the  court  may  determine  the  forum 
in  which  the  action  shall  be  brought.  It  may,  therefore,  grant 
leave  to  sue  the  receiver  in  its  own  jurisdiction,  and  may  refuse 
to  permit  him  to  be  sued  in  another  court.  And  when  the  order 
is  made  in  this  form,  and  the  action  is  brought  in  the  court  by 
which  the  receiver  was  appointed,  but  the  plaintiff  then  files  a 
petition  and  bond  for  the  removal  of  the  cause  to  a  federal 
court,  it  is  not  error  for  the  former  court,  of  its  own  motion, 
to  revoke  the  permission  to  sue  its  receiver  and  to  dismiss  the 
action.^^  So  when  a  receiver  is  appointed  by  a  state  court,  the 
refusal  of  that  court  to  permit  a  claimant  against  its  receiver  to 
bring  an  action,  such  claimant  being  by  reason  of  his  citizen- 
Maine  the  failure  to  procure  leave  versies,  and  not  by  challenging  the 
would  seem  to  be  jurisdictional,  jurisdiction  of  other  tribunals. 
Chalmers  v.  Littlefield,  103  Me.,  When,  therefore,  a  receiver  is  sued 
271,  69  Atl.,  100.  As  to  whether  in  a  court  other  than  that  by  which 
want  of  leave  is  jurisdictional  in  he  was  appointed,  an  averment  in 
Michigan,  see  Prather  Engineer-  his  answer  that  he  is  such  receiver 
ing  Co.  V.  Detroit,  F.  &  S.  Ry.,  152  raises  no  question  as  to  the  jurisdic- 
Mich.,  582,  116  N.  W.,  376.  In  St.  tion  of  the  court  in  which  the  ac- 
Joseph  &  Denver  City  R.  Co.  v.  tion  is  brought. 
Smith,    19    Kan.,    225,    supra,   it    is  86  Payson    v.    Jacobs,    38    Wash., 

held  that  the  ordinary  jurisdiction      203,  80  Pac,  429. 
of  the  courts  is  not  taken  away  or  87  Payson   v.    Jacobs,    38    Wash., 

impaired  by  the  appointment   of  a      203,  80  Pac,  429. 
receiver  by  another  court,  and  while  88  Brown  v.  Ranch,  1  Wash.,  497 

that   court   may   draw   to   itself   all       (Territorial   Supreme  Court), 
controversies    to     which    he     is    a  89  Meredith  Village  Savings  Bank 

party,  it  does  so  by  acting  directly      v.  Simpson,  22  Kan.,  414. 
upon    the    parties    to    such    contro- 


CHAP.  VIII.]  ACTIONS.  299 

ship  entitled  to  sue  in  a  federal  court,  is  not  error,  it  being  dis- 
cretionary with  the  court  to  grant  leave  to  sue,  or  to  determine 
the  controversy  upon  petition  in  the  cause  in  which  the  receiver 
was  appointed. ^*^ 

§  2546.  Usual  practice  by  petition ;  trial  by  jury ;  action 
for  tort ;  dismissal  of  action  begun  without  leave ;  granting 
leave  discretionary;  no  appeal  from  order  granting  leave. 
The  more  common  practice,  and  that  which  has  been  generally 
commended  by  the  courts,  is  to  hear  and  determine  all  rights  of 
action  and  demands  against  a  receiver  by  petition  in  the  cause 
in  which  he  was  appointed,  without  remitting  the  parties  to  a 
new  and  independent  suit.^^  And  it  rests  wholly  within  the 
discretion  of  the  court  to  grant  leave  to  bring  an  independent 
action  against  its  receiver,  or  to  determine  the  controversy  up- 
on petition  in  the  original  cause,  directing,  if  necessary,  an  is- 
sue to  be  tried  by  a  jury  as  to  questions  of  fact  or  of  damages. ^^ 
And  the  right  to  a  trial  by  jury  in  such  cases  is  wholly  discre- 
tionary with  the  court,  which  may  direct  the  issues  of  fact  to 
be  tried  by  a  jury,  or  may  refer  them  to  a  master  for  deter- 
mination.^^  And  where  a  claimant  might,  under  the  act  of 
congress,^^  have  instituted  an  action  at  law  against  the  re- 
ceiver of  a  railway  company  without  leave  of  court,  he  waives 
his  right  to  a  trial  by  jury  by  intervening  in  the  receivership 
proceeding  and  submitting  himself  to  the  jurisdiction  of  the 
chancery  court,  and  in  such  case  the  verdict  of  the  jury  in  favor 
of  the  petitioner  is  merely  advisory  and  the  court  may  set  it 

90  Reed  V.  Axtell,  84  Va.,  231,  4  Gatch,  37  Ore.,  5,  60  Pac,  383; 
S.  R,  587.  Harrigan  v.  Gilchrist,  121  Wis.,  127, 

91  Citizens'  Savings  Bank  v.  Per-  280,  99  N.  W.,  909,  952;  De  Forrest 
son,  98  Mich.,  173,  57  N.  W.,  121.  v.  Coffey,  154  Cal.,  444,  —  Pac,  — ; 
Winchester  v.  Davis  Pyrites  Co.,  14  dictum  in  Blake  v.  State  Savings 
C.  C.  A.,  300,  67  Fed.,  45,  28  U.  S.  Bank,  12  Wash.,  619,  41  Pac,  909. 
App.,  353,  affirming  S.  C,  64  Fed.,  And  see,  post,  §  395a. 

664.     And  see,  ante,  §  139.  93  Kennedy  v.  I.,  C.  &  L.  R.  Co., 

92MeIendy   v.    Barbour,   78   Va.,  3  Fed.,  97,  2  Flippin,  704;  Shedd  v. 

544;  Kennedy  v.  I.,  C.  &  L.  R.  Co.,  Seefeld,  230  111.,  118,  82  N.  E.,  580. 

3  Fed.,  97,  2  Flippin,  704;  Stephens  9*  For  the  citation  of  this  statute, 

V.   Augusta  T.  &  E.  Co.,   120  Ga.,  see,  ante,  §  254,  note. 
1082,  48  S.  E.,  433;  Goodnough  v. 


300  RECEIVERS.  [chap.  VIII. 

aside  and  dismiss  the  petition. ^^  And  since  the  question  of 
permitting  an  independent  action  against  a  receiver  is  one  lying 
within  the  discretion  of  the  court,  mandamus  will  not  lie  to 
compel  the  court  to  grant  leave  for  the  commencement  of  an 
independent  suit  against  the  receiver.^^  And  it  is  proper  for 
the  court,  when  application  is  made  for  leave  to  sue  its  receiv- 
er, to  investigate  the  subject-matter  of  the  petition,  and  if  it 
appears  that  the  case  is  free  from  difficulty,  or  that  it  involves 
no  question  which  must  necessarily  be  determined  by  an  action 
at  law,  the  court  may  itself  determine  the  matter  upon  peti- 
tion.^'^  So  if  an  equitable  right  or  title  is  asserted  in  property 
W'hich  is  in  the  custody  of  a  receiver,  the  court  will  not  ordi- 
narily permit  an  action  to  be  brought  against  him,  but  will  re- 
quire the  claimant  to  proceed  by  petition. ^^  And  persons  hav- 
ing a  claim  or  lien  upon  a  fund  in  a  receiver's  hands  should  as- 
sert such  claim  by  petition,  rather  than  by  an  action  against  the 
receiver.99  And  where  a  person,  asserting  a  claim  to  property 
in  the  possession  of  a  receiver,  institutes  an  independent  ac- 
tion against  him,  it  is  proper  for  the  court  in  which  the  action 
was  begun  to  dismiss  it ;  and  the  fact  that  the  plaintiff  has  se- 
cured leave  of  the  appointing  court  to  commence  his  suit  upon 
an  ex  parte  hearing  and  without  notice  to  the  parties  in  interest 
will  not  preclude  the  court  from  thus  dismissing  the  proceed- 
ing.i  And  where  a  court,  having  jurisdiction  of  the  subject- 
matter  and  of  the  parties,  has  appointed  a  receiver  and  or- 
dered him  to  take  possession  of  certain  property,  which  he  has 
done,  an  action  of  trespass  will  not  lie  against  the  receiver  at 
the  suit  of  a  stranger  to  the  receivership  proceeding,  claiming 
title  to  the  property,  to  recover  damages  for  the  taking  of  it  by 
the  receiver,  his  remedy  in  such  case  being  by  intervention  in 

95  Flippin  V.  Kimball,  31  C.  C.  A.,  98  Porter  v.  Kingman,  126  Mass., 
282,  87  Fed.,  258,  59  U.  S.  App.,  1.  141. 

96  De  Forrest  v.  Cofifey,  154  Cal.,  99  Olds  v.   Tucker,   35   Ohio   St., 
444,  —  Pac.  — .  581. 

97  Lehigh  C.  &  N.  Co.  v.  Central  1  Goodnough  v.   Gatch,   37  Ore,., 
R.  Co.,  38  N.  J.  Eq.,  175.  5,  60  Pac,  383. 


CHAP.  VIII.]  ACTIONS.  301 

the  receivership  proceeding.^  And  a  petition  filed  in  a  re- 
ceivership proceeding  seeking  the  payment  of  a  claim  alleged 
to  be  due  petitioner  for  which  the  receiver  is  liable  is  defective 
where  it  contains  no  allegations  that  there  are  funds  in  the 
hands  of  the  receiver  out  of  which  the  claim  can  be  paid,  and 
a  demurrer  is  properly  sustained.^  If,  however,  the  cause  of 
action  is  in  tort,  it  is  regarded  as  the  more  appropriate  practice 
to  apply  for  leave  to  bring  an  action,  rather  than  to  submit  the 
matter  upon  petition.*  And  in  an  action  of  tort  against  the 
receiver  of  an  insolvent  lessee  street  railway  company,  it  is 
proper  to  join  the  lessor  company  as  a  joint  tort-feasor.^  But 
when  the  court  has  appointed  a  receiver  over  an  insolvent  cor- 
poation  and  has  entered  an  order  requiring  all  creditors  to 
come  in  and  prove  their  demands,  its  refusal  to  grant  leave  to  a 
mortgagee  to  institute  an  independent  action  to  foreclose  his 
mortgage  upon  the  property  of  the  corporation  is  not  error. ^ 
And  since  the  question  whether  an  independent  action  shall  be 
brought,  or  the  party  aggrieved  shall  be  permitted  to  intervene 
in  the  suit  in  which  the  receiver  was  appointed,  rests  wholly 
within  the  discretion  of  the  court,  the  refusal  to  grant  leave  to 
bring  such  action  will  not  be  reviewed  upon  appeal  unless  there 
has  been  a  manifest  abuse  of  judicial  discretion.'^    And  an  ap- 

2  Steele  v.  Walker,  115  Ala.,  title  of  the  cause  without  prefixing 
485,  21  So.,  942,  67  Am.  St.  Rep.,  it  with  "as"  renders  such  word 
62.  In  this  case  it  is  not  clear  merely  descriptio  persons;  and  the 
whether  or  not  the  action  had  been  defect  is  not  cured  in  such  case  by 
commenced  against  the  receiver  by  an  allegation  that  the  receiver  has 
leave  of  the  court  which  had  ap-  the  charge  and  control  of  the  prop- 
pointed  him.  erty   of   the   company,    where    it    is 

3  Empire  Distilling  Co.  v.  M'Nul-  not  averred  that  he  has  such  charge 
ta,  23  C.  C.  A.,  415,  77  Fed.,  700,  46  and  control  as  receiver.  Vasele  v. 
U.  S.  App.,  578.  Grant  Street  E.  R.  Co.,  16  Wash., 

4  Palys  V.   Jewett,  32   N.  J.   Eq.,  602,  48  Pac,  249. 

302,  distinguished  in  Shedd  v.  See-  5  Tandrup    v.    Sampsell,   234    111., 

feld,   230   111.,    118,   82   N.    E.,   580.  526,  85  N.  E.,  331,  17  L.  R.  A.,  (N. 

Where  an  action  is  brought  against  S.),  852. 

a     railway    company    and    its     re-  6  Meeker    v.    Sprague,  5    Wash., 

ceiver  to  recover  damages  for  per-  242,  31  Pac,  628. 

sonal  injuries,  the  use  of  the  word  ''^  Mechanics     National     Bank     v. 

"receiver"    after    his    name    in    the  Landauer,  68  Wis.,   AA,   31    N.   W., 


302  RECEIVERS.  [chap.  VIII. 

peal  will  not  He  from  an  order  of  a  federal  court  granting  leave 
to  sue  its  receiver  in  a  state  court.^ 

§  254c.  Practice  on  petitions  of  intervention.  When 
a  court  of  equity  has  taken  jurisdiction  of  an  estate  by  its  re- 
ceiver, as  in  the  case  of  an  insolvent  corporation,  upon  proceed- 
ings in  the  nature  of  a  judgment  creditors'  bill,  creditors  as- 
serting liens  or  claims  upon  the  property  as  found  in  the  re- 
ceiver's possession  may  file  their  petitions  of  intervention  in  the 
suit  in  which  the  receiver  was  appointed.^  Such  petitions  are 
substantially  independent  suits  and  may  proceed  to  final  judg- 
ment, allowing  or  rejecting  the  demand  or  claim  asserted,  inde- 
pendent of  the  judgment  in  the  principal  cause.  Every  such 
intervention  is  regarded  as,  in  effect,  a  suit  against  the  receiver, 
and  any  party  to  the  cause  who  may  be  dissatisfied  with  the 
final  order  made  upon  such  petition  may  appeal  therefrom.^^ 
And  the  effect  of  such  an  intervention  is  to  create  an  equitable 
levy  and  to  fasten  upon  the  property  in  the  hands  of  the  receiver 
an  equitable  lien  for  the  satisfaction  of  the  petitioner's  judg- 
ment or  claim,  subject  to  prior  liens  and  superior  equities.^^ 

§  254(/.  Revocation  of  leave  to  sue;  leave  may  be  con- 
ditional. The  power  of  the  court  to  appoint  a  receiver 
and  to  grant  leave  that  he  shall  be  sued  either  in  the  court  of  his 
appointment  or  in  any  other  court  necessarily  implies  the  power 
to  revoke  such  leave  in  the  proper  case.  Accordingly,  where 
the  appointing  court  has  granted  leave  that  an  action  may  be 
brought  against  a  receiver  in  another  court,  and,  after  such 
action  was  instituted,  the  plaintiff  therein  amends  his  bill  with- 
out notice  to  the  receiver  defendant  and  obtains  an  order  of  in- 
junction restraining  the  receiver  from  applying  to  the  appoint- 

160;   Stephens  v.  Augusta  T.  &  E.  10  Pagan  v.   Boyle  I.   M.  Co.,  65 

Co.,  120  Ga.,  1082,  48  S.  E.,  433.  Tex.,  324;  Voorhees  v.  Indianapolis 

8  New  York  Security  &  T.  Co.  v.  C.  &  M.  Co.,  140  Ind.,  220,  39  N.  E., 
Illinois  T.  R.  Co.,  44  C.  C.  A.,  161,  738. 

104  Fed.,  710.  H  Atlantic  Trust  Co.  v.  Dana,  62 

9  Pagan  v.   Boyle   I.   M.   Co..  65      C.  C.  A.,  657,  128  Fed.,  209. 
Tex.,    324;    Crutchfield    v.    Hunter, 

138  N.  C,  54,  50  S.  E.,  557. 


CHAP.  VIII.]  ACTIONS.  303 

ing  court  for  relief  concerning  the  property  in  his  possession, 
the  latter  court  may  require  the  plaintiff  to  have  such  improper 
injunction  dissolved,  and,  in  default  thereof,  may  revoke  the 
order  permitting  the  plaintiff  to  join  the  receiver  as  a  defend- 
ant to  his  action.i2  Sq,  also,  the  court,  in  granting  leave  to 
sue  its  receiver,  may  impose  such  reasonable  conditions  as  it 
sees  fit,  such,  for  example,  as  that  the  action  shall  not  be  insti- 
tuted within  a  specified  time ;  and  if  the  plaintiff  commences  his 
proceeding  before  the  expiration  of  the  time  limited,  he  is  guil- 
ty of  contempt;  nor  will  he  be  allowed,  upon  proceedings 
against  him  for  contempt,  to  assert  that  the  condition  in  ques- 
tion was  unreasonable.^^  And  where  leave  has  been  granted 
to  commence  garnishment  proceedings  against  a  receiver,  the 
court  may,  in  its  discretion,  set  aside  such  order  if  improvident- 
ly  made ;  and,  in  the  absence  of  an  abuse  of  discretion  in  so  do- 
ing, a  reviewing  court  will  not  interfere  with  such  action.^"* 
But  after  the  court  has  granted  permission  to  bring  an  action 
against  its  receiver  for  the  recovery  of  property  claimed  by 
him,  and  an  action  is  brought  accordingly  and  a  large  amount 
of  costs  is  incurred,  it  is  regarded  as  an  abuse  of  the  discre- 
tionary powers  of  the  court  to  revoke  such  permission  and  to 
dismiss  the  action. ^^ 

§  255.  Court  itself  may  give  relief  on  motion,  or  may 
authorize  suit ;  receiver  of  railway ;  liability  not  a  personal 
one.  While  it  is  the  more  commonly  recognized  practice 
for  persons  having  claims  or  demands  against  an  estate,  over 
which  a  receiver  is  appointed,  to  apply,  by  petition  or  other- 
wise, to  the  court  appointing  the  receiver  for  the  relief  desired, 
yet  this  method  of  obtaining  redress  does  not  exclude  the  rem- 
edy by  action  against  the  receiver,  in  cases  where  an  action  is 
proper.  And  when  complaint  is  made  against  a  receiver  for  in- 
juries sustained  by  reason  of  negligence  in  the  discharge  of  his 

12  Ray  V.  Trice,  53  Fla.,  864,  42  ings    Bank    v.    Bay    Circuit    Judge, 
So.,  901.  lib  Mich.,  633,  68  N.  V^.,  649. 

13  In  re  Battersby,  31  L.  R.  In,  15  Conwell  v.  Lawrence,  46  Kan., 
73.  83,  26  Pac,  461. 

1*  Citizens'    Commercial    &    Sav- 


304  RECEIVERS.  [chap.  VIII. 

official  duties,  the  court  appointing  him  may  either  take  cog- 
nizance of  the  complaint  and  administer  justice  between  the 
parties,  or  it  may  permit  the  party  aggrieved  to  bring  his  ac- 
tion for  the  injury  sustained.  And  in  case  of  an  action  brought 
against  the  receiver  of  a  railway  corporation,  for  injuries  al- 
leged to  have  been  sustained  through  negligence  of  employees 
in  the  management  of  the  road,  the  receiver  can  not  object  to 
the  action  that  he  is  a  public  officer,  and  as  such  not  responsible 
in  his  official  capacity  for  the  negligence  of  his  employees.i^ 
But  it  may  be  observed  generally,  that  in  an  action  instituted 
against  a  receiver  in  his  official  capacity,  he  incurs  no  personal 
liability,  and  whatever  judgment  is  obtained  against  him  should 
be  so  entered  as  to  be  enforced  only  out  of  funds  properly 
chargeable  to  him  in  the  capacity  of  receiver.^''' 

§  256.  Courts  may  enjoin  unauthorized  suits  against 
their  receivers;  illustrations.  Courts  of  equity  are  so 
jealous  of  permitting  any  unauthorized  interference  with  their 
receivers,  that  they  frequently  interpose  by  injunction  to  re- 
strain the  prosecution  of  actions  against  them,  when  leave  of 
court  has  not  been  first  obtained. ^^  And  when  a  person  is  pro- 
ceeding to  assert  his  claims  to  property  held  by  a  receiver,  by 
an  action  at  law,  without  obtaining  permission  of  the  court  to 
bring  such  action,  the  court  may,  on  application  of  the  receiver, 
enjoin  him  from  proceeding  with  his  suit,  regardless  of  how- 
ever clear  his  right  may  appear  to  be,  or  of  whether  he  was  ap- 
prised of  the  receiver's  appointment  at  the  time  of  bringing  his 
action.19    So  when  a  railroad  company  has  instituted  proceed- 

16  Meara's  Administrator  v.  Hoi-  St.  Rep.,  47,  and  note,  as  to  the  con- 
brook,  20  Ohio  St.,  137.  clusiveness  of  a  judgment  rendered 

17  Commonwealth  v.  Rvmk,  26  Pa.  against  a  receiver  upon  the  parties 
St.,  235;   Meara's  Administrator  v.  whom  he  represents. 

Holbrook,  20  Ohio  St.,   137;   Bart-  18  Evelyn  v.  Lewis,  3  Hare,  472; 

lett   V.    Cicero   Light    Co.,    177    111.,  Tink  v.  Rundle,   10  Beav..  318;  In 

68,  52  N.  E.,  339,  68  L.  R.  A..  78,  69  re   Persse,  8  Ir.   Eq.,    Ill;    Parr  v. 

Am.  St.  Rep.,  206;  Brown  v.  Brown,  Bell,  9  Ir.  Eq.,  55;  Montgomery  v. 

71  Tex.,  355,  9  S.  W.,  261.    And  see,  Enslen,  126  Ala.,  654,  28  So.,  626. 

post,  §  398&.  See  Painter  v.  Paint-  19  Evelyn  v.  Lewis,  3  Hare,  472. 
«r,  138  Cal.,  231.  71  Pac,  90,  94  Am. 


CHAP.  VIII.]  ACTIONS.  305 

ings  to  condemn  for  the  use  of  its  road  certain  real  estate  in  the 
custody  of  a  receiver,  without  obtaining  leave  of  court,  an  in- 
junction has  been  allowed  ex  parte,  to  restrain  the  company 
from  proceeding  until  further  order.^O  And  where  tenants, 
without  leave  of  court,  have  brought  actions  of  replevin  or  of 
trespass  against  a  receiver,  who  has  distrained  for  their  rent, 
they  may  be  enjoined  from  proceeding  with  such  actions.^l  So 
an  injunction  is  properly  granted  at  the  instance  of  a  receiver 
appointed  by  a  federal  court  to  restrain  the  prosecution  of  ac- 
tions at  law  brought  against  him  in  a  state  court  without  leave 
to  recover  the  possession  of  property  in  his  custody,  the  case 
not  being  one  in  which,  under  the  provisions  of  the  act  of  con- 
gTess,22  an  action  may  be  instituted  without  leave  of  court. ^3 

§  257.  Suit  against  receiver  for  mere  trespass  not  en- 
joined. Notwithstanding  the  extreme  jealousy  thus  shown 
by  the  courts  in  protecting  their  receivers  against  unauthor- 
ized interference  by  suit,  such  protection  will  not  be  extended  to 
acts  which  are  outside  and  in  excess  of  the  functions  of  the  re- 
ceiver, or  to  matters  in  which  he  occupies  the  attitude  of  a  mere 
trespasser,  as  in  dealing  with  or  assuming  possession  and  con- 
trol of  property  which  is  not  embraced  in  his  receivership. 
Thus,  when  suit  is  brought  against  a  receiver  in  another  court 
for  acts  committed  by  him  as  an  individual,  as  for  taking  and 
retaining  possession  of  property  not  pertaining  to  his  receiver- 
ship, and  as  to  which  he  is  a  mere  trespasser,  such  action  will 
not  be  enjoined  by  the  court  appointing  the  receiver.24  Nor 
will  a  writ  of  prohibition  lie  to  restrain  an  inferior  court  from 
entertaining  an  action  against  a  receiver  in  such  case.^^  And 
an  action  of  replevin  has  been  maintained  for  the  recovery  of 
such  property,  although  leave  of  court  had  not  been  obtained 
to  bring  the  action.    And  it  has  been  held  that  an  action  against 

20  Tink  V.  Rundle,  10  Beav.,  318.  26  C.  C.  A.,  46,  81  Fed.,  529,  52  U. 

21 /n  re   Persse,  8  Ir.    Eq.,    Ill;  S.  App.,  253. 
Parr  v.  Bell,  9  Ir.  Eq.,  55.  24  /„  re  Young,  7  Fed.,  855.    And 

22  For  the  citation  of  the  act  in  see  Curran  v.  Craig,  22  Fed.,  101. 
question,  see  ante,  §  254,  note.  2.'.  Sherwood  v.  New  England  K. 

23  J.  I.  Case  Plow  Works  v.  Finks,  Co.,  68  Conn.,  543,  37  Atl.,  388. 

Receivers — 20. 


306  RECEIVERS.  [chap.  VIII. 

a  receiver  in  his  official  capacity,  concerning  matters  pertaining 
to  his  receivership,  will  not  be  enjoined,  on  motion  of  the  re- 
ceiver, upon  the  ground  that  the  matters  in  controversy  have 
been  passed  upon  by  the  court  in  other  proceedings,  since,  if 
this  be  true,  it  furnishes  a  complete  and  sufficient  defense  to 
the  action  sought  to  be  enjoined,  and  the  receiver  should  avail 
himself  of  it  in  that  action. 26 

§  258.  Receiver  as  a  party  to  action  against  original 
debtor;  must  file  plea;  receiver  as  party  to  appeal.  As  re- 
gards actions  instituted  against  a  debtor  or  person  over  whom  a 
receiver  is  appointed,  there  would  seem  to  be  no  necessity  for 
making  the  receiver  a  party  defendant  to  such  actions,  wdiere 
the  rights  and  remedies  of  the  plaintiff  terminate  with  the  orig- 
inal debtor,  and  when  the  receiver  is  not  to  be  adjudged  or 
compelled  to  do  anything  for  plaintiff's  benefit.  And  in  order 
to  make  the  receiver  a  proper  co-defendant  with  the  original 
debtor  in  an  action  against  the  latter,  some  right  to  relief  at 
the  receiver's  hands  should  be  stated,  and  some  relief  prayed  as 
against  him.^^  But  it  is  to  be  observed  with  reference  to  ac- 
tions already  begun  against  a  debtor,  over  whose  affairs  a  re- 
ceiver is  subsequently  appointed,  that  the  receiver  can  have  nc 
status  in  court  until  he  has  become  a  party  to  the  action,  the' 
proper  course,  if  he  desires  to  be  made  a  party,  being  to  ap[Jy 
to  the  court  for  that  purpose ;  and  until  this  is  done  he  can  not 
appear  or  take  any  action  in  the  cause.^^  And  where,  per /jng 
an  appeal  from  a  judgment  against  a  railway  company  a  re- 
ceiver is  appointed  over  the  property  of  the  company,  int  re- 

26  Jay's  Case,  6  Ab.  Pr.,  293.  the    mortgagee    seeking    t.     redeem 

27  Arnold  v.  Suffolk  Bank,  27  the  mortgaged  premises  be  tore  fore- 
Barb.,  424.  And  see  Decker  v.  closure,  a  receiver  having  the  equit- 
Gardner,  124  N.  Y.,  334,  26  N.  E.,  able  title  to  the  mortgagu  and  the 
814.  And  see,  post,  §  344b.  As  to  sole  authority  to  enfon  e  it  is  a 
the  right  of  a  receiver  to  be  admit-  necessary  party  to  the  vroceeding. 
ted  to  defend  an  action  brought  Southern  Mutual  B.  &  1 ..  Assn.  v. 
against  the  persons  over  whose  af-  Andrews,  122  Ala.,  598,  25  So.,  113. 
fairs  he  is  appointed,  see  Honegger  28  Tracy  v.  First  National  Bank 
V.  Wettstein,  94  N.  Y.,  252.     Upon  of  Selma,  37  N.  Y.,  523. 

a  bill  filed  by  a  mortgagor  against 


CHAP.  VIII.]  ACTIONS.  307 

ceiver  is  not  a  necessary  party  to  such  appeal,  where  there  is 
no  attempt  to  charge  the  assets  in  his  hands  with  the  payment 
of  plaintiff's  judgment.^^  But  the  receiver  of  an  insolvent 
debtor  is  a  necessary  party  to  an  appeal  from  a  judgment  ren- 
dered in  the  debtor's  favor  prior  to  the  appointment  of  the  re- 
ceiver,^^  And  where  the  receiver  of  an  insolvent  debtor  has 
been  made  a  party  defendant  to  an  action  previously  com- 
menced against  the  debtor,  he  can  not  complain  that  a  judgment 
rendered  against  the  debtor  is  erroneous  where  he  has  wholly 
failed  himself  to  file  a  plea  to  the  declaration. ^^ 

§  259.  Effect  of  receiver  over  one  defendant  in  foreclo- 
sure suit.  The  appointment  of  a  receiver  over  the  effects 
of  one  of  the  defendants,  in  an  action  for  the  foreclosure  of  a 
mortgage,  constitutes  no  bar  to  the  continuance  of  the  action, 
if  properly  begun ;  and  such  appointment  can  at  most  only  ren- 
der the  action  defective  as  to  parties,  so  as  to  render  it  neces- 
sary for  the  plaintiff  to  bring  the  receiver  before  the  court  by  a 
supplemental  bill  in  the  nature  of  a  bill  of  revivor.32  And  even 
this  course  is  not  necessary  when  the  parties  in  interest  are  suffi- 
ciently represented  before  the  court  to  enable  it  to  properly  de- 
termine the  controversy.^^  And  where  a  foreclosure  suit  is  in- 
stituted against  two  mortgagors,  a  receiver  appointed  at  the  in 
stance  of  one  of  the  mortgagors  over  the  other  to  wind  up  the 
affairs  of  a  partnership  existing  between  them  is  not  vested,  by 
the  order  of  appointment  and  in  the  absence  of  a  conveyance, 
with  such  an  interest  in  or  title  to  the  partnership  property  as 
to  render  him  a  necessary  party  to  the  foreclosure  proceeding.^'* 

§  260.  Receivers  of  corporations  as  parties  defendant. 
In  an  action  to  foreclose  a  mortgage  given  by  a  corporation, 
when  a  decree  pro  confesso  is  taken  against  the  corporation,  b}i 

29  Keeley  v.  Union  Pac.  Ry.  Co.,  32  Wilson  v.  Wilson,  1  Barb.  Ch., 
58  Kan.,  161,  48  Pac,  843.  592. 

30  Scannell    v.    Felton,    57    Kan.,  33  Wilson  v.  Wilson,  1  Barb.  Ch,. 
468,  46  Pac,  848.  592;   St.  Louis,  C.  G.  &  F.  S.  Ry. 

31  Braddock      Brewing      Co.      v.  Co.  v.  Holladay,  131  Mo.,  440,  33  S. 
Pfaudler  V.  F.  Co.,  45  C.  C.  A.,  491,  W.,  49. 

106  Fed.,  604.  34  Heffron  v.  Gage,  149  111.,  182, 


308  RECEIVERS.  [CIIAP.  VIII. 

which  plaintiff's  right  to  recover  is  estahhshed,  and  receivers 
of  the  corporation  are  afterward  appointed,  it  is  not  necessary 
that  they  should  be  made  parties  defendant  to  the  proceeding, 
although  the  court  may  properly  admit  them  as  parties  at  any 
stage  of  the  cause,  if  they  seek  to  be  so  admitted.^^  And  the 
question  whether  a  receiver  shall  be  permitted  to  defend  an  ac- 
tion brought  against  the  person  or  corporation  over  whose  af- 
fairs he  is  appointed,  rests  wholly  in  the  discretion  of  the  court 
appointing  him,  and  is  not  a  matter  of  right  upon  the  part  of 
the  receiver.  When,  therefore,  a  receiver  of  a  corporation  is 
denied  permission  to  defend  an  action  for  the  foreclosure  of 
mortgages  given  by  the  corporation,  such  action  of  the  court 
will  not  be  reversed  upon  appeal.^^  But  when  a  corporation  is 
dissolved,  and  a  receiver  is  appointed  in  an  action  in  the  state 
of  its  domicile,  and  a  court  of  another  state  proceeds  to  render 
judgment  against  the  corporation  in  an  action  there  pending, 
without  making  the  receiver  a  party,  such  judgment  is  not  bind- 
ing against  the  receiver  of  the  corporation  in  the  state  wliere 
it  was  dissolved.^'^  And  when  the  action  will,  if  sustained,  re- 
sult in  relieving  the  receivers  of  the  corporation  of  a  consider- 
able portion  of  their  duties,  being  equivalent  to  that  extent  to  a 
removal  from  their  office,  it  is  manifestly  proper  and  right  that 
they  should  be  made  parties  defendant,  and  be  allowed  an  op- 
portunity of  being  heard  in  their  own  behalf.^^ 

36  N.   E.,  569,   followed  by  Manu-  Adriatic  Fire  Ins.  Co.,   148  N.  Y., 

facturers  Paper  Co.  v.  Lindblom,  80  34,  42  N.  E.,  515. 
111.  App.,  267.  38  Smith     v.    Trenton    Delaware 

35Willink    v.     Morris     Canal    &  Falls  Co.,  3  Green  Ch.,  505.     Since 

Banking  Co.,  3  Green  Ch.,  377.  an  action  against  the  receiver  of  a 

36  Patrick  v.  Eells,  30  Kan.,  680,  corporation  is  in  effect  against  the 
2  Pac,  116.  corporation    itself,    service    of   pro- 

37  McCulloch  V.  Norwood,  58  N.  cess  may  be  had  in  such  an  action 
Y.,  562,  reversing  S.  C,  36  N.  Y.,  upon  an  agent  of  the  corporation, 
Supr.  Ct.  R.,  180.  See,  also,  Pen-  under  a  statute  providing  that  when 
dleton  V.  Russell,  144  U.  S.,  640,  an  action  is  brought  against  a  cor- 
12  Sup.  Ct.  Rep.,  743,  affirming  S.  poration,  service  may  be  had  upon 
C.  sub.  nom.  People  v.  Knicker-  a  local  agent.  Farris  v.  Receivers, 
bocker  Life  Insurance  Co.,  106  N.  115  N.  C,  600,  20  S.  E.,  167;  Grady 
Y.,  619,  13  N.  E.,  447;  Rodgers  v. 


CHAP.  VIII.]  ACTIONS.  309 

§  261.  Receiver's  appearance  waives  objection  as  to 
want  of  leave.  It  has  already  been  shown  that  the  weight 
of  authority  supports  the  doctrine  that  want  of  leave  to  sue  a 
receiver  is  not  jurisdictional.39  And  where  the  rule  thus  pre- 
vails, it  follows  that  where  a  receiver  against  whom  an  action 
has  been  instituted  without  the  leave  of  the  appointing  court 
enters  his  voluntary  appearance  in  the  cause  or  in  any  other 
way  submits  himself  generally  to  the  jurisdiction  of  the  court 
and  defends  upon  the  merits,  the  objection  is  thereby  deemed  to 
be  waived.'**^  Thus,  a  motion  to  dismiss  an  action  brought 
against  a  receiver,  upon  the  ground  that  leave  of  court  was  not 
first  had  before  beginning  the  action,  is  waived  by  the  appear- 
ance of  counsel  for  the  receiver,  such  appearance  being  an  ad- 
mission that  the  defendant  has  been  regularly  brought  into 
court.  Want  of  permission,  therefore,  to  bring  the  action  can 
not  be  urged  as  a  ground  for  dismissal  after  such  appearance  on 
the  part  of  the  receiver.^i  So  it  is  held  that  when  a  receiver, 
who  is  sued  with  other  defendants,  joins  in  answering  to  the 
merits  of  the  action,  without  raising  the  objection  that  leave  of 
court  was  not  had  to  bring  suit  against  him,  he  will  not  be 
heard  to  make  the  objection  upon  motion  in  arrest  of  judg- 
ment.'*2  go  where  a  creditor  has  commenced  attachment  suits 
in  a  foreign  state  to  reach  assets  of  his  debtor  over  whom  a  re- 
ceiver has  been  appointed  in  another  state,  but  has  failed  to  pro- 
cure leave  of  the  court  making  such  appointment,  the  failure  of 
the  creditor  to  dismiss  such  attachment  suits  upon  being  noti- 
fied of  the  receivership  is  waived  by  the  entry  of  the  receiver's 

V.  Richmond  &  D.  R.  Co.,  116  N.  C,  v.  Steward,  45  Neb.,  640,  63  N.  W., 

952,  21  S.  E.,  304.  924;  American  Steel  &  Wire  Co.  v. 

s'o  See,  ante,  §  254a.  Bearse,    194   Mass.,    596,   80   N.    E., 

40Hubbell  v.  Dana,  9  How.  Pr.,  623;    Manker  v.   Loan   Association, 

424;    Elkhart    Car  Works  v.    Ellis,  124  Iowa,  341. 

113  Ind..  215,  15  N.  E.,  249;  Ridge  41  Hubbell  v.  Dana,  9  How.  Pr., 

V.    Manker,   67   C.    C.   A.,    596,    132  424.    See,  also,  In  re  Young,  7  Fed., 

Fed.,   599;    Holbrook   v.    Ford,    153  855. 

111.,  633,  39  N.  E.,  1091,  27  L.  R.  A.,  42  Elkhart    Car    Works    v.    Ellis, 

324,  46  Am.  St.  Rep.,  917;  Flentham  113  Ind.,  215,  15  N.  E.,  249. 


310  RECEIVERS.  [chap.  VIII. 

appearance  in  the  attachment  proceedings  accompanied  by  a 
motion  to  dismiss.^^ 

§  262.  Courts  will  not  enjoin  their  own  receivers;  relief 
granted  in  receivership  proceeding;  mandatory  injunction 
against  receiver.  Courts  of  equity  will  not  ordinarily  en- 
tertain a  bill  for  an  injunction  against  their  receivers,  the  prop- 
er remedy  for  the  party  aggrieved  being  to  apply  to  the  court 
for  leave  to  assert  his  rights  and  to  enforce  his  remedies  in  the 
action  in  which  the  receiver  was  appointed.^^  And  where  a 
receiver  appointed  by  a  federal  court  is  maintaining  an  obstruc- 
tion to  a  highway  which  amounts  to  a  nuisance,  a  third  person 
injured  thereby  may  intervene  in  the  receivership  proceeding 
and  is  entitled  to  an  injunction  restraining  the  continuance  of 
the  nuisance.^^  So  where  a  receiver  of  a  railway  company  has 
unlawfully  and  without  authority  taken  possession  of  certain 
tracks  and  switches  of  another  company,  the  latter,  by  inter- 
vening in  the  receivership  proceeding,  may  not  only  obtain  a 
prohibitory  injunction  restraining  such  use  and  occupation  but 
may  have  a  mandatory  injunction  against  the  receiver  requir- 
ing the  removal  of  certain  tracks  and  switches. ^^  And  since 
a  receiver,  authorized  by  the  court  to  bring  an  action,  is  bound 
to  proceed  therewith,  the  court  will  not  permit  him  to  be  en- 
joined from  so  proceeding.     The  proper  course,  in  such  case, 

43  Holbrook  v.  Ford,  153  111.,  633,  manage  and  operate  such  property 
39  N.  E.,  1091,  27  L.  R.  A.,  324,  46  according  to  the  requirements  of  the 
Am.  St.  Rep.,  917.  valid    laws    of   the    state   in    which 

44  Smith  v.  Earl  of  Effingham,  2  such  property  shall  be  situated,  in 
Beav.,  232.  the  same  manner  that  the  owner  or 

45  Felton  V.  Ackerman,  9  C.  C.  A.,  possessor  thereof  would  be  bound 
457,  61  Fed.,  225,  22  U.  S.  App.,  to  do  if  in  possession  thereof."  Sec- 
154.  This  decision  is  based  upon  tion  2,  of  Act  of  March  3,  1S87,  c. 
section  2,  of  the  act  of  congress  of  Z7Z,  24  Stat.,  554,  as  amended  by 
August  13,  1888,  which  defines  the  Act  of  August  13,  1888,  c.  866,  25 
jurisdiction  of  circuit  courts  of  the  Stat.,  436;  1  U.  S.  Comp.  Stat., 
United  States  and  provides  that  1901,  p.  582;  4  Fed.  Stat.  Ann.,  ;,. 
where,  in  any  cause  pending  in  such  386. 

court,  "there  shall  be  a  receiver  or  46  Chattanooga  Terminal  Ry.  Co. 

manager  in  possession  of  any  prop-      v.  Felton,  69  Fed.,  273. 
erty,  such  receiver  or  manager  shall 


CHAP.  VIII.]  ACTIONS.  311 

for  parties  dissatisfied  with  the  receiver's  conduct,  is  to  apply 
to  the  court  appointing-  him  for  relief,  instead  of  seeking  to  en- 
join him  by  another  suit.^'^ 

§  263.  Rival  claimants  against  receiver;  bill  of  inter- 
pleader. When  there  are  different  and  rival  claimants 
to  a  fund  in  the  hands  of  a  receiver,  each  of  whom  has  insti- 
tuted proceedings  against  him  for  the  fund,  it  is  proper  for  the 
receiver  to  bring  an  action  in  the  nature  of  a  bill  of  interpleader 
against  such  claimants,  and  to  compel  them  to  interplead  and 
to  determine  their  conflicting  rights  to  the  fund.'^^ 

§  264.  Receivers  not  allowed  to  waive  defense;  when 
receiver  not  required  to  make  particular  defense.  It  is 
held,  in  actions  against  receivers  in  their  official  capacity,  that 
they  may  not,  either  expressly  or  impliedly,  waive  any  legal  or 
equitable  defense  on  which  their  principal  might  have  relied 
had  the  action  been  brought  against  him.  Receivers  of  an  in- 
surance company  may  not,  therefore,  in  an  action  brought 
against  them  to  recover  upon  a  policy  of  insurance  issued  by 
the  company,  waive  or  dispense  with  the  conditions  of  the  pol- 
icy as  to  notice  of  loss.^^  And  although  leave  may  be  granted 
to  sue  a  receiver,  he  is  at  liberty  to  assert  any  defense  which 
he  may  have  to  the  action,  either  by  plea,  answer  or  demurrer.^^ 
But  the  court  appointing  a  receiver  will  not,  at  the  instance  of  a 
party  interested,  require  the  receiver  to  set  up  certain  matters 
in  defense  to  an  action  against  him,  where,  upon  investigation, 
he  is  satisfied  that  such  matters  are  not  in  accordance  with  the 
facts  and  are  incapable  of  proof. ^^ 

47  Winfield  v.  Bacon,  24  Barb.,  Rep.,  625,  43  L.  Ed.,  941,  modifying 
154.  and   affirming   S.   C,   26   C.   C.   A., 

48  Winfield  v.  Bacon,  24  Barb.,  279,  80  Fed.,  969,  53  U.  S.  App., 
154.  302,    the    court    say :      "It   becomes 

49  McEvers  v.  Lawrence,  Hoffm.,  important  to  consider  what  are  the 
172.  rights  and  duties  of  a   receiver  in 

50  Davis  V.  Duncan,  19  Fed.,  477.  respect  to  claims  made  against  the 

51  Land  Title  &  Trust  Co.  v.  As-  estate  in  his  possession.  It  is  often 
phalt  Co.,  121  Fed.,  192.  In  Bos-  said  that  he  is  merely  the  hand  of 
worth  V.  St.  Louis  Terminal  R.  the  court  which  has  appointed  him; 
Assn.,   174  U.  S.,  182,  19  Sup.  Ct.  and  for  certain  purposes  that  is  not 


312 


RECEIVERS. 


[chap.  VIII, 


§  264(7,  When  receiver  may  appeal  from  orders  entered 
in  receivership  cause.  As  to  the  right  of  a  receiver  to 
appeal  from  orders  and  judgments  entered  in  the  course  of  the 
receivership  proceedings,  it  is  held  that  he  has  the  same  right  of 
appeal  from  an  adverse  judgment  for  the  recovery  of  funds 
pertaining  to  his  receivership,  as  the  party  over  whom  he  was 
appointed  would  have  had.^^  ^nd  where  a  claim  for  damages 
for  personal  injuries  has  been  allowed  in  a  receivership  proceed- 
ing, the  receiver,  being  the  representative  of  all  parties  to  the 
suit  and  being  under  obligation  to  protect  the  property  in  his 
possession,  has  the  right  to  appeal  from  such  order.^^  And 
where,  upon  an  intervening  petition  filed  by  a  third  person  in 
the  receivership  cause,  an  injunction  has  been  granted  restrain- 
ing the  receiver  from  continuing  a  nuisance,  the  receiver  may 
appeal  from  such  in  junctional  order,  and  his  action  in  so  doing 
is  regarded  as  consonant  with  his  relation  to  the  court. ^^    And 


an  inapt  expression.  He  is  charged 
with  the  duty  of  carrying  into  exe- 
cution the  orders  of  that  court,  but 
he  is  also  a  custodian  of  property, 
and  has  by  virtue  of  such  custody 
.certain  obligations  to  the  parties 
owning  or  interested  therein. 

First.  A  receiver  may  defend, 
both  in  the  court  appointing  him  and 
by  appeal,  the  estate  in  his  posses- 
sion against  all  claims  which  are  an- 
tagonistic to  the  rights  of  both  par- 
ties to  the  suit.  For  instance,  he 
may  thus  contest  a  claim  for  taxes, 
because  if  valid  they  are  superior 
to  the  rights  of  both  parties;  in  a 
case  like  the  present,  superior  to  the 
rights  of  mortgagor  and  mortgagee. 
Second.  He  may  likewise  defend 
the  estate  against  all  claims  which 
are  antagonistic  to  the  rights  of 
either  party  to  the  suit,  subject  to 
the  limitation  that  he  may  not  in 
such  defense  question  any  order  or 
decree  of  the  court  distributing  bur- 


dens or  apportioning  rights  between 
the  parties  to  the  suit,  or  any  order 
or  decree  resting  upon  the  discre- 
tion  of   the   court   appointing   him. 

In  the  case  at  bar  one  defense, 
as  shown  by  the  exceptions  taken 
to  the  report  of  the  master,  was  that 
the  claim  of  the  intervener  was  not 
against  the  estate,  but  against  some 
third  party.  That  defense  the  re- 
ceiver had  a  right  to  make.  We  do 
not  mean  that  he  alone  can  act ;  we 
do  not  stop  to  inquire  what  rights 
either  party  to  the  suit  may  have  in 
this  respect.  All  we  now  decide  is 
that  the  receiver  is  a  proper  party 
to  make  the  defense." 

52  Melendy  v.  Barbour,  78  Va., 
544;  Kavanagh  v^  Bank  of  Ameri- 
ca, 239  111.,  404,  88  N.  E.,  171. 

53Thom  V.  Pittard,  10  C.  C.  A., 
352,  62  Fed.,  232,  8  U.  S.  App.,  597. 

54  Felton  V.  Ackerman,  9  C.  C.  A., 
457,  61  Fed.,  225,  22  U.  S.  App.,  154. 


CHAP.  VIII.]'  ACTIONS.  313 

the  right  of  appeal  has  been  recognized  to  the  extent  of  hold- 
ing that,  where  an  application  is  made  to  the  court  to  effect  a 
settlement  with  a  receiver,  which  is  represented  to  be  advan- 
tageous to  all  parties,  and  an  order  is  entered  requiring  the  re- 
ceiver to  accept  the  settlement  in  question,  the  receiver,  if  dis- 
satisfied, may  maintain  an  appeal  from  such  order.^^  And  a 
receiver's  right  of  appeal  from  the  allowance  of  a  claim  against 
the  estate  in  his  possession  does  not  necessarily  fail  when  the 
receivership  has  been  terminated  to  the  extent  of  surrendering 
the  property  to  the  parties  entitled  thereto. ^^ 

§  2646.  Receiver  can  not  appeal  from  administrative  or- 
ders; nor  from  orders  of  distribution;  costs  on  unauthor- 
ized appeal.  An  appeal  will  not  lie,  how^ever,  upon  behalf 
of  a  receiver  from  purely  administrative  orders  which  the  court 
in  the  exercise  of  its  discretion,  may  make  in  the  cause  for  the 
proper  care  and  management  of  the  property  in  its  custody. 
Thus,  where  a  receiver  has  been  appointed  over  the  property 
of  a  railway  company,  an  order  which  has  in  view  the  safe  op- 
eration of  the  road  is  purely  administrative  and,  as  such,  whol- 
ly within  the  discretion  of  the  court,  and  an  appeal  from  such 
an  order  by  the  receiver  will  therefore  be  dismissed. ^'^  Nor  can 
a  receiver  maintain  an  appeal  from  an  order  directing  the  dis- 
ss McGregor  v.  Third  National  decrees  which  may  finally  be  entered 
Bank.  124  Ga.,  557,  53  S.  E.,  93.  against  the  estate." 

56  Bosworth  v.   St.  Louis  Termi-  S7  Hunt  v.  Illinois  Central  R.  Co., 

nal  R.  Assn.,  174  U.  S.,  182,  19  Sup.  37  C.  C.  A.,  548,  96  Fed.,  644.  In 
Ct.  Rep..  625,  43  L.  Ed.,  941,  modi-  Bosworth  v.  St.  Louis  Terminal  R. 
fying  and  affirming  S.  C,  26  C.  C.  Assn.,  174  U.  S.,  182.  19  Sup.  Ct. 
A.,  279,  80  Fed.,  969,  53  U.  S.  App.,  Rep.,  625,  43  L.  Ed.,  941,  modifying 
302.  In  this  case  the  court  say:  and  affirming  S.  C,  26  C.  C.  A., 
"It  is  common  practice  in  courts  of  279,  80  Fed.,  969,  53  U.  S.  App.,  302, 
equity,  anxious  as  they  are  to  be  the  court  say:  "He  (the  receiver) 
relieved  of  the  care  of  property,  to  may  not  appeal  from  an  order  dis- 
turn  it  over  to  the  parties  held  en-  charging  or  removing  him,  or  one 
titled  thereto,  even  before  the  final  directing  him  in  the  administration 
settlement  of  all  claims  against  it,  of  the  estate,  as  for  instance  to  issue 
and  at  the  same  time  to  leave  to  the  receiver's  certificates,  to  make  im- 
receiver  the  further  defense  of  such  provements,  or  matters  of  that  kind, 
claims,  the  party  receiving  the  prop-  all  of  which  depend  on  the  sound 
crty  giving  security  to  abide  by  any       discretion  of  the  trial  court." 


314 


RECEIVERS. 


[chap.  VIII. 


tribution  of  funds  in  his  hands  among  the  different  creditors 
or  claimants  entitled  thereto.^^  And  since  he  is  the  mere  serv- 
ant or  agent  of  the  court,  he  will  not  be  allowed  of  his  own 
volition  to  appeal  from  an  order  made  in  the  progress  of  the 
cause  in  which  he  is  appointed.  When,  therefore,  without  au- 
thority of  the  court,  he  prosecutes  such  an  appeal,  it  may  be 
dismissed  on  motion.^^  Even  under  a  statute  allowing  ap- 
peals "as  a  matter  of  right  on  the  application  of  either  party, 
or  his  personal  representatives,"  a  receiver  is  not  entitled  to  an 
appeal  from  an  order  directing  him  to  pay  a  claim  which  has 
been  allowed  by  the  court,  since  he  is  not  a  party  to  the  cause.^^ 
And  where  a  receiver  thus  takes  an  unauthorized  appeal,  it  is 
proper  to  tax  the  costs  of  the  appeal  against  the  receiver  per- 
sonally.^^ 

§  265.  Notice  of  application  for  leave  to  sue  receiver; 
when  corporate  creditors  not  necessary  parties  to  action  by 
stockholders  against  receiver  of  corporation.     When  per- 


SSKnabe  v.  Johnson,  107  Md., 
616,  69  Atl.,  420;  Battery  Park  Bank 
V.  Western  C.  Bank,  127  N.  C,  432, 
yj  S.  E.,  461.  See  Hoffman  v. 
Bank,  4  N.  Dak.,  473,  61  N.  W., 
1031.  In  Bosworth  v.  St.  Louis 
Terminal  R.  Assn.,  174  U.  S.,  182, 
19  Sup.  Ct.  Rep.,  625,  43  L.  Ed., 
941,  modifying  and  affirming  S.  C, 
26  C.  C.  A.,  279,  80  Fed.,  969,  53 
U.  S.  App.,  302,  the  court  say: 
"Neither  can  he  question  any  subse- 
quent order  or  decree  of  the  court 
distributing  the  estate  in  his  hands 
between  the  parties  to  the  suit.  It 
is  nothing  to  him  whether  all  of  the 
property  is  given  to  the  mortgagee 
or  all  returned  to  the  mortgagor. 
He  is  to  stand  indiflferent  between 
the  parties,  and  may  not  be  heard 
either  in  the  court  which  appointed 
him,  or  in  the  appellate  court,  as  to 
the  rightfulness  of  any  order  which 
is  a  mere  order  of  distribution  be- 


tween the  parties.  In  this  connec- 
tion it  must  be  noticed  that  an  in- 
tervenor,  although  for  certain  pur- 
poses recognized  as  a  party  to  the 
litigation,  is  not  such  a  party  as 
comes  within  the  scope  of  the  limi- 
tation just  announced.  He  is  one 
who  comes  into  the  litigation  assert- 
ing a  right  antagonistic  or  superior 
to  that  of  one  or  both  of  the  parties 
thereto,  and  a  receiver,  who  repre- 
sents, so  far  as  the  property  is  con- 
cerned, the  interests  of  the  parties, 
may  rightfully  challenge  his  claim; 
provided  that  in  such  challenge  he 
does  not  question  any  orders  of  the 
court  heretofore  referred  to." 

59  McKinnon  v.  Wolfenden,  78 
Wis.,  237,  47  N.  W.,  436. 

SODorsey  v.  Sibert,  93  Ala.,  312, 
9  So.,  288. 

61  First  National  Bank  v.  Bunt- 
ing, 7  Idaho,  27,  59  Pac,  929,  1106. 


CHAP.  VIII.]  ACTIONS.  315 

sons  apply  for  and  obtain  leave  of  court  to  bring  an  action 
against  a  receiver  in  his  official  capacity,  it  is  not  essential  to  the 
jurisdiction  of  the  court  over  the  receiver,  or  to  the  validity  of 
the  order,  that  the  application  should  be  based  upon  notice  to 
the  parties  in  the  action  wherein  the  receiver  was  appointed.  It 
is  sufficient  that  leave  be  granted  by  the  court  having  control 
over  the  receiver,  upon  notice  to  him,  against  whom  alone  the 
cause  of  action  exists,  and  against  whom  the  proceedings  must 
be  brought.  62  And  where  an  action  is  brought  by  shareholders 
of  a  corporation  against  the  receiver  of  the  corporation  to  set 
aside  a  decree  providing  for  an  assessment  upon  the  subscribers 
to  the  stock,  the  creditors  of  the  corporation  are  held  not  to  be 
necessary  parties  to  the  action  against  the  receiver.63 

§  266.  English  practice  as  to  defending  actions  of  eject- 
ment against  receivers.  The  practice  of  the  English  Court 
of  Chancery,  with  reference  to  defending  actions  of  ejectment 
brought  against  receivers,  seems  to  have  been  to  apply  to  the 
court  for  leave  to  defend.  And  an  order  of  reference  to  a  mas- 
ter was  sometimes  made,  to  ascertain  and  report  whether  it  was 
for  the  best  interests  of  the  parties  that  the  receiver  should  de- 
fend the  ejectment. 6^ 

§  267.  When  receiver  not  entitled  to  costs.  As  regards 
the  liability  for  costs  incurred  by  a  receiver  in  defense  of  an  ac- 
tion, it  has  been  held  that  he  is  not  entitled  to  the  costs  of 
defending,  when  he  has  not  first  obtained  leave  of  the  court  ap- 
pointing him  to  defend.  65 

§  268.  Effect  of  receiver's  discharge.  After  a  receiver 
has  been  duly  discharged  and  has  parted  with  all  the  assets 
which  came  to  his  possession,  the  court  will  not  entertain  an 
application  by  a  claimant  or  creditor  for  payment  of  his  de- 
mand by  the  receiver.  In  such  case,  the  receiver  being  functus 
officio  and  no  longer  the  agent  or  representative  of  the  court, 

«2  Potter  V.  Bunnell,  20  Ohio  St.,  64  Anonymous,  6  Ves.,  287. 

150;  Atlantic  Trust  Co.  v.  Dana,  62  65  Convers  v.  Crosbie,  6  Ir.  Eq, 

C  C.  A.,  657,  128  Fed..  209.  657. 

63  Farwell  v.  Great  Western  Tel. 
Co.,  161  III.,  522,  44  N.  E.,  891. 


316  RECEIVERS  [chap.  VIII. 

and  having  no  funds  in  his  hands,  the  remedy  of  a  creditor 
should  be  sought  by  an  apphcation  to  vacate  the  order  of  dis- 
charge, and  while  such  order  stands,  he  can  not  enforce  his  de- 
mand against  the  receiver.^^  If,  however,  a  receiver  is  dis- 
charged pending  an  appeal  from  a  judgment  against  him,  and 
the  judgment  is  afterward  affirmed,  the  discharge  is  no  bar  to 
the  final  entry  of  judgment  against  the  receiver  as  affirmed. ^'^ 
And  the  rescinding  of  an  order  for  a  receiver,  without  preju- 
dice to  any  person  in  interest,  constitutes  no  defense  to  an  ac- 
tion against  him  to  recover  property  of  which  he  had  taken  pos- 
session under  such  appointment. ^^  And  when  a  receiver  is  ap- 
pointed without  notice  to  defendant,  under  a  statute  providing 
that  an  order  appointing  a  receiver  without  notice  shall  be  void, 
the  owner  of  the  premises  in  controversy  may  maintain  an  ac- 
tion against  the  receiver  to  recover  rents  which  he  has  collected 
by  virtue  of  such  appointment.^^ 

§  268a.  When  receiver  concluded  by  judgment.  A  re- 
ceiver, like  any  other  suitor,  will  be  concluded  by  a  judgment  in 
an  action  to  which  he  was  in  effect  a  party,  although  not  joined 
as  such  by  name.  Thus,  when  a  receiver  of  an  insolvent  bank 
in  Illinois,  whose  funds  in  New  York  are  attached  by  creditors 
after  the  receiver's  appointment,  causes  the  appearance  of  the 
bank  to  be  entered  in  the  attachments  in  New  York  and  pro- 
cures the  giving  of  a  bond  to  release  the  funds  attached,  and 
thereby  obtains  possession  of  such  funds,  if  the  attachments  re- 
sult in  judgments  in  favor  of  the  creditors,  the  receiver  will  not 
be  allowed  to  enjoin  such  creditors  from  enforcing  their  judg- 
ments by  actions  upon  such  bond  or  otherwise.  And  in  such 
case,  although  no  formal  order  of  the  court  authorized  the  re- 

66  New  York  &  W.  U.  T.  Co.  v.  defense  to  the  receiver  when  finally 
Jewett,  lis  N.  Y.,  166,  21  N.  E.,  called  upon  for  satisfaction  of  the 
1036.     See,  contra,  Miller  v.  Loeb,      judgment. 

64  Barb.,  454.  68  Johnson    v.    Powers,    21    Neb., 

67  Woodruff  V.  Jewett,  115  N.  Y,.      292,  32  N.  W.,  62. 

267,  22  N.  E.,  156.     But  Mhe  court  69  Johnson    v.    Powers,   21    Neb., 

decline  to  pass  upon  the  question  of      292,  32  N.  W.,  62. 
the    effect   of   such    discharge    as    a 


CHAP.  VIII.]  ACTIONS.  317 

ceiver  to  appear  in  the  New  York  suits,  yet  the  retention  by  the 
court  of  the  funds  thus  accruing  to  the  receiver  is  held  to  be 
equivalent  to  a  ratification  of  his  action  in  that  regard."^^ 

iO  Smith  V.  United  States  Express    Co.,  135  III,  279,  25  N.  E.,  525. 


CHAPTER  IX. 
OF  THE  RECEIVER'S  LIABILITIES. 

§  269.  Receiver  responsible  directly  to  court;  liabilities  to  third  per- 
sons, how  and  when  enforced;  not  accountable  to  other 
court. 

270.  Receiver  liable  for  injury  to  property  while  in  his  possession; 

plaintiff  not  liable. 

271.  Leave  of  court  necessary  before  bringing  suit  against  receiver. 

272.  Not  personally  liable  on  covenant  made  in  official   capacity; 

when  personally  liable  on  note  given  in  carrying  on  business. 

273.  Not  liable  on  covenants  of  original  party;  when  liable  for  rent. 
273a.  Becomes   liable   by   adoption   of   covenant;   election   to   adopt 

lease;  lessor's  lien;  no  personal  liability  for  rent. 
273b.  Rule  further  illustrated;  question  of  adoption  of  covenant  one 

of  discretion. 
273c.  Liability  for  rent;  stipulated  rent  or  rent  based  on  reasonable 

rental  value. 
273d.  Can  not  impair  contract  liability  of  original  party. 

274.  Liability  for  loss  of  funds  on  failure  of  bank;  liable  for  ming- 

ling funds. 
274a.  When  receiver  of  bank    liable  to  pay  deposit  or  draft  in  full; 
check;  del  credere  commission. 

275.  Liability    dependent    upon    receiver's   negligence;   bills    of   ex- 

change of  failing  tradesman;  misconduct  of  attorney. 

276.  When    liable    for    employing    property    in    his    private    business; 

speculative  profits. 

277.  Liable  as  trespasser  for  selling  mortgaged  property;  liable  for 

tort;  liable  for  rent  of  real  estate. 

278.  Liability  does  not  terminate  until  discharged;  appointed  trustee 

in  insolvent  proceedings,  still  liable  as  receiver. 

279.  Receivers  of  railway  liable  in  another  state  for  breach  of  duty 

as  common  carriers. 

280.  Liable  to  commitment  for  failure  to  pay  balance  into  court; 

the  practice  in  such  cases. 
28L    When  not  liable  to  landlord  for  rent  of  partnership  premises. 

282.  Liable  for  paying  money  to  persons  not  entitled. 

283.  Not    liable    for    loss    to    real    property   remaining    in    owner's 

possession. 

284.  Solicitor  assuming  to  act  as  receiver,  liable  for  loss  in  rents. 

318 


CHAP.   IX.]  LIABILITIES.  319 

§  285.    Receiver's  liability  extended  to  his  administrator. 

286.  Dismissal  of  bill  does  not  discharge  liability;  receiver  pro- 
tected by  order. 

286o.  Claims  for  damages  for  tort  of  receiver's  agents,  when  a 
charge  upon  the  fund. 

286b.  Remedy  for  fraudulent  conversion  of  estate  by  receiver  and 
his  attorney;  supplemental  bill  in  receivership  cause. 

§  269.  Receiver  responsible  directly  to  court;  liabilities 
to  third  persons,  how  and  when  enforced ;  not  accountable 
to  other  court.  A  receiver  is  responsible  for  his  official  acts 
directly  to  the  court  appointing  him,  and  this  responsibility  con- 
tinues until  he  is  finally  discharged.^  This  immediate  and  di- 
rect responsibility  to  the  court,  however,  does  not  relieve  him 
from  liabilities  which  he  may  incur  toward  third  parties,  and 
these  liabilities  are  generally  recognized  and  frequently  en- 
forced by  the  same  court  which  has  appointed  him.  And  when 
a  party  to  the  cause,  who  is  interested  in  the  funds  in  the  re- 
ceiver's hands,  ascertains  that  the  receiver  has  made  improper 
payments  or  has  misapplied  the  funds,  or  any  portion  of  them, 
he  may  apply  to  the  court  for  relief  at  any  stage  of  the  cause, 
and  it  is  not  necessary  that  he  should  wait  until  the  receiver 
passes  his  accounts,  and  then  have  the  improper  payments  dis- 
allowed.2  As  a  general  rule,  however,  a  receiver  can  only  be 
called  to  account  by  the  court  appointing  him,  and  another  court 
will  not  entertain  a  bill  to  compel  him  to  account  for  the  per- 
formance of  his  trust,  since  he  is  not  the  receiver  of  the  second 
court,  and  can  not  be  called  upon  to  answer  as  such.^  And  he 
can  only  be  divested  of  the  fund  intrusted  to  him  as  receiver  by 
an  order  of  the  court  appointing  him,  made  in  the  action  in 
which  he  was  appointed.'* 

§  270.  Receiver  liable  for  injury  to  property  while  in 
his  possession;  plaintiff  not  liable.  When  property  in  liti- 
gation passes  by  order  of  court  into  the  hands  of  a  receiver, 
who  gives  a  bond  for  the  faithful  execution  and  performance 

1  Henry  v.  Kaufman,  24  Md.,  1.  3  Conkling  v.  Butler,  4  Biss.,  22. 
See  Conkling  v.  Butler,  4  Biss.,  22.  •*  Galster     v.     Syracuse     Savings 

2  DeWinton  v.  Mayor  of  Brecon,  Bank,  29  Hun,  594. 
28  Beav.,  200. 


320  RECEIVERS.  [CIIAP.   IX. 

of  his  trust,  the  remedy  for  injury  done  or  alleged  to  be  done 
during-  the  receiver's  possession  should  be  sought  against  him 
and  his  sureties,  and  not  against  the  plaintiff  in  the  action  in 
which  he  was  appointed.  The  receiver  being  appointed  for  the 
benefit,  not  of  the  plaintiff  alone,  but  of  all  parties  in  interest, 
and  being  an  officer  of  the  court,  he  is  liable  for  any  fraud  or 
negligence  of  his  own  whereby  injury  accrues  to  the  property 
intrusted  to  him.  In  the  absence,  therefore,  of  any  evidence  of 
fraud  or  collusion  on  the  part  of  the  plaintiff  in  the  action,  he 
will  not  be  held  liable  for  injury  to  the  property  while  in  the  re- 
ceiver's possession. 5 

§  271.  Leave  of  court  necessary  before  bringing  suit 
against  receiver.  It  is  important  to  observe,  that  while 
the  receiver's  liability  to  the  parties  in  interest,  for  misconduct 
or  injury  to  the  property  intrusted  to  his  care,  is  generally  rec- 
ognized by  courts  of  equity,  they  will  not  ordinarily  permit  such 
liability  to  be  enforced  against  him  by  legal  proceedings,  unless 
leave  of  court  is  first  obtained  for  that  purpose.  Being  the  rep- 
resentative of  the  court,  it  will  not  permit  him  to  be  made  a 
defendant  without  its  consent  having  first  been  given.  And 
persons  desirous  of  enforcing  demands  against  a  receiver  are, 
therefore,  required  either  to  apply  to  the  court,  by  motion  or 
petition,  for  relief  against  the  receiver,  or  to  ask  leave  of  the 
court  to  institute  an  action  against  him.^ 

§  272.  Not  personally  liable  on  covenant  made  in  official 
capacity ;  when  personally  liable  on  note  given  in  carrying 
on  business.  A  receiver  will  not  be  held  personally  liable, 
in  his  individual  capacity,  upon  a  covenant  or  instrument  made 
by  him  in  his  official  capacity,  and  the  only  remedy  upon  such 
covenant  must  be  sought  against  the  estate  of  which  he  was  re- 
ceiver. Thus,  when  the  receiver  of  a  banking  corporation  sells 
and  assigns  certain  judgments  in  favor  of  the  bank,  and  the  in- 

5  Kaiser  v.   Kellar,  21   Iowa,  95;  77;   Downs  v.   Allen,    10  Lea,  652. 

Robinson  v.  Arkansas  L.  &  T.  Co.,  And  see,  post,  §  645. 

74  Ark.,  292,  85  S.  W.,  413.     See,  6  See  chapter  VIII,  subdivision  V. 

also,    Terrell   v.    Ingersoll,    10   Lea,  Actions  against  Receivers. 


CHAP.    IX.]  LIABILITIES.  321 

strument  of  assignment  is  executed  strictly  in  his  official,  and 
not  in  his  personal,  capacity,  and  contains  a  covenant  that  the 
several  judgments  sold  are  due  and  unpaid,  no  personal  liabil- 
ity is  incurred  by  the  receiver  upon  such  covenant,  and  it  will  be 
presumed,  under  such  circumstances,  that  the  purchaser  trust- 
ed to  the  receiver  in  his  official  capacity.'''  So  when,  upon  the 
settlement  of  the  receiver's  accounts,  the  court  fixes  the  amount 
to  be  paid  as  counsel  fees  for  services  rendered  to  the  receiver, 
upon  notice  to  such  counsel  and  his  appearance  upon  the  ap- 
plication, and  the  court  thereupon  accepts  the  final  account  of 
the  receiver  and  discharges  him  from  his  trust,  no  action  will 
lie  against  him  for  the  recovery  of  a  balance  claimed  to  be  due 
for  such  services.^  But  in  Iowa  it  has  been  held  that,  where 
the  order  appointing  a  receiver  authorized  him  to  purchase 
stock  and  material  to  carry  on  a  business,  and  a  note  is  given 
by  him  for  such  purchases  signed  by  him  as  receiver,  such  note 
is  beyond  the  authority  of  the  receiver  and  does  not  bind  the  es- 
tate in  his  possession  and  he  consequently  remains  personally 
liable  upon  it.^ 

§  273.  Not  liable  on  covenants  of  original  party;  when 
liable  for  rent.  As  a  rule,  receivers  are  not  liable  upon  the 
covenants  of  the  persons  over  whose  effects  they  are  appointed, 
but  become  liable  solely  by  reason  of  their  own  acts.^^  And 
receivers  who  have  been  appointed  over  a  corporation,  and  who 
have  accepted  the  trust  and  taken  possession  of  the  assets,  do 
not  thereby  become  liable  for  rent  of  the  premises  held  by  the 
company  under  a  lease;  nor  can  they  be  held  liable  until  they 
elect  to  take  possession  of  the  premises,  or  until  the  doing  of 
some  affirmative  act  which  would  in  law  be  equivalent  to  such 

7  Livingston  v.  Pettigrew,  7  Lans.,  10  Wells  v.  Hartford  Manilla  Co., 
405.  See,  also,  Ellis  v.  Little,  27  76  Conn.,  27,  55  Atl.,  599;  Scott  v. 
Kan.,  707.  Rainier  P.  &  R.  Co.,  13  Wash.,  108, 

8  Walsh  V.  Raymond,  58  Conn.,  42  Pac,  531 ;  Casey  v.  Northern  Pac. 
251,  20  Atl.,  464.  R.  Co.,  15  Wash.,  450,  48  Pac,  53; 

9  Peoria  Steam  Marble  Works  v.  Central  Trust  Co.  v.  East  T.  L.  Co., 
Hickey,    110  Iowa,  276,  81    N.  W..  79  Fed.,  19. 

473,  80  Am.  St.  Rep.,  296. 
Receivers — 21. 


jJZ 


RECEIVERS. 


[CIIAP.    IX. 


an  election. 1^  Nor  does  the  receiver,  merely  by  virtue  of  taking 
possession  of  leased  property,  forming  a  part  of  the  assets  or 
estate  of  the  receivership,  become  an  assignee  of  the  term  or 
liable  for  the  rent  in  accordance  with  the  covenants  of  the  lease. 
He  is  entitled  to  a  reasonable  time  after  taking  possession  to  de- 
termine whether  he  will  elect  to  affirm  the  lease  and  to  retain 
the  premises. ^2    Nor  can  the  liability  created  by  the  contracts 


11  Commonwealth  v.  Franklin  In- 
surance Co.,  115  Mass.,  278;  Gaither 
V.  Stockbridge,  67  Md.,  222,  9  At!., 
632,  10  Atl.,  309.  And  see  Common- 
wealth  V.    Franklin    Insurance   Co., 

115  Mass.,  278,  and  Dayton  Hy- 
draulic Co.  V.  Felsenthall,  54  C.  C. 
A.,  537,  116  Fed.,  961,  as  to  what 
constitutes  such  an  election.  And 
see  Griffith  v.  Blackwater  B.  &  L. 
Co.,  46  West  Va.,  56,  33  S.  E.,  125 ; 
Tennis  Bros.  Co.  v.  Wetzel  &  T. 
Ry.  Co.,  140  Fed.,  193. 

i2Quincy,  M.  &  P.  R.  Co.  v. 
Humphreys,  145  U.  S.,  82,  12  Sup. 
Ct.  Rep.,  787;  St.  Joseph  &  St.  L. 
R.  Co.  V.  Humphreys,  145  U.  S., 
105,  12  Sup.  Ct.  Rep.,  795;  United 
States  Trust  Co.  v.  Wabash  West- 
ern R.  Co.,  150  U.  S.,  287,  14  Sup. 
Ct.  Rep.,  86;  Seney  v.  Wabash 
Western  R.  Co.,  150  U.  S.,  310,  14 
Sup.  Ct.  Rep.,  94;  Carswell  v.  F. 
L.  &  T.  Co.,  20  C.  C.  A.,  282,  74 
Fed.,  88,  43  U.  S.  App.,  300;  Empire 
Distilling  Co.  v.  M'Nulta,  23  C.  C 
A.,  415,  77  Fed.,  700,  46  U.  S.  App., 
578;  Mercantile  Trust  Co.  v.  Far- 
mers' L.  &  T.  Co.,  26  C.  C.  A.,  383, 
81  Fed.,  254,  49  U.  S.  App.,  462, 
affirming  S.  C,  71  Fed.,  601 ;  Central 
Trust  Co.  V.  Continental  Trust  Co., 
30  C.  C.  A.,  235,  86  Fed.,  517,  58 
U.  S.  App.,  604;  Dayton  Hydraulic 
Co.  V.  Felsenthall,  54  C.  C.  A.,  537, 

116  Fed.,  961;  Johnson  v.  Lehigh 
V.  T.   Co.,   130  Fed.,  932;    Spencer 


V.  World's  Columbian  Exposition, 
163  111.,  117,  45  N.  E.,  250;  DeWolf 
V.  Royal  Trust  Co.,  173  111.,  435,  50 
N.  E.,  1049;  Link  Belt  Machinery 
Co.  V.  Hughes,  174  111.,  155,  51  N. 
E.,  179;  Bell  v.  American  Protective 
League,  163  Mass.,  558,  40  N.  E., 
857,  28  L.  R.  A.,  452,  47  Am.  St. 
Rep.,  481 ;  Stoepel  v.  Union  Trust 
Co.,  121  Mich.,  281,  80  N.  W.,  13; 
Nelson  v.  Kalkhoff,  60  Minn.,  305, 
62  N.  W.,  335;  Stokes  v.  Hoffman 
House,  167  N.  Y.,  554,  60  N.  E., 
667,  53  L.  R.  A.,  870.  See,  contra, 
People  V.  Universal  Life  Insurance 
Co.,  30  Hun,  142.  And  see  Stockton 
V.  Mechanics  etc..  Bank,  32  N.  J. 
Eq.,  163;  Klein  v.  Gavenesch  Co.,  64 
N.  J.  Eq.,  50,  53  Atl.,  196 ;  McGraw 
V.  Union  Trust  Co.,  135  Mich.,  609, 
98  N.  W.,  390.  See,  post,  %  394/?. 
In  Fleming  v.  Fleming  Hotel  Co., 
69  N.  J.  Eq.,  715,  61  Atl.,  157,  it 
was  held,  under  a  lease  providing 
for  a  forfeiture  by  the  lessor  in  case 
the  lessee  failed  to  pay  the  rent,  that 
where  a  receiver  had  been  appointed 
and  had  gone  into  possession  of  the 
premises,  the  lessor  could  not  forfeit 
the  lease  until  it  should  be  made  to 
appear  that  the  receiver  was  unable 
or  unwilling  to  pay  the  past  due 
rent.  In  People  v.  St.  Nicholas 
Bank,  151  N.  Y.,  592,  45  N.  E.,  1129, 
the  premises  had  been  leased  to  a 
corporation  which  afterward  became 
insolvent  and  over  which  a  receiver 


CHAP.   IX.]  LIABILITIES.  323 

or  covenants  of  an  insolvent  company  be  imposed  upon  the  re- 
ceiver upon  the  ground  that  the  receivership  is  based  upon  the 
insolvency  and  fraudulent  management  of  a  trust  estate  as  dis- 
tinguished from  a  proceeding  brought  for  the  foreclosure  of 
liens.i^ 

§  273(2.  Becomes  liable  by  adoption  of  covenant;  elec- 
tion to  adopt  lease;  lessor's  lien;  no  personal  liability  for 
rent.  Upon  the  other  hand,  w^hile  the  mere  acceptance  of 
the  trust  will  not  render  the  receiver  liable,  yet  where,  by  his 
unequivocal  acts,  he  has  indicated  an  intention  to  receive  and 
accept  the  benefits  of  the  contract  of  his  principal,  he  will  be 
held  to  have  elected  to  be  bound  thereby  and  accordingly  he 
becomes  subject  to  the  liabilities  thereby  created. i'*  And  where 
a  receiver  has  taken  possession  of  the  demised  premises  under 
a  lease  of  his  principal  and  has  remained  in  possession  after  the 
lapse  of  a  reasonable  time  in  which  to  make  his  election,  he 
will  be  held,  by  implication,  to  have  accepted  the  lease  and  to  be 
bound  thereby;  and  having  thus  become  bound  by  the  cov- 
enants of  the  lease,  he  is  held  to  have  adopted  it  as  a  whole, 
and  he  can  not  afterward  escape  liability  as  to  the  unexpired 
portion  of  the  term  by  serving  notice  upon  the  lessor  and  surren- 
dering possession.  15  And  in  such  case,  where  the  lease  pro- 
vides that  the  lessor  shall  have  a  lien  for  rent  upon  the  property 

was  then  appointed,  who  took  pos-  13  General  Electric  Co.  v.  Whit- 
session  of  the  premises  but  shortly  ney,  20  C.  C.  A.,  674,  74  Fed.,  664, 
afterward  vacated  them.  The  lessor  41  U.  S.  App.,  165. 
thereupon  leased  them  at  a  reduced  !■*  Spencer  v.  World's  Columbian 
rental  for  the  balance  of  the  term.  Exposition,  163  111.,  117,  45  N.  E., 
This  was  a  claim  for  the  difference  250. 

in  rental  for  the  balance  of  the  term  l^DeWolf    v.    Royal    Trust    Co., 

and    it   was   held  that   the    receiver  173  III.,  435,  50  N.   E.,  1049.     And 

should  recognize  the  claim.     From  it  is  held  in  New  Jersey,  under  a 

the  report  of  the  case  it  is  not  clear  statute  providing  that  leased  prem- 

whether  the  claim  was  presented  for  ises  shall  not  be  liable  to  be  taken 

preference  as  one  of  the  expenses  of  under     execution,     attachment     or 

the    receivership   or   merely    as   the  "other   process,"   unless   the   person 

claim   of  a   general    creditor  to   be  at   whose   instance   such   process   is 

paid   /jro   rata  with  those  of  other  issued  shall  first  pay  to  the  landlord 

creditors.  all   rent  due,  that  the  appointment 


324  RECEIVERS.  [chap.   IX. 

of  the  lessee  and  the  receiver  has  taken  possession  and  adopted 
the  lease,  he  is  bound  by  such  provision,  and  the  lessor  is  there- 
fore entitled  to  a  lien  upon  the  proceeds  of  the  sale  of  the  in- 
solvent's estate  for  the  payment  of  the  rent  due  under  the 
lease.i^  But  where  a  receiver  has  surrendered  the  demised 
premises  upon  the  expiration  of  the  receivership,  he  can  not  be 
held  personally  liable  under  the  lease  for  rent  accruing  there- 
after, since  no  privity  exists  between  him  and  the  lessor  which 
could  render  him  personally  liable.^'^ 

§  273b.  Rule  further  illustrated;  question  of  adoption 
of  covenant  one  of  discretion.  As  further  illustrating  the 
rule  under  discussion,  it  is  held  that  the  receivers  of  a  railway 
company  are  not  bound  by  a  contract  to  carry  passengers  en- 
tered into  by  the  company  prior  to  their  appointment. ^^  So 
the  receiver  of  an  insolvent  corporation  may  elect  whether  he 
will  be  bound  by  an  executory  contract  which  had  been  made  by 
the  corporation  for  the  purchase  of  real  estate  or  abide  the  dam- 
ages resulting  from  its  breach. ^^  And  upon  similar  principles, 
it  is  held  that  a  receiver  who'  succeeds  a  former  receiver  is  not 
bound  by  the  contracts  of  the  latter  and  is  under  no  obligation 
to  carry  them  out.20  And  a  receiver  who  is  directed  to  con- 
tinue a  business  temporarily  for  the  purpose,  among  other 
things,  of  finishing  uncompleted  contracts,  while  not  bound 
to  finish  them  or  warranted  in  so  doing  where  the  property 
would  not  otherwise  be  jeopardized,  should  at  least  investigate 
them  and  should  pass  judgment  whether  the  best  interests  of 

of  a  receiver  over,  and  his  taking  16  Link    Belt    Machinery    Co.    v. 

possession  of  such  premises,  is  such  Hughes,  174  111.,  155,  51  N.  E.,  179. 

a  taking  under   "other  process"  as  17  Johnston  v.  Robuck,  114  Iowa, 

brings  the  case  within  the  statute.  530,  87  N.  W.,  491. 

The  receiver  may,  therefore,  be  re-  18  Casey  v.  Northern  Pac.  R.  Co., 

quired  to  pay   to  the  landlord   the  15  Wash.,  450,  48  Pac,  53. 

rent    due   at   the   filing   of   the   bill  19  Central  Trust  Co.  v.  East  T.  L. 

for  a  receiver  in  preference  to  the  Co.,  79  Fed.,  19. 

claims  of  general  creditors.     Wood  20  Kansas     Pacific     Ry.     Co.     v. 

V.    McCardle   W.   &   F.    C.    Co.,   49  Bayles,  19  Colo.,  348,  35  Pac,  744. 

N.  J.  Eq.,  433,  24  Atl.,  228. 


CHAP.   IX.]  LIABILITIES.  325 

the  estate  require  their  fulfillment.^!  And  the  question  whether 
a  receiver  shall  renounce  the  covenants  of  his  principal  or  elect 
to  be  bound  by  them  is  one  of  administrative  policy  resting 
M^holly  within  the  discretion  of  the  chancellor,  and  his  action  in 
this  regard  will  not  be  disturbed  upon  appeal. ^2 

§  273c.  Liability  for  rent;  stipulated  rent  or  rent  based 
on  reasonable  rental  value.  Where  a  receiver  takes  pos- 
session of  the  demised  premises  which  had  been  occupied  by  his 
principal  under  a  lease  and  makes  his  election  to  be  bound  by  the 
covenants  thereof,  he  becomes  subject  to  all  the  obligations  of 
the  lease,  and  in  such  case,  it  is,  of  course,  clear  that  he  is  liable 
for  the  rent  at  the  rate  stipulated  in  the  instrument  and  not 
upon  the  basis  of  the  reasonable  rental  value  of  the  premises. ^3 
Where,  however,  the  receiver  has  renounced  the  lease  and  has 
elected  not  to  be  bound  by  the  obligations  thereof,  there  is  a 
direct  conflict  of  authority  as  to  whether  he  becomes  liable  for 
the  rent  during  the  period  of  his  occupancy  at  the  rate  stipu- 
lated in  the  lease  or  only  for  the  reasonable  rental  value.  It 
has  been  held  that,  although  the  receiver  elects  not  to  be  bound 
by  the  covenants  of  the  lease,  nevertheless,  if  he  continues  in 
possession,  he  becomes  liable  for  the  stipulated  rent.24  This 
view  is  founded  upon  the  theory  that  although  not  bound  by  any 
of  the  covenants  of  the  lease,  he  is  nevertheless  in  possession 
under  it,  since  otherwise  he  would  be  a  trespasser,  and,  since  his 
possession  is  thus  under  the  lease,  the  rental  accruing  for  such 
possession  must  be  determined  by  that  instrument.  The  oppo- 
site and,  undoubtedly,  the  better  view  is  supported  by  the  weight 
of  authority  which  holds  that  where  the  receiver  renounces  the 

21  Harrigan  v.  Gilchrist,  121  Wis.,  23  Spencer  v.  World's  Columbian 
127,  352,  99  N.  W.,  909,  978.  Exposition,  163  111.,  117,  45  N.  E., 

22  Mercantile  Trust  Co.  v.  Far-  250;  Dayton  Hydraulic  Co.  v.  Fel- 
mers'  L.  &  T.  Co.,  26  C.  C.  A.,  383,  senthall,  54  C.  C.  A.,  537,  116  Fed., 
81   Fed.,  254,  49  U.   S.   App.,  462,  961. 

affirming  S.  C,  71  Fed,  601 ;  Cen-  24  Nelson  v.   Kalkhoff,  60  Minn., 

tral  Trust  Co.  v.  Continental  Trust      305,  62  N.  W.,  335. 
Co.,  30  C.  C.  A,  235,  86  Fed.,  517, 
58  U.  S.  App.,  604. 


326  RECEIVERS.  [chap.    IX. 

lease,  he  is  subject  to  none  of  the  obHgations  created  by  it,  and 
his  Hability  is  accordingly  held  to  be  limited  to  the  reasonable 
rental  value  of  the  premises.25 

§  2Tid.  Can  not  impair  contract  liability  of  original 
party.  While,  as  has  already  been  shown,  a  receiver  is  in 
no  way  bound  by  the  contracts  or  covenants  of  the  person  over 
whose  estate  he  is  appointed,  it  is  equally  true  that  where  a  valid 
and  subsisting  contract  has  been  entered  into  by  his  principal 
and  a  third  person,  a  receiver  who  is  afterward  appointed  can 
do  no  act  which  will  in  any  way  impair  the  obligations  of  such 
contract,  and  the  obligee  may  therefore  maintain  an  action 
against  the  insolvent  to  recover  damages  resulting  from  a  vio- 
lation of  the  agreement,  and  to  such  action  the  receiver  is  neith- 
er a  necessaiy  nor  a  proper  party.26  Where,  therefore,  at  the 
time  of  the  appointment  of  a  receiver,  a  valid  lease  was  out- 
standing whereby  a  liability  was  created  for  the  payment  of  rent 
thereunder  upon  the  part  of  one  of  the  parties  who  subsequent- 
ly becomes  insolvent,  the  receiver  can  not,  by  serving  notice  of 
his  intention  of  terminating  the  lease,  relieve  his  insolvent  from 
liability  for  the  rent,  and  an  action  may  therefore  be  maintained 
against  the  latter  to  recover  damages  resulting  from  the  vio- 
lation of  the  covenants  of  the  lease.  And  in  such  case  the  re- 
ceiver is  not  a  necessary  party  to  the  action  and  it  is  therefore 
not  error  to  refuse  to  render  judgment  against  him  where  he 
was  joined  as  a  party  defendant  to  the  proceeding.27  So,  where 
a  national  bank,  upon  selling  certain  bonds,  has  made  a  valid 
agreement  to  repurchase  the  bonds  upon  certain  conditions,  and 
such  contract  is  a  binding  and  outstanding  obligation  against 
the  bank  at  the  time  of  the  appointment  of  a  receiver  over  it,  the 

25  Bell  V.  American  Protective  16  Slip.  Ct.  Rep.,  439;  Wolf  v.  Na- 
League,  163  Mass.,  558,  40  N.  E.,  tional  Bank  of  Illinois,  178  III.,  85, 
857,  28  L.  R.  A.,  452,  47  Am.   St.      52  N.  E.,  896. 

Rep.,  481 ;    Stoepel  v.   Union  Trust  27  Chemical     National     Bank     v. 

Co.,  121  Mich.,  281,  80  N.  W.,  13.  Hartford  Deposit  Co.,  156  111.,  522, 

26  Chemical  National  Bank  v.  41  N.  E.,  225;  S.  C,  161  U.  S.,  1. 
Hartford  Deposit  Co.,  156  111.,  522,  16  Sup.  Ct.  Rep.,  439. 

41  N.  E.,  225;  S.  C,  161   U.  S.,  1. 


CHAP.   IX.]  LIABILITIES.  327 

laiter  has  no  power  to  impair  the  obligation  thereby  created, 
and  an  action  may  therefore  be  maintained  against  the  bank 
to  recover  damages  for  a  violation  of  its  undertaking.^^  But 
it  is  to  be  observed,  in  such  case,  that  any  judgment  which  may 
be  rendered  should  run  against  the  obligor  only  and  not  against 
his  receiver.29 

§  274.  Liability  for  loss  of  funds  on  failure  of  bank;  lia- 
ble for  mingling  funds.  The  question  of  a  receiver's  lia- 
bility for  loss  of  the  funds  intrusted  to  him,  by  reason  of  the 
misconduct  of  another,  is  one  of  importance,  and  has  sometimes 
arisen  in  cases  of  the  failure  of  banks  having  funds  of  receivers 
in  their  custody.  The  question  would  seem  to  depend  upon  the 
manner  of  keeping  the  account,  and  it  has  been  held  that  if  a 
receiver  remits  to  his  bank  money  which  comes  to  his  hands  in 
his  official  capacity,  to  be  deposited  with  his  private  account,  and 
not  to  a  separate  account  as  receiver,  thereby  mingling  the  trust 
funds  with  his  individual  funds,  he  will  be  liable  for  the  loss  on 
the  failure  of  the  bank.^^  So  when  a  receiver  deposits  the 
funds  of  his  receivership  with  his  bankers  and  receives  from 
them  for  his  own  benefit  interest  upon  the  balances  remaining 
on  deposit,  he  will  be  held  liable  for  any  loss  which  may  result 
from  their  bankruptcy,  and  will  be  compelled  to  make  good 
such  loss.^l  And  a  receiver  will  be  held  accountable  for  the  loss 
of  all  funds  of  the  receivership  occasioned  by  the  failure  of  a 
banker  with  whom  they  are  deposited,  if  deposited  in  such  man- 
ner as  to  be  beyond  his  absolute  control.  For  example,  when  a 
receiver,  in  order  to  induce  certain  persons  to  become  his  sure- 
ties, enters  into  an  arrangement  with  them  whereby  the  funds 
of  his  receivership  are  to  be  deposited  in  bank  in  the  joint  names 
of  the  sureties,  to  be  drawn  therefrom  upon  drafts  drawn  by  a 
partner  of  one  of  the  sureties  and  signed  by  the  receiver,  and 

28  Wolf  V.  National  Bank  of  Illi-  tional  Bank  of  Illinois,  178  111.,  85. 
nois,  178  111.,  85,  52  N.  K,  896.  52  N.  E.,  896. 

29  Chemical     National     Bank     v.  30  Wren  v.  Kirton,  11  Ves.,  377. 
Hartford  Deposit  Co.,  156  111.,  522,  31  Drever  2'.  Maudesley,  13  L.  J.. 
41  N.  E.,  225;  S.  C,  161  U.  S.,  1,  N.  S.  Ch.,  433;  S.  C,  8  Jur.,  547. 
16  Sup.  Ct.  Rep.,  439;  Wolf  v.  Na- 


328  RECEIVERS.  [chap.   IX. 

the  bankers  fail,  thereby  causing  a  loss  to  the  fund,  the  receiver 
and  his  sureties  are  liable  for  such  loss,  since  the  receiver  has 
parted  with  his  exclusive  control  over  the  fund  by  associating 
with  himself  the  authority  of  another  person. ^^  /^i-^^\  ^  re- 
ceiver of  an  estate  of  infant  heirs  who  deposits  the  funds  ac- 
cruing from  such  estate,  without  authority  of  court,  in  a  bank 
in  another  state,  taking  a  certificate  of  deposit  to  himself  as 
receiver,  may  be  held  liable  for  a  loss  resulting  from  a  failure 
of  such  bank,  although  he  acted  in  good  faith  and  believed  the 
bank  to  be  solvent. ^^  But  in  the  selection  of  a  bank  as  a  de- 
positary of  the  funds  of  a  receiver,  it  is  held  to  be  no  objection 
that  the  bank  is  a  creditor  of  the  estate  over  which  the  receiver 
has  been  appointed.^^ 

§  274a.  When  receiver  of  bank  liable  to  pay  deposit  or 
draft  in  full ;  check ;  del  credere  commission.  The  question 
of  the  liability  of  the  receiver  of  a  bank  to  payment  in  full  of 
moneys  which  had  been  specially  deposited  in  or  remitted  to  the 
bank,  would  seem  to  be  controlled  by  the  fact  as  to  whether 
such  funds  were  kept  separate  and  distinct  from  the  general 
funds  of  the  bank,  so  as  to  be  capable  of  identification,  or  wheth- 
er they  were  mingled  with  the  general  funds,  with  no  means  of 
discriminating  between  them.  Thus,  money  collected  by  an  in- 
solvent bank  upon  a  draft  sent  to  it  for  collection  and  mingled 
with  its  general  funds,  with  no  marks  of  distinction,  can  not 
be  recovered  in  full  against  a  receiver  of  the  bank,  such  money 
being  incapable  of  identification  or  of  being  distinguished  from 
the  funds  belonging  to  the  general  creditors.^^  So  when  a  sav- 
ings bank  is  made,  by  an  order  of  court,  the  depositary  of  the 
funds  belonging  to  suitors  in  such  court  and  held  by  its  officers, 
such  funds  being  received  by  the  bank  from  time  to  time  like  all 

32  Salway  v.    Salway,  2  Russ.   &  34  State  v.  Corning  State  S.  Bank, 

M.,  215,  reversing  S.  C,  4  Russ.,  60,      128  Iowa,  597,  105  N.  W.,  159. 
and  affirmed  on  appeal  to  the  House  35  Illinois  Trust  &  Savings  Bank 

of  Lords,  sub  nom.    White  v.  Baugh,      v.  Smith,  21  Blatchf.,  275. 
9  Bli.,  N.  S.,  181. 

S3  State  V.  Gooch.  97  N.  C,  186, 
1  S.  E..  653. 


CHAP,   IX.]  LIABILITIES.  329 

other  deposits,  and  mingled  with  its  other  funds  with  no 
means  of  identification,  a  receiver  of  the  bank  will  not  be  re- 
quired to  pay  such  deposit  in  full,  and  it  will  only  be  entitled  to 
share  pro  rata  with  other  depositors  and  creditors.  Nor,  in 
such  case,  does  the  fact  that  the  bank  did  not  pay  interest  on 
such  deposit,  as  on  others,  change  the  principle.  And  this  is 
true,  even  though  the  court  making  the  deposit  is  the  same 
which  appoints  the  receiver,  it  having  no  other  or  greater  rights 
under  such  circumstances  than  those  of  any  other  creditor.^^ 
And  since  a  check  drawn  in  the  ordinary  form,  and  not  describ- 
ing any  particular  fund  out  of  which  it  is  payable,  does  not  ope- 
rate as  an  assignment  of  funds  in  the  hands  of  the  drawer,  if  a 
receiver  is  afterward  appointed  over  the  drawer  of  the  check, 
who  takes  possession  of  the  entire  fund  on  deposit  before  the 
check  is  presented,  the  drawee  is  not  entitled  to  payment  in  full 
at  the  hands  of  the  receiver,  having  no  specific  lien  upon  the 
fund.^'^  And  to  entitle  the  payee  of  a  draft  drawn  upon  a  bank, 
but  not  paid  before  the  appointment  of  a  receiver  over  the  bank, 
to  payment  in  full  as  against  the  receiver,  the  specific  fund  must 
be  traced  into  the  hands  of  the  receiver  against  which  the  draft 
was  drawn,  or  which,  before  the  receivership,  had  been  set  apart 
to  its  payment  in  such  manner  as  to  constitute  it  a  trust  fund, 
the  equitable  title  to  which  had  vested  in  the  payee  of  the  draft. 
And  when  this  does  not  appear,  the  payee  can  not,  as  against  the 
receiver,  claim  priority  over  other  creditors.^^  But  since  the 
proceeds  of  goods  consigned  to  a  factor  to  be  sold  on  a  del  cred- 
ere commission  continue  to  be  the  property  of  the  consignor  so 
long  as  they  may  be  traced  and  identified,  they  may  likewise  be 
claimed  as  against  a  receiver  of  the  factor,  who  only  succeeds 
to  the  factor's  rights  in  this  respect.  And  the  proceeds  of  goods 
thus  consigned  having  been  kept  distinct,  the  receiver  may  be 
required  to  apply  them  in  payment  of  drafts  drawn  by  the  con- 

36  Otis  V.  Gross,  96  111.,  612.  38  People  v.  Merchants  &  Mechan- 

37  Attorney-General   v.   Continen-      ics  Bank,  78  N.  Y.,  269. 
tal   Life  Insurance   Co.,  71    N.    Y., 

325.     See,  also,  Butler  v.   Sprague, 
66  N    Y.,  392. 


330  RECEIVERS.  [chap.    IX. 

signor  upon  the  factor,  which  have  passed  into  the  hands  of 
third  parties. ^^ 

§  275.  Liability  dependent  upon  receiver's  negligence; 
bills  of  exchange  of  failing  tradesman;  misconduct  of  at- 
torney. The  extent  of  a  receiver's  habihty  for  the  miscar- 
riage or  fault  of  another  is  dependent  in  a  large  degree  upon 
whether  the  loss  occurred  through  the  receiver's  own  negligence 
or  default,  and  in  the  preceding  section  it  has  been  shown  that, 
in  cases  of  loss  occurring  by  reason  of  his  own  negligence  or 
misfeasance,  the  receiver  will  be  held  liable.  Where,  however, 
he  has  acted  with  evident  caution  and  for  what  he  deemed  the 
best  interests  of  the  estate,  and  a  loss  occurs  without  fault  of  his 
own,  he  will  not  ordinarily  be  required  to  make  good  such 
oss."^^  And  where  a  receiver  collected  a  large  sum  of  money  due 
the  estate,  and,  deeming  it  unsafe  to  remit  the  money  in  specie, 
he  purchased  bills  of  exchange  of  a  tradesman  then  in  good 
credit,  but  who  soon  afterward  failed,  the  receiver  having  had 
no  knowledge  of  his  failing  circumstances,  it  was  held  that  he 
was  not  personally  liable  for  the  loss.^^  So  when  a  loss  occurs 
through  the  fraud  or  misconduct  of  an  attorney,  as  by  his  mis- 
appropriation of  funds  collected  for  the  receiver,  if  the  receiver 
uses  due  and  reasonable  care  in  selecting  such  attorney,  he  will 
not  be  charged  with  the  loss.^^  Sq  where  it  becomes  necessary 
in  the  course  of  the  administration  of  the  estate  to  employ  coun- 
sel, and  the  receiver,  acting  in  good  faith,  does  so  employ  an 
attorney  and  follows  the  advice  given  by  him,  he  can  not  be 
held  liable  for  consequent  loss.'*^ 

39  Francklyn  v.  Sprague,  10  Hun,  42  Powers  v.  Loughridge,  38  N.  J. 
589.  Eq.,  396;   Union  Bank  Case,  11  N. 

40  Knight  V.  Plimouth,  3  Atk.,  J.  Eq.,  420,  affirmed  on  appeal  sub 
480;  Union  Bank  Case,  37  N.  J.  Eq.,  nom.  Sandford  v.  Clarke,  38  N.  J. 
420,    affirmed    on    appeal    sub    nom.  Eq.,  265. 

Sandford   v.    Clarke,   38   N.   J.    Eq.,  43  State   v.    Germania    Bank,    106 

265;   Powers  v.  Loughridge,  38  N.       Minn.,  164,  118  N.  W.,  683. 
J.  Eq.,  396. 

41  Knight    V.    Plimouth,    3    Atk., 
480. 


CHAP.   IX.]  LIABILITIES.  331 

§  276.  When  liable  for  employing  property  in  his  pri- 
vate business;  speculative  profits.  When  property  is 
placed  in  a  receiver's  hands  for  an  indefinite  period,  with  a  prob- 
ability of  remaining  there  for  a  number  of  years  pending  the  lit- 
igation, and  it  is  of  such  a  nature  that  it  may  be  profitably  em- 
ployed by  hiring,  it  would  seem  to  be  the  receiver's  duty  so  to 
do.  And  if,  instead  of  so  hiring  it,  he  employs  the  property  in 
and  about  his  own  private  business,  he  thereby  receives  a  benefit 
from  the  trust  committed  to  him  for  which  he  will  be  held  ac- 
countable, and  which  should  be  charged  to  him  in  his  ac- 
counts.^^  But  when  a  receiver  sells  property  belonging  to  his 
receivership,  he  is  liable  for  the  proceeds  only  upon  the  basis  of 
actual  sales  and  receipts ;  and  in  the  absence  of  negligence,  mis- 
conduct or  bad  faith  on  his  part,  he  is  not  liable  for  probable  or 
speculative  profits  which  might  have  been  realized  had  he  con- 
tinued the  management  of  the  property.'*^ 

§  277.  Liable  as  trespasser  for  selling  mortgaged  prop- 
erty; liable  for  tort;  liable  for  rent  of  real  estate.  When  a 
receiver,  without  permission  of  court,  and  pending  an  injunc- 
tion restraining  him  from  so  doing,  forcibly  takes  possession 
of  property  which  had  been  mortgaged  by  the  defendant  debt- 
or before  the  receiver's  appointment,  and  sells  the  same,  he 
becomes  liable  therefor  as  a  trespasser,  and  will  be  deemed  as 
much  a  trespasser  as  the  mortgagor  himself  would  have  been 
had  he  undertaken  to  seize  and  sell  the  property  after  giving 
the  mortgage."*^  So  a  receiver  may  become  personally  liable 
for  a  tort,  as  for  the  wrongful  taking  possession  and  disposing 
of  property,  although  he  acts  under  color  of  his  official  author- 
ity, and  in  such  case  his  official  character  will  not  protect  him 
from  the  consequences  of  his  tortious  act.^'^    So  where  an  order 

44  Battaile    v.    Fisher,    36    Miss.,  against  the  receiver  as  a  trespasser 
321  in  such  case  was  sustained,  but  the 

45  Demain    v.    Cassidy,    55    Miss..  case  was  reversed  for  misjoinder  of 
320.  parties.     And  see  S.   C,   10  Bosw., 

46  Manning      v.      Monaghan,      1  231,  when  tried  again  in  the  court 
Bosw.,  459.     See    S.   C,  23   N.   Y.,  below. 

539,     where     the     right     of     action  47  Gutsch      v.      Mcllhargey,      69 


332  RECEIVERS.  [chap.   IX. 

authorizing  a  receiver  to  take  possession  of  real  estate  is  totally- 
void  because  the  real  estate  is  in  no  way  involved  in  the  suit 
he  becomes  liable  to  the  owner  for  the  rents  and  profits  collected 
by  him  as  receiver.^^ 

§  278.  Liability  does  not  terminate  until  discharged; 
appointed  trustee  in  insolvent  proceedings,  still  liable  as 
receiver.  The  liability  of  a  receiver  to  the  court  appoint- 
ing him  does  not  terminate  until  his  discharge.  And  when  a 
defendant,  whose  property  the  receiver  has  taken  into  posses- 
sion and  sold  by  order  of  the  court,  afterward  takes  advantage 
of  the  insolvent  laws  of  the  state,  and  the  receiver  is  appointed 
as  his  trustee  in  the  insolvent  proceedings,  such  appointment 
does  not  relieve  him  from  his  responsibility  to  the  court  of 
equity  as  receiver.  The  power  of  that  court  in  such  a  case 
is  regarded  as  ancillary  to  the  jurisdiction  of  the  insolvent 
court,  and  the  receiver  may  be  required  by  the  court  of  equity  to 
bring  the  fund  into  that  court.'*^ 

§  279.  Receivers  of  railway  liable  in  another  state  for 
breach  of  duty  as  common  carriers.  The  general  doctrine 
already  considered,  that  receivers  are  liable  only  to  the  court 
appointing  them,  has  been  somewhat  modified  in  Massachu- 
setts, in  the  case  of  receivers  over  railways.  And  it  is  there 
held  that,  when  receivers  are  operating  a  railway  under  ap- 
pointment from  a  court  of  chancery  of  another  state,  and  the 
courts  of  that  state  hold  them  liable  as  common  carriers  and 
they  are  acting  in  that  capacity,  they  are  liable  to  an  action  in 
the  courts  of  Massachusetts,  for  a  breach  of  duty  as  common 
carriers.^^  This  doctrine,  however,  is  plaintly  inconsistent  with 
the  weight  of  authority,  in  so  far  as  it  recognizes  a  right  of  ac- 
tion against  receivers,  without  permission  of  the  court  ap- 
pointing them.^^ 

Mich.,  377,  37  N.  W.,  303;  Kenney  49  Henry  v.  Kaufman,  24  Md.,  1. 

V.  Ranney,  96  Mich.,  617,  55  N.  W.,  50  Paige  v.  Smith,  99  Mass.,  395. 

982.  51  See  chapter   VIII,   subdivision 

48  Bowman    v.    Hazen,    69    Kan.,  V,  Actions  against  Receivers. 
682,  77  Pac,  589. 


CHAP.   IX.]  LIABILITIES.  333 

§  280.  Liable  to  commitment  for  failure  to  pay  balance 
into  court;  the  practice  in  such  cases.  When  a  receiver 
fails  to  comply  with  an  order  requiring  him  to  pay  into  court 
a  balance  reported  to  be  in  his  hands,  he  is  liable  to  be  com- 
mitted for  disobeying  the  order.  But  the  proper  practice  is  not 
to  grant  an  order  for  the  commitment  in  the  first  instance,  but 
to  make  the  order  in  the  alternative,  requiring  him  to  pay  the 
money  within  a  given  time  or  to  stand  committed.^^  j^^^^ 
where  a  receiver  has  misappropriated  funds  which,  under  the 
order  of  the  court,  he  had  deposited  in  a  bank,  and  he  has 
thereupon  been  ordered  to  turn  over  the  amount  to  the  clerk 
of  the  court,  his  failure  to  comply  with  such  order  amounts  to 
a  continuing  contempt  for  which  he  may  be  imprisoned  until 
such  time  as  he  purges  himself. ^^  When  he  is  in  default  in 
the  payment  into  court  of  interest  upon  a  balance  due  from 
him,  and  has  disobeyed  orders  of  the  court  for  its  payment, 
he  may  be  punished  by  committal.^'*  And  since  the  receiver  is 
an  officer  of  the  court,  he  need  not  be  served  with  a  writ  of  exe- 
cution of  a  decretal  order  of  the  court,  but  only  with  a  copy 
of  the  order,  and  if  he  disobeys  this,  he  is  liable  to  be  commit- 
ted.^^ So  the  refusal  of  a  receiver  to  pay  over  moneys  in  ac- 
cordance with  the  order  of  the  court  constitutes  a  contempt 
and  may  be  punished  as  such.  And  upon  appeal  by  the  re- 
ceiver from  an  order  adjudging  him  guilty  of  contempt  for  such 
refusal,  the  court  will  not  review  the  propriety  of  the  order 
directing  such  payment,  since  if  the  court  below  had  power  to 
make  the  order,  and  if  it  is  not  appealed  from,  its  propriety 
can  not  be  questioned  upon  an  appeal  from  the  order  adjudg- 

52  Davies  v.  Cracraft,  14  Ves.,  143.  S.  E.,  450,  849.  As  to  the  right  of 
See  Fields  v.  United  States,  27  App.  the  court  to  release  the  receiver  in 
D.  C,  433,  for  an  indictment  against  such  case  upon  the  showing  of  his 
a  receiver  for  embezzlement  of  inability  to  pay,  see  Nisbet  v.  Tin- 
funds  which  have  come  into  his  dall,  115  Ga.,  374,  41  S.  E..  569. 
hands  as  receiver.  54  /,j   re   Bell's    Estate,   L.    R.,  9 

53  Tindall     v.     Nisbet,     113     Ga.,  Eq.,  172. 

1114,  39  S.  E.,  450,  55  L.  R.  A.,  225;  55  Anonymous,  Mos.,  40. 

Tindall  v.  Nisbet,  114  Ga.,  224,  39 


334  RECEIVERS.  [chap.    IX. 

ing  the  receiver  guilty  of  contempt. ^^  Nor,  in  proceedings 
against  a  receiver  for  contempt  in  refusing  to  turn  over  money 
in  accordance  with  tlie  direction  of  the  court,  can  he  justify 
such  refusal  upon  the  ground  that  he  has  been  garnished  as 
to  the  money  in  question. ^"^  And  the  appropriation  by  the  re- 
ceiver to  his  own  use  of  the  funds  in  his  possession,  without 
leave  of  court,  constitutes  a  gross  breach  of  his  trust,  and  a 
contempt  of  court  which  may  be  punished  either  by  fine  or  im- 
prisonment, or  by  both,  at  the  discretion  of  the  court.  And 
in  such  case,  the  object  of  an  attachment  and  commitment  for 
the  contempt  being  not  merely  to  compel  the  restoration  of  the 
mone}'  illegally  taken  by  the  receiver,  but  to  punish  the  offense 
as  well,  the  discretion  of  the  court  will  not  be  controlled  by 
the  fact  that  the  receiver  has  no  present  means  of  repaying 
what  he  has  abstracted. ^^  So  when  the  appointment  of  a  re- 
ceiver is  revoked  and  he  is  ordered  to  restore  to  the  proper 
parties  the  property  and  money  received  by  him,  he  may  be 
punished  for  contempt  if  he  refuses  to  obey  such  order, ^^ 
And  where  a  receiver  is  committed  for  contempt  in  not  com- 
plying with  the  order  of  the  court  directing  him  to  turn  over 
funds  which  he  has  wrongfully  converted,  the  court  should 
not  place  a  limit  upon  the  term  of  his  imprisonment,  but  he 
should  be  confined  until  he  complies  w^ith  the  order  of  the 
court  or  until  othenvise  discharged  by  due  process  of  law.^^ 

§  281.  When  not  liable  to  landlord  for  rent  of  partner- 
ship premises.  When  a  receiver  is  appointed  of  the  effects 
of  a  partnership,  but  the  only  assets  which  come  into  his  hands 
are  notes  and  book  accounts  of  the  firm,  it  has  been  held  that  he 
is  not  liable  to  the  landlord  of  the  premises  where  the  business 

56  Clark  v.  Bininger,  75  N.  Y.,  230;  People  7'.  Zimmer,  238  111.,  607, 
344.  And  see  this  case  as  to  the  87  N.  E.,  845.  And  see  Cartwright's 
practice  upon  proceedings  against  a  case,  supra,  for  the  procedure  in 
receiver    for    contempt    under    the  such  cases. 

statutes  of  New  York.  fJO  People  v.  Jones,  33  Mich.,  303. 

57  People  V.  Brooks,  40  Mich.,  333.  P-o  People  v.  Zimmer,  238  111.,  607, 

58  Cartwright's    Case,    114   Mass.,      87  N.  E.,  845. 


CHAP.   IX.]  LIABILITIES.  335 

was  conducted  for  the  rent  thereof,  since  he  was  not  possessed 
of  any  property  on  which  the  landlord  had  a  right  to  distrain. ^^ 

§  282.  Liable  for  paying  money  to  persons  not  entitled. 
It  has  been  said  that  if  a  receiver  pays  money  to  persons  who 
prove  not  to  be  entitled  thereto,  although  he  may  have  acted 
innocently  and  supposed  them  to  be  entitled  in  right  of  the 
parties  to  the  cause,  he  should  be  held  liable  to  the  parties  in 
interest,  upon  the  ground  that  in  making  such  payments  he  de- 
parts from  the  strict  line  of  his  duty,  and  is,  therefore,  liable 
for  any  error  which  he  may  commit  in  so  doing.^2 

§  283.  Not  liable  for  loss  to  real  property  remaining  in 
owner's  possession.  Under  the  practice  of  the  English 
Court  of  Chancery,  in  the  case  of  a  receiver  over  real  property, 
it  was  proper  for  the  parties  to  the  cause  to  make  application  to 
the  court  that  the  owner  be  required  to  deliver  possession  to  the 
receiver.  And  if  a  loss  occurred  because  of  the  owner  being 
allowed  to  remain  in  possession,  it  was  held  to  be  the  fault  of 
the  parties  in  interest  in  the  cause  in  not  applying  for  such  an 
order,  rather  than  the  fault  of  the  receiver.^^ 

§  284.  Solicitor  assuming  to  act  as  receiver,  liable  for 
loss  in  rents.  When  a  solicitor  in  a  cause  has  improperly 
assumed  the  character  of  a  receiver,  and  has  acted  in  that 
capacity  without  having  been  appointed,  thereby  leading  the 
parties  in  interest  to  believe  that  he  had  been  duly  appointed  as 
receiver,  he  will  be  held  liable  for  any  loss  in  the  collection  of 
the  rents  which  may  occur  through  his  negligence.^'* 

§  285.  Receiver's  liability  extended  to  his  administrator. 
It  would  seem  that  the  liability  of  a  receiver  may  sometimes  be 
extended  to  his  administrator.  For  example,  when  the  admin- 
istrator of  a  deceased  receiver  submits  to  an  accounting  as  to 
rents  which  came  to  the  receiver's  hands  during  his  lifetime, 
the  court  may  order  him  to  pay  over  the  amount  which  ap- 
pears to  be  due.^^ 

61  In  re  Brown,  3  Edw.  Ch.,  384.  63  Griffith  v.  Griffith,  2  Ves.,  400. 

62  McCan  v.  O'Ferrall,  West  H.  6^  Wood  v.  Wood,  4  Russ.,  558. 
L.,  593.  65  Magan  v.  Fallon,  5  Ir.  Eq.,  409. 


336  RECEIVERS.  [CIIAP.   IX. 

§  286.  Dismissal  of  bill  does  not  discharge  liability;  re- 
ceiver protected  by  order.  It  is  to  be  observed,  as  regards 
the  receiver's  accountability  to  the  court  from  which  he  de- 
rives his  appointment,  that  the  dismissal  of  the  bill  upon  which 
he  was  appointed  does  not  have  the  effect  of  releasing  him  in 
any  manner;  and,  being  an  officer  of  the  court,  he  is  subject  to 
its  orders  in  relation  to  the  fund  or  effects  placed  in  his  hands, 
until  he  is  finally  discharged  by  the  court. ^^  But  when  the 
funds  of  the  receivership  have  been  regularly  distributed  under 
the  orders  of  the  court  among  the  creditors  of  the  estate 
whose  claims  have  been  duly  proven,  the  receiver  is  not  liable 
in  an  action  for  further  demands  or  claims  made  by  other  cred- 
itors.^^ And  an  order  appointing  a  receiver  in  a  cause  in  which 
the  court  has  full  jurisdiction,  affords  protection  to  the  receiver 
for  all  acts  done  under  and  in  conformity  with  such  order, 
even  though  it  is  afterward  reversed  for  error.  An  action 
can  not,  therefore,  be  maintained  against  a  receiver  to  recover 
rents  collected  and  paid  over  by  him  as  receiver  out  of  real  es- 
tate of  a  judgment  debtor,  the  court  having  full  jurisdiction  of 
the  matter,  even  though  the  appointment  is  subsequently  re- 
versed upon  the  ground  that  the  property  in  question  was  ex- 
empt from  execution,  and,  therefore,  not  subject  to  the  ap- 
pointment of  a  receiver.^8 

§  286(7.  Claims  for  damages  for  tort  of  receiver's  agents, 
when  a  charge  upon  the  fund.  Damages  for  torts  resulting 
from  the  negligence  of  the  agents  or  servants  of  a  receiver 
become  a  charge  upon  the  receivership  estate  in  the  nature  of 
operating  expenses  and  are  payable  out  of  the  net  income  or  out 
of  the  proceeds  in  case  of  a  sale.  And  since  the  receiver  him- 
self, in  the  absence  of  personal  fault,  incurs  no  responsibility 
for  such  damages,  the  liability  follows  the  fund  after  his  dis- 
charge. And  where  the  estate,  after  the  termination  of  the 
receivership,  has  been  turned  back  to  the  debtor,  the  latter  be- 
comes liable  for  the  damages  in  question  to  the  extent  to  which 

66  State  v.  Gibson,  21  Ark.,  140.  68  Holcombe  v.  Johnson,  27  Minn., 

67  Keene  v.  Gaehle,  56  Md.,  343.      353.  7  N.  W.,  364. 


CHAP.   IX.]  LIABILITIES.  337 

the  net  income  has  been  applied  for  the  permanent  improvement 
of  the  property.69  And  in  such  case  it  is  immaterial  that  suc- 
cessive receivers  have  been  appointed,  since  the  receivership 
continues,  although  the  personnel  of  the  receiver  may  change.'^^ 
§  286&.  Remedy  for  fraudulent  conversion  of  estate  by 
receiver  and  his  attorney ;  supplemental  bill  in  receivership 
cause.  Where  a  receiver  and  his  attorney  have  wrongfully 
and  fraudulently  paid  out  and  disposed  of  the  property  and  as- 
sets in  the  hands  of  the  receiver  as  part  of  a  conspiracy  by  which 
the  officers  and  directors  of  an  insolvent  corporation  are  to  se- 
cure a  preference  over  general  creditors  in  the  administration 
of  the  affairs  of  the  corporation  and  in  the  distribution  of  its 
assets,  it  is  proper  for  the  court,  by  a  supplemental  bill  in  the 
receivership  proceeding,  even  after  the  discharge  of  the  re- 
ceiver and  the  settlement  of  his  accounts,  to  make  the  guilty 
parties  defendants  in  the  pending  suit  with  some  creditor  or 
creditors  as  plaintiff  or  plaintiffs,  and  to  broaden  the  scope  of 
the  proceeding  sufficiently  to  cover  all  such  fraudulent  trans- 
actions and  to  include  in  the  general  decree  entered  in  the  cause 
judgments  and  recoveries  against  all  such  guilty  parties  accord- 
ing to  the  nature  and  extent  of  their  liabilities.  In  such  case 
the  guilty  ones  are  to  be  regarded  as  in  the  nature  of  trustees, 
and  the  jurisdiction  is  based  upon  the  general  power  of  courts 
of  equity  to  interfere  for  the  protection  of  the  interests  of  the 
beneficiaries  of  a  trust.  No  statutory  authority  is  necessary 
to  warrant  such  a  proceeding  by  the  court  nor  is  it  a  defense  to 
the  proceeding  that  the  specific  property  misappropriated  can 
not  be  followed  into  the  hands  of  the  beneficiaries.'^^     Nor  is 

69  Bartlett   v.    Cicero    Light    Co.,  in  his  very  elaborate  and  masterly 

177  III.,  68,  52  N.  E.,  339,  68  L.  R.  opinion  in  this  case,  uses  the   fol- 

A.,  78,  69  Am.  St.  Rep.,  206;  Knic-  lowing  language,   (121  Wis.,  p.  225, 

kerbocker  v.  Benes,  195  111.,  434,  63  99  N.  W.,  p.  933)  :    "With  the  views 

N.  E.,  174.    And  see,  post,  §  397a.  above    expressed,    notwithstanding, 

'!'0  Knickerbocker    v.    Benes,    195  as    indicated,   it   seemed   that   there 

111.,  434,  63  N.  E.,  174.  was     practical     submission    to    the 

71  Harrigan  v.  Gilchrist,  121  Wis.,  power  of  the  trial  court  in  this  case 

127,  99  N.  W.,  909.  Marshall,  J.,  by  appellants,  when  the  appeals  were 
Receivers — 22. 


338 


RECEIVERS. 


[chap.    IX. 


the  jurisdiction  defeated  by  the  fact  that  it  is  customary  in  such 
cases  to  cite  the  receiver  into  court  without  the  use  of  any  proc- 
ess and  to  try  tlie  disputed  matters  in  his  account  in  a  sum- 
mary way,  or,  if  compHcated,  by  reference  to  the  master,  where 


taken  up  for  decision,  after  a  full 
argument  thereof  upon  the  merits, 
we  were  confronted  at  the  threshold 
of  our  deliberations  by  the  necessity 
to  determine  whether  such  court 
had  not  gone  so  far  in  an  attempt 
to  do  justice  as  tp  transgress  its 
jurisdiction.  Doubts  in  that  regard 
became  so  serious  that  it  seemed 
that  counsel  for  the  respective  par- 
ties should  have  a  full  opportunity 
to  aid  the  court  to  the  best  of  their 
ability  in  reaching  a  right  conclu- 
sion, and  to  that  end  this  question 
was  formulated,  definitely  covering 
the  subject,  and  a  reargument  there- 
on ordered :  'The  property  of  an 
insolvent  corporation  having  been 
placed  under  the  control  of  a  re- 
ceiver appointed  by  the  court  in  a 
winding-up  suit,  and  it  being  claimed 
that  such  receiver,  in  the  course  of 
his  administration,  has  wrongfully 
lost  such  property  or  some  portion 
thereof,  his  attorneys  and  others 
participating  in  the  wrong;  is  it 
competent  for  the  court  to  make  the 
alleged  guilty  parties  defendants  in 
the  pending  suit  with  some  creditor, 
or  creditors,  standing  for  all  persons 
so  circumstanced,  as  plaintiff  or 
plaintiffs,  broaden  out  the  complaint 
so  as  to  cover  the  new  matters  by  a 
supplemental  bill,  litigate  the  same, 
and  include  in  the  general  decree  in 
such  suit  recoveries  against  all  of 
such  alleged  guilty  parties  according 
to  the  nature  or  extent  of  their  lia- 
bilities?'" The  court  further  say, 
(121  Wis.,  p.  302,  99  N.  W.,  p.  960)  : 
"If  it  is  alleged  as  to  a  receiver,  that 


during  the  course  of  his  administra- 
tion he  pursued  a  systematic  course 
hostile  to  the  primary  beneficiaries, 
concealing  his  conduct  from  the 
knowledge  of  the  court  till  the  trust 
fund  was,  by  him  and  those  fraudu- 
lently colluding  with  him,  wasted  or 
put  beyond  the  reach  of  such  bene- 
ficiaries, except  so  far  as  the  same 
could  be  recovered  by  judicial  pro- 
ceedings, and  there  is  probable 
ground  for  believing  that  the  charge 
is  true,  and  the  issues  raised  in  the 
action  in  respect  to  the  trust  are 
still  open,  it  is  competent  for  the 
court,  on  such  showing,  to  permit 
the  claim  on  behalf  of  the  creditors, 
against  the  receiver  and  his  alleged 
guilty  participants,  to  be  treated  as 
a  part  of  the  original  subject  of  the 
action,  and  to  be  brought  into  it  for 
trial  by  supplemental  bill. 

"If  an  action  is  commenced  osten- 
sibly to  administer  the  assets  of  an 
insolvent  corporation,  but  really  pur- 
suant to  a  fraudulent  agreement  be- 
tween its  officers  or  its  officers  and 
others,  to  enable  them  to  control  the 
corporate  assets  for  their  own  bene- 
fit, and  in  execution  of  such  fraudu- 
lent scheme  those  controlling  the 
suit  induce  the  court,  by  false  pre- 
tenses, to  appoint  as  receiver  one  of 
their  own  number  who  will  use  his 
office  to  enable  them  to  effect  their 
wrongful  purpose,  and  he  does  so 
use  it,  the  court  may,  upon  being 
satisfied  of  a  probability  that  such 
fraud  has  been  committed,  for  the 
purpose  of  having  the  truth  of  the 
matter  judicially  determined,  permit 


CHAP.   IX.] 


LIABILITIES. 


339 


resort  may  not  be  had  to  such  summary  methods.'^^  And  in 
such  case,  where  the  entire  property  and  assets  of  the  corpora- 
tion have  thus  been  improperly  disposed  of  and  converted,  it  is 
not  necessary  that  the  creditors  seeking  rehef  should  procure 
the  appointment  of  another  receiver,  since  adequate  relief  may 
be  had  merely  bv  an  account  without  the  necessity  for  such 
appointment."^^ 


the  creditors  to  treat  such  receiver 
as  having  been  the  agent  of  the  cor- 
poration and  its  officers,  and  the  as- 
sets of  the  corporation  to  have  been 
by  his  aid  continued  under  their 
control,  though  being  ostensibly  un- 
der the  control  of  the  court.  In 
such  circumstances  it  is  eminently 
proper  for  the  court — the  condition 
of  the  suit  being  such  that  under 
any  circumstances  a  supplemental 
complaint  might  be  made — to  allow 
such  officers  and  such  agents  to  be 
made  parties  defendant  and  charged 
as  trustees  for  creditors,  as  to  the 
property  of  the  corporation  still  in 
their  hands,  and  the  value  of  all 
wrongfully  appropriated  by  them  or 
otherwise  lost  through  their  wrong- 
ful conduct,  or  that  of  either  of 
them,  in  execution  of  the  original 
fraudulent  design.  To  bring  such 
parties  into  the  suit  as  defendants 
on  either  of  the  contingencies  men- 
tioned, it  is  believed,  would  not  be 
a  stretch  of  judicial  discretion,  and 


on  the  last  one  mentioned  would  be 
a  very  wise  exercise  of  judicial 
power. 

"Upon  a  review  of  the  whole  situ- 
ation, we  can  see  no  legitimate 
ground  for  appellants  to  complain. 
They  had  as  full  an  opportunity  to 
be  heard  in  their  defense  as  they 
would  have  had  if  any  other  method, 
adequate  under  the  circumstances  to 
meet  the  case,  had  been  adopted. 
Certainly,  no  good  ground  exists  for 
the  court  to  hold  that  the  practice 
adopted  was  such  an  abuse  of  ju- 
dicial power  as  to  constitute  juris- 
dictional error.  On  the  contrary,  in 
view  of  the  feature  of  the  case  as 
to  Rust  (the  receiver)  being  really 
the  arm  of  the  corporation  defend- 
ant and  its  officers,  instead  of  that 
of  the  court,  the  practice  adopted 
meets  with  our  approval." 

72  S.  C,  121  Wis.,  p.  253,  99  N. 
W.,  p.  943. 

73  S.  C,  121  Wis.,  p.  270,  99  N. 
W.,  p.  949. 


CHAPTER  X. 

OF  RECEIVERS  OVER  CORPORATIONS. 

I.  Principles   Governing  the  Jurisdiction    §  287 

II.  Functions,  Duties  and  Rights  of  Action  of  the  Receiver.  .      313 

III.  Receivers  of  Insolvent   Corporations    343 

IV.  Receivers  of  National  Banks  358 

I.  Principles  Governing  the  Jurisdiction, 

§  287.     Jurisdiction  of  equity  over  corporations  enlarged  by  statute. 

288.  Power  to  wind  up  corporation  conferred  by  statute;  receiver 

not  usually  granted  under  general  equity  powers. 

289.  Statutes  enlarging  the  jurisdiction  strictly  construed;  method 

prescribed   must  be  strictly  followed. 

290.  Corporation  a  necessary  party  to  the  proceeding;  omission  of, 

may    be    taken    advantage    of    by   writ    of    error;    corporate 
functions  suspended  by  appointment  of  receiver. 

291.  Receiver  need  not  be  made  a  party  to  subsequent  proceeding 

for  another   receiver;   bill  not  demurrable  because   it  prays 
receiver. 

292.  General  allegations  of  fraud  insufficient;  insolvency  alone  in- 

sufficient;  receiver  not  appointed   when  no  fraud   or  danger 
shown;  insolvency  and  fraud. 

293.  Breach   of  trust  by   corporate   officers;   no   place   of   business 

and  no  corporate  officers;  trust  deed  securing  unauthorized 
notes  of  bank;  deadlock  among  directors. 

294.  Receiver  of  unauthorized  issue  of  stock,  when  refused;  share- 

holder who  has  parted  with  his  interest  not  entitled  to  relief, 

295.  Long  acquiescence  of  shareholder  a  bar  to  relief;  receiver  of 

rents    and    tools    refused;    effect    of   shareholder's    participation 

in  fraud. 
295a.  Bill  by  minority  shareholders;  when  receiver  not  appointed. 
295&.  The  same;  when  receiver  appointed;  action  against  directors; 

when  demand  on  receiver  to  sue  unnecessary. 
295c.  The  same;  demand  upon  officers  and  directors  to  proceed. 

296.  Legislation  and  decisions  of  other  states,  when  considered  in 

refusing  receiver  over  new  issue  of  stock. 

297.  Sequestration  for  benefit  of  creditors;  rights  of  attaching  cred- 

itors subordinate;  transfer  to  new  corporation. 
340 


CHAP.  X.]  CORPORATIONS.  341 

§  298.     Right   of  judgment  creditors   to   receiver  over  corporation,   con- 
ferred by  statute. 

299.  Officers  and  shareholders  required  to  account  to  receiver  to 

pay  judgment  creditors. 

300.  Judgment   creditor   allowed   receiver   over   rents   and   tolls   of 

bridge  company. 

301.  Creditor  not  entitled  to  receiver  before  judgment;  nor  when 

there  is  a  remedy  at  law. 

302.  Prior  lien  of  judgment  creditor  not  divested  or  affected  by  re- 

ceivership;   title   to    real   estate   not  divested. 

303.  Title  divested  by  appointment  of  receiver  on  final  dissolution; 

departure  from  common-law  rule. 

304.  Waste  of  trust  fund  by  officers  of  insurance  and  loan  associa- 

tion, ground  for  receiver;  insolvency  and  assignment;  build- 
ing and  loan  association;  foreign  life  insurance  company. 

305.  Receivers  in  behalf  of  creditors  of  foreign  corporations. 

306.  Receiver   appointed   in   one   state   over   assets   of   corporation 

organized  in  another  state. 

306a.  Domiciliary  receiver  of  mutual  benefit  association,  when  en- 
titled to  possession  of  assets  in  another  state;  ancillary  re- 
ceiver. 

306&.  Ancillary  receiverships. 

307.  In  proceedings  by  quo  warranto  against  corporation,  receiver 

not  appointed  before  judgment  of  forfeiture;  nor  upon  in- 
voluntary dissolution  by   expiration   of   charter. 

308.  Corporation  allowed  to  give  bond  to  judgment  creditor  in  lieu 

of  receiver;  case  retained  for  accounting. 

309.  Appointment  of  receiver  no  defense  to  action  against  share- 

holder for  unpaid  subscription. 

310.  Registration  of  shares  in  receiver's  hands. 

311.  Receiver  not  granted  over  dividends  due  from  college  fellow- 

ship. 

312.  One  corporation  may  be  appointed  receiver  over  another. 
312a.  Duty  of  officers  to  deliver  assets  to  receiver. 

Z\2b.  Receiver's  certificates. 

312c.  Conflict    of    authority    as    to    preference     for    labor    and    supply 

claims  incurred  before  receivership. 
Z\2d.  Weight  of  authority  is  opposed  to  preference. 
312(?.  Abuse    of    corporate    franchise    as    ground    for    receiver    in    quo 

warranto  proceeding  for  forfeiture  of  charter. 

§  287.  Jurisdiction  of  equity  over  corporations  enlarged 
by  statute.  In  most  of  the  states  of  this  country,  as  well  as 
in  England,  the  jurisdiction  of  courts  of  equity  over  corpora- 
tions has  been  extended  by  legislative  enactments  to  the  ap- 
pointing of  receivers  and  sequestrating  the  property  of  the  cor- 


342  RECEIVERS.  [chap.  X. 

poration,  in  proper  cases;  and  in  some  of  the  states  the  juris- 
diction has  even  been  enlarged  by  statute  to  the  extent  of  wind- 
ing up  the  affairs  of  the  corporation,  and  to  the  forfeiture  of 
its  franchise.  While  these  legislative  enactments  vary  largely 
in  the  different  states,  their  general  purpose  and  scope  are  to 
provide  a  more  effectual  method  for  the  protection  of  creditors 
and  shareholders  than  may  be  had  by  the  ordinary  process  of 
courts  of  law.  And  while  in  the  decisions  of  the  courts  under 
these  various  statutes,  there  is  sometimes  manifested  a  lack  of 
harmony  and  uniformity,  certain  well-defined  principles  have 
yet  been  established  which  serve  as  precedents  for  future  guid- 
ance, and  the  discussion  of  these  will  occupy  the  present  chap- 
ter. 

§  288.  Power  to  wind  up  corporation  conferred  by  stat- 
ute; receiver  not  usually  granted  under  general  equity 
powers.  It  is  to  be  observed,  at  the  outset,  that  the  gen- 
eral jurisdiction  of  equity  over  corporate  bodies  does  not  ex- 
tend to  the  power  of  dissolving  the  corporation,  or  of  winding 
up  its  affairs  and  sequestrating  the  corporate  property  and 
effects,  in  the  absence  of  express  statutory  authority.  And 
courts  of  equity  will  not,  ordinarily,  by  virtue  of  their  gen- 
eral equitable  jurisdiction,  or  of  their  visitorial  powers  over 
corporate  bodies,  sequestrate  the  effects  of  the  corporation, 
or  take  the  management  of  its  affairs  from  the  hands  of  its  own 
officers  and  intrust  it  to  the  control  of  a  receiver  of  the  court, 
upon  the  application  either  of  creditors  or  shareholders.^  And 
while  equity  may  properly  compel  officers  of  corporations  to 

1  Bangs    V.    Mcintosh,    23    Barb.,  mick   Lumber    Co.    v.    Teague,    119 

591;  Howe  v.  Deuel,  43  Barb.,  504;  Ala.,  385,  24  So.,  4;  People  v.  Dis- 

Waterbury  v.  Merchants  Union  Ex-  trict   Court,  33   Colo.,  293.  80   Pac, 

press  Co.,  50  Barb.,  157;  Belmont  v.  908;  People  v.  Weigley,  155  111.,  491, 

Erie  R.   Co.,   52   Barb.,  637;   In  re  40  N.  E.,  300;  Coquard  v.  National 

Coleman,  174  N.  Y.,  373,  66  N.  E.,  Linseed  Oil  Co.,  171  111.,  480,  49  N. 

983;  Davis  v.   Flagstaff   S.   M.   Co.,  E.,  563;   Wallace  v.   Pierce-Wallace 

2  Utah,  74;  Neall  v.  Hill,  16  Cal.,  Publishing   Co.,    101    Iowa,   313,   70 

145;  French  v.  Bank  Case,  53  Cal.,  N.   W.,   216,   38   L.   R.    A.,    122,   63 

495;  Murray  v.  Superior  Court,  129  Am.    St.   Rep.,   389;   Vila   v.    Grand 

Cal.,  628,  62  Pac,  191 ;  Smith-Dim-  Island  E.  L.,  I.  &  C.  S.  Co..  68  Neb., 


CHAP.  X.] 


CORPORATIONS. 


343 


account  for  any  breach  of  trust  in  their  official  capacity,  yet  in 
the  absence  of  statutes  extending  its  jurisdiction,  it  will  usu- 
ally decline  to  assume  control  over  the  manag-ement  of  the  af- 
fairs of  a  corporation,  upon  a  bill  filed  by  a  stockholder  alleg- 
ing fraud,  mismanagement  and  collusion  on  the  part  of  the  cor- 
porate authorities,  since  such  interference  would  necessarily 
result  in  the  dissolution  of  the  corporation,  and  the  court  would 
thus  accomplish  indirectly  what  it  has  no  power  to  do  direct- 
ly. The  remedial  power  exercised  by  courts  of  equity,  in  such 
cases,  ordinarily  extends  no  further  than  the  granting  of  an 
injunction  against  any  special  misconduct  on  the  part  of  the 
corporate  officers ;  and  although  the  facts  shown  may  be  suffi- 
cient foundation  for  such  an  injunction,  the  court  will  not  en- 
large its  jurisdiction  by  taking  the  affairs  of  the  corporation 
out  of  the  management  of  its  own  officers,  and  placing  them 
in  the  hands  of  a  receiver.2 


222,  94  N.  W.,  136,  97  N.  W.,  613; 
Ardmore  National  Bank  v.  Briggs 
M.  &  S.  Co.,  20  Okla,  427,  94  Pac, 
533.  See,  also.  Baker  v.  Adminis- 
trator of  Backus,  32  111.,  79;  Pond 
V.  F.  &  L.  R.  Co.,  130  Mass.,  194; 
Hinckley  v.  Pfister,  83  Wis.,  64,  53 
N.  W.,  21;  Florence  Gas,  E.  L.  & 
P.  Co.  V.  Hanby,  101  Ala.,  15,  13 
So.,  343 ;  State  Investment  &  Insur- 
ance Co.  V.  Superior  Court,  101  Cal., 
135,  35  Pac,  549 ;  Walters  v.  Anglo- 
American  M.  &  T.  Co.,  50  Fed.,  316; 
Taylor  v.  Decatur  M.  &  L.  Co.,  112 
Fed.,  449.  But  see  Blatchford  v. 
Ross,  54  Barb.,  42,  5  Ab.  Pr.,  N.  S., 
434,  37  How.  Pr.,  110;  Adler  v. 
Milwaukee  Patent  Brick  Manufac- 
turing Co.,  13  Wis.,  57.  As  to  the 
power  of  congress  to  enact  a  law 
repealing  a  charter  granted  to  a  re- 
ligious corporation  by  a  territorial 
legislature,  and  as  to  the  right  to  a 
receiver  under  such  act  of  congress, 
see  United  States  v.  Church,  5  Utah, 


361,  15  Pac,  473.  As  to  the  statu- 
tory power  of  appointing  a  receiver 
over  a  corporation,  which  has  been 
dissolved  by  judgment  of  ouster  in 
Pennsylvania,  see  Commonwealth  v. 
Order  of  Vesta,  156  Pa.  St.,  531,  27 
Atl.,  14;  Fraternal  Guardian's  Es- 
tate, 159  Pa.  St.,  603,  28  Atl.,  479. 
As  to  the  right  of  the  attorney-gen- 
eral to  procure  the  appointment  of 
a  receiver  over  a  state  bank  under 
the  statute  of  California  of  March 
24,  1903,  as  amended  by  the  act  of 
March  20,  1905,  see  People  v.  Bank 
of  San  Luis  Obispo,  154  Cal.,  194, 
—  Pac,  — . 

2  Waterbury  v.  Merchants  Union 
Express  Co.,  50  Barb.,  157;  Neall  v. 
Hill,  16  Cal.,  145;  Howe  v.  Deuel, 
43  Barb.,  504;  Belmont  v.  Erie  R. 
Co.,  52  Barb.,  637;  Mason  v.  Su- 
preme Court,  77  Md.,  483,  27  Atl., 
171  ;  Richardson  v.  Clinton  Wall 
Trunk  Co.,  181  Mass.,  580,  64  N.  E., 
400.    Waterbury  f.  Merchants  Union 


344 


RECEIVERS. 


[chap,  X. 


§  289.  Statutes  enlarging  the  jurisdiction  strictly  con- 
strued; method  prescribed  must  be  strictly  followed. 
When  the  jurisdiction  of  courts  of  equity  has  been  extended  by 
legislation  to  the  appointment  of  receivers  over  incorporated 
companies,  the  power  thus  conferred  is  treated  by  the  courts 
as  a  delegated  authority,  the  exercise  of  which  requires  the 
most  careful  consideration.  The  effect  of  appointing  a  re- 
ceiver being  to  take  the  property  of  the  corporation  out  of 
the  control  of  its  own  officers,  to  whom  it  has  been  intrusted 
by  its  stockholders,  the  courts  proceed  with  extreme  caution  in 
the  exercise  of  so  summary  a  power.^     And,  in  construing 


Express  Co.,  50  Barb.,  157,  was  an 
action  brought  by  a  stockholder  of 
the  defendant  corporation,  against 
the  company  and  its  executive  or 
managing  committee,  to  obtain  a 
dissolution  of  the  corporation  and 
the  appointment  of  a  receiver  for 
winding  up  its  affairs.  Barnard,  J., 
denying  the  motion  for  a  receiver, 
observes,  p.  166 :  "The  remaining 
grounds  for  the  relief  which  the 
plaintiff  demands  resolve  them- 
selves into  the  alleged  personal 
misconduct  of  the  executive  or 
managing  committee.  This  has,  I 
think,  nothing  to  do  with  the  pres- 
ent motion  for  a  receiver.  The  in- 
fidelity or  misconduct  of  some,  or 
even  of  all,  of  the  trustees  or  man- 
agers of  such  an  association,  affords 
no  ground  for  taking  away  the 
rights  of  the  shareholders  who  con- 
stitute the  company,  either  by  dis- 
solving it,  or  taking  away  its  man- 
agement and  placing  it  in  the  hands 
of  an  officer  of  the  court.  In  such 
a  case,  the  principles  of  remedial  or 
preventive  justice  go  no  further 
than  to  enjoin  or  forbid  the  mis- 
conduct, or  remove  the  unfaithful 
officer.  I  am  not  aware  of  any  au- 
thority for  dissolving  a  corporation. 


or  an  unincorporated  stock  associa- 
tion, or  for  taking  its  management 
from  its  proprietors  or  sharehold- 
ers, on  the  mere  ground  that  one, 
or  even  all,  of  its  trustees,  are  un- 
faithful. The  court  may  enjoin 
the  trustee,  or  suspend  and  remove 
him,  and  if  necessary  may  order  a 
new  election,  but  can  not  substitute 
its  own  officer."  But  in  Blatchford 
V.  Ross,  54  Barb.,  42,  5  Ab.  Pr., 
N.  S.,  434,  37  How.  Pr.,  110,  the 
court  inclined  to  the  opinion  that 
the  action  of  the  executive  commit- 
tee of  a  corporation  in  repeatedly 
voting  to  themselves  large  sums  of 
money  in  addition  to  their  regular 
compensation,  for  their  services  as 
promoters  or  originators  of  the  com- 
pany, was  sufficient  ground  for  ap- 
pointing a  receiver  in  behalf  of 
stockholders,  but  a  decision  as  to 
the  appointment  was  reserved  on 
other  grounds. 

3  Oakley  v.  Paterson  Bank,  1 
Green  Ch.,  173 ;  Clark  v.  National 
Linseed  Oil  Co.,  45  C.  C.  A.,  53, 
105  Fed.,  787.  See,  also,  Davis  v. 
United  States,  E.  P.  &  L.  Co.,  77 
i\Id.,  35,  28  Atl.,  982.  In  Kentucky, 
it  is  held  that  a  water  company 
seeking  to   enjoin  the   collection   of 


CHAP.  X.]  CORPORATIONS.  345 

such  statutes,  they  are  inchned  to  give  them  a  strict  construc- 
tion, and  require  the  prescribed  method  of  obtaining  jurisdic- 
tion of  the  person  and  of  the  subject-matter  to  be  strictly  fol- 
lowed. Thus,  when  a  statute  authorizes  the  court,  upon  ap- 
plication of  any  judgment  creditor  of  a  corporation,  after  exe- 
cution returned  unsatisfied,  to  sequestrate  the  property,  stock 
and  choses  in  action  of  the  corporation,  and  to  appoint  a  re- 
ceiver, the  statute  will  be  strictly  construed,  since  the  exer- 
cise of  the  jurisdiction  which  it  confers  involves  the  virtual 
dissolution  of  the  corporate  body,  and  the  loss  of  its  franchises.^ 
And  when  the  statute  authorizes  the  court  to  interfere  upon 
the  petition  of  the  person  obtaining  such  judgment,  the  court 
can  not  acquire  jurisdiction  by  any  other  means  than  a  peti- 
tion by  the  judgment  creditor  himself,  and  a  petition  by  his 
attorney  will  not  suffice.^  And  it  by  no  means  follows,  be- 
cause an  injunction  has  been  granted  against  the  operations 
of  the  corporate  body,  that  a  receiver  should  necessarily  be  ap- 
pointed, since  the  two  questions  are  independent  of  and  dis- 
tinct from  each  other,  and  circumstances  may  call  for  and  de- 
mand a  suspension  of  the  business  of  the  corporation,  while  its 
officers  in  charge  are  not  implicated,  and  are  the  most  proper 
persons  to  wind  up  its  affairs.^ 

§  290.  Corporation  a  necessary  party  to  the  proceeding ; 
omission  of,  may  be  taken  advantage  of  by  writ  of  error; 
corporate  functions  suspended  by  appointment  of  receiver. 
Since  the  appointment  of  a  receiver  over  a  corporation  is  gen- 
erally equivalent  to  a  suspension  of  its  corporate  functions,  and 
of  all  authority  over  its  property  and  effects,'^  and  is  also  equiv- 

taxes   upon   its   property,   upon   the      ing.    Clark  v.  Louisville  Water  Co., 

ground    that   it   is    exempt   by   law      90  Ky.,  515,  14  S.  W.,  502. 

from  taxation,  may  be  required  to  4  Bangs    v.    Mcintosh,    23    Barb., 

pay  the  amount  of  the   taxes   into      ^^  •  ^        ,      ^-,    t^    , 

.      ,   r     ,.     r        J   •       xi.  ^  ^  Bangs    V.    Mcintosh,    23    Barb., 

court,  or  m  default  of  so  domg  that       _  . 

the    management    of    the    company  6  Oakley    v.     Paterson    Bank,     1 

may  be  intrusted  to  a  receiver  until  Green  Ch.    173. 

a  sufficient  sum  is  realized  to  pay  7  Linville  v.  Hadden,  88  Md.,  594^ 

the  taxes  and  costs  of  the  proceed-  41  Atl.,  1097.  43  L.  R.  A.,  222. 


346  RECEIVERS.  [chap,  X. 

alent  to  an  injunction  restraining  its  agents  and  officers  from 
intermeddling  with  its  property,  the  courts  will  not  exercise 
this  extraordinary  power  when  the  corporate  body,  as  such,  is 
not  made  a  party  to  the  action,  and  is  not  before  the  court.^ 
And  this  is  true,  even  when  the  bill  is  filed  against  the  stock- 
holders of  the  company,  assailing  the  franchise  itself,  and  as- 
serting that  the  company  is  not  a  corporation  proper,  but  a 
mere  partnership.  The  object  of  such  a  proceeding  being  to 
take  away  the  corporate  franchise,  the  corporation  itself  must 
be  made  a  party  defendant  to  enable  it  to  be  heard ;  and,  being 
an  indispensable  party  to  the  proceedings,  the  omission  to  join 
it  is  not  a  mere  formal  error,  but  one  of  substance,  which  may 
be  taken  advantage  of  by  the  stockholders  on  writ  of  error.^ 
And  since  the  appointment  of  a  receiver  over  a  corporation 
operates  as  a  suspension  of  its  corporate  functions  and  of  all 
its  authority  over  its  property  and  effects,  the  delivery  by  an 
officer  of  the  corporation,  after  the  appointment  of  a  receiver, 
of  a  deed  which  had  been  executed  by  the  corporation  prior 
to  such  appointment  is  of  no  effect.!^ 

§  291.  Receiver  need  not  be  made  a  party  to  subsequent 
proceeding  for  another  receiver;  bill  not  demurrable  be- 
cause it  prays  receiver.  Notwithstanding  the  corporation 
over  which  a  receiver  is  sought  is  itself  an  indispensable  party 
to  the  suit,  as  above  shown,  yet  when  a  receiver  has  already 
been  appointed,  he  need  not  be  joined  as  a  party  to  subsequent 
proceedings  having  for  their  object  the  appointment  of  a  re- 
ceiver over  the  same  corporation.  Thus,  upon  a  bill  filed 
against  a  banking  association  by  one  of  its  creditors,  charging 
that  defendants  are  only  a  nominal  or  pretended  corporation, 
having  fraudulently  combined  to  deceive  their  creditors,  and 

8  Gravenstine's  Appeal,  49  Pa.  St.,  ceiver  to   resist  an  order  made  by 

310;     Baker    v.     Administrator     of  the   court    for   the    sale    of   its    real 

Backus,   32   111.,   79.      See    State   v.  estate. 

Fawcett,   58   Neb.,   371,   78   N.    W.,  9  Baker  v.  Administrator  of  Back- 

636,  as  to  the  right  of  an  insolvent  us,  32  III,  79. 

banking  corporation  which  has  con-  10  Brynjolfson  v.  Osthus,  12  N, 
sented  to  the  appointment  of  a  re- 


CHAP.  X.]  CORPORATIONS.  347 

being  only  a  voluntary  association  in  the  nature  of  a  partner- 
ship, it  is  not  necessary  to  join  as  a  party  defendant  a  receiver 
of  the  bank  appointed  upon  proceedings  instituted  by  another 
creditor.  Nor  is  such  a  bill  demurrable  because  it  prays  the 
appointment  of  a  receiver,  since,  whether  a  receiver  be  or  be 
not  necessary,  the  objection  because  of  the  prayer  for  his  ap- 
pointment can  not  sustain  a  demurrer.^  And  the  fact  that  a 
receiver  has  been  appointed  in  an  action  to  foreclose  a  mort- 
gage given  by  a  corporation  is  no  bar  to  appointing  a  receiver 
in  a  subsequent  suit  to  sequestrate  the  property  of  the  corpora- 
tion for  the  benefit  of  its  creditors  under  the  insolvent  laws  of 
the  state.  12 

§  292.  General  allegations  of  fraud  insufficient;  insol- 
vency alone  insufficient;  receiver  not  appointed  where  no 
fraud  or  danger  shown;  insolvency  and  fraud.  It  has  al- 
ready been  shown  that  courts  of  equity  proceed  with  extreme 
caution  in  the  appointment  of  receivers  over  corporate  bodies, 
under  legislative  enactments  enlarging  their  general  jurisdic- 
tion for  this  purpose.  13  And  in  proceedings  under  such  stat- 
utes, mere  general  allegations  in  the  affidavits  in  support  of 
the  motion  for  a  receiver,  as  to  the  belief  of  affiants  that  great 
frauds  have  been  committed,  are  not  sufficient  ground  for  the 
interference,  when  it  is  not  stated  in  what  the  frauds  consist, 
or  by  whom  they  were  committed. 14  Nor  is  the  loss  of  the 
property  of  a  corporation  or  its  failure  to  continue  business 
sufficient  ground  for  a  receiver  in  the  absence  of  a  showing  of 
gross  mismanagement,  nor  will  general  averments  of  negli- 
gence and  mismanagement  supply  the  deficiency,  nor  the  be- 
lief of  the  plaintiff  that  frauds  have  been  committed,  where  it 
is  not  clearly  shown  of  what  such  frauds  consist. 1^     Nor  is 

Dak.,  42,  96  N.  W.,  261.  14  Oakley    v.    Paterson    Bank,    1 

11  Wheeler  v.  Clinton  Canal  Bank,  Green   Ch.,   173.     And   see   State  v. 
Harring.  (Mich.),  449.  Bearing,   184  Mo.,  647,   111    S.  W., 

12  St.  Louis  Car  Co.  v.  Stillwater  967. 

Street  R.  Co.,  53  Minn.,  129,  54  N.  15  Clark  v.   National  Linseed  Oil 

W.,  1064.  Co.,  45  C.  C.  A.,  53,  105  Fed.,  787. 

13  See,  ante,  §  289. 


348 


RECEIVERS. 


[chap.  x» 


there  any  necessity  for  appointing  a  receiver  when  no  fraud  is 
alleged  or  shown,  and  when  no  satisfactory  proof  is  produced 
that  the  court  should  interfere  to  save  the  property  from  ma- 
terial injui*y,  or  to  rescue  it  from  impending  destruction. ^^ 
So  mere  insolvency,  unaccompanied  by  any  charge  of  frauds 
wa^te  or  mismanagement  in  the  affairs  of  the  corporation,  nev- 
er of  itself  constitutes  sufficient  ground  for  the  appointment 
of  a  receiver.!"^  So  where  there  is  no  charge  of  insolvency  or 
of  fraud  or  mismanagement  upon  the  part  of  the  directors,  the 
court  will  not  appoint  a  receiver,  where  the  only  question  is  as 
to  the  policy  in  regard  to  the  management  of  the  business. ^^ 
And  where  a  corporation  is  perfectly  solvent  and  no  fraud  is 
charged,  a  receiver  will  not  be  appointed  at  the  instance  of  a 
shareholder  and  director,  who  is  also  a  creditor,  upon  general 
charges  of  mismanagement  which  will  result  in  injury  and 
waste  and  the  total  loss  of  the  property. ^^     Nor  will  a  re- 


16  Baker  v.  Administrator  of 
Backus,  32  111.,  79;  Fort  Payne  F. 
Co.  V.  Fort  Payne  C.  &  I.  Co.,  96 
Ala.,  472,  11  So.,  439;  Trust  &  De- 
posit Co.  V.  Spartanburg  W.  Co.,  91 
Fed.,  324;  Murray  v.  Superior 
Court,  129  Cal.,  628,  62  Pac,  191. 
See,  also,  Rathbone  v.  Gas  Co.,  31 
West  Va.,  798,  8  S.  E.,  570 ;  Neitzel 
V.  Lyons,  48  Neb.,  892,  67  N.  W., 
867;  Donald  v.  Manufacturers'  Ex- 
port Co.,  142  Ala.,  578,  38  So.,  841. 
As  to  the  appointment  of  a  receiver 
under  the  statutes  of  South  Dakota, 
see  Dudley  v.  Dakota  H.  S.  Co.,  11 
S.  Dak.,  559,  79  N.  W.,  839;  Gates 
V.  McGee,  15  S.  Dak.,  247,  88  N. 
W.,  115;  Kelly  v.  Fargo  M.  Co.,  16 
S.  Dak.,  73,  91  N.  W.,  350. 

IT'  Murray  v.  Superior  Court,  129 
Cal.,  628,  62  Pac,  191 ;  Trust  &  De- 
posit Co.  V.  Spartanburg  W.  Co.,  91 
Fed.,  324.  But  it  is  held  under  the 
statute  of  Washington  that  a  simple 
contract  creditor   of  a   corporation. 


whose  claim  is  not  controverted,  is 
entitled  to  a  receiver  over  the  corpo- 
ration upon  a  mere  showing  of  in- 
solvency. Davis  V.  Edwards,  41 
Wash.,  480,  84  Pac,  22.  In  this  case 
the  court  say:  "Whatever  the  rule 
may  be  in  other  jurisdictions,  the 
rule  is  established  in  this  state  that 
a  simple  contract  creditor,  whose 
claim  is  not  controverted,  is  entitled 
to  a  receivership  against  a  debtor 
corporation  upon  a  mere  showing 
of  insolvency." 

18  Hunt  V.  American  Grocery  Co., 
80  Fed.,  70.  But  in  Tompkins  Co. 
V.  gatawba  Mills,  82  Fed.,  780,  it 
was  held  that  dissensions  among  the 
officers  and  directors  of  a  corpora- 
tion which  were  deep-seated  and 
could  not  be  healed  made  a  receiver 
imperatively  necessary  even  though 
there  was  no  showing  of  the  insol- 
vency of  the  corporation. 

19  Little  Warrior  Coal  Co.  v. 
Hooper,  105  Ala.,  665,  17  So.,  118. 


CHAP.  X.]  CORPORATIONS.  349 

ceiver  be  appointed  to  wind  up  the  affairs  of  a  corporation 
merely  because  of  dissension  among  the  shareholders,  where 
it  appears  that  the  corporation  is  quite  solvent  and  that  its  bus- 
iness is  prosperous.20  Nor  is  the  fear  upon  the  part  of  a  share- 
holder that  a  certain  action  pending  against  an  officer  of  a 
solvent  corporation  will  not  be  diligently  prosecuted  sufficient 
ground  for  the  appointment  of  a  receiver  in  the  absence  of 
charges  of  fraud  or  mismanagement.^!  Nor  does  it  constitute 
sufficient  ground  for  a  receivership  of  a  corporation,  at  the  in- 
stance of  a  shareholder,  that  the  directors  are  holding  over  in 
•default  of  an  election  of  their  successors,  or  that  the  plaintiff 
has  been  denied  access  to  the  corporate  books  and  papers,  or 
that  the  directors  refuse  to  disclose  material  facts  connected 
with  the  business  of  the  corporation. ^2  And  it  is  held  that  a 
receiver  should  not  be  appointed  over  a  corporation  at  the  in- 
stance of  a  majority  of  the  shareholders,  where  it  appears  that 
there  are  no  scattered  assets  to  be  marshalled  and  there  are  no 
charges  of  fraud  or  mismanagement  in  the  affairs  of  the  com- 
pany, .and  the  only  effect  of  the  receivership  would  be  to  hinder 
and  delay  the  collection  of  a  valid  claim. ^^  And  where  a  cor- 
poration is  a  prosperous,  solvent,  going  concern,  a  receiver 
should  not  be  appointed  in  a  proceeding  brought  by  a  share- 
holder against  the  corporation  and  its  officers  to  compel  the 
latter  to  account  for  profits  made  by  them  as  individuals  in 
selling  real  estate  to  the  corporation  at  fraudulently  excessive 
valuations.24  Nor  can  one  of  two  equal  co-owners  of  the 
stock  of  a  corporation  have  a  receiver  over  the  corporation  up- 
on the  ground  that  there  are  irreconcilable  differences  between 
the  two  and  that  the  other  has  assumed  the  control  and  manage- 
ment of  the  business  and  excludes  the  plaintiff  from  partici* 

20  Sternberg  v.   Wolflf,   56   N.  J.  23  Bell  v.  Wood  &  Co.,  181   Pa. 
Eq.,  555,  42  Atl.,  1078.                             St.,  175,  37  Atl.,  201. 

21  Griffin  v.   Griffin  Iron  Co.,  96  24  Klein  v.  Independent  B.  Assn., 
Fed.,  577.                                                231  III.,  594,  83  N.  E.,  434. 

22  Alabama  Coal  &  Coke  Co.  v. 
Shackelford,  137  Ala.,  224,  34  So., 
S33,  97  Am.  St.  Rep.,  23. 


350  RECEIVERS.  LCHAP.  X. 

pating  in  it.^^  If,  ho\ve\'er,  the  corporation  is  insolvent  and 
its  directors  have  been  guilty  of  fraudulent  mismanagement  of 
its  affairs,  and  if  it  has  ceased  to  transact  the  business  for  which 
it  was  incorporated,  its  financial  embarrassments  being  such  as 
to  render  it  impracticable  to  resume,  a  fit  case  is  presented  for 
a  receiver,  in  order  to  preserve  the  property  of  the  corporation 
for  the  benefit  of  its  creditors  and  stockholders.26  And  where 
one  of  two  shareholders  of  a  corporation  has  constituted  him- 
self a  trustee  for  the  collection  and  distribution  of  the  assets 
of  the  corporation  and  has  made  false  statements  as  to  his  col- 
lections and  has  proved  generally  unfaithful  to  his  trust,  a  re- 
ceiver is  properly  appointed  to  take  charge  of  the  collection  of 
the  assets  of  the  corporation. 27  But  ordinarily  a  receiver  will 
not  be  appointed  over  a  corporation  upon  a  preliminary  ap- 
plication, where  all  the  charges  of  insolvency,  fraud  and  mis- 
management upon  which  the  right  to  the  belief  is  based  are  ful- 
ly and  unequivocally  denied  by  affidavit. ^^ 

§  293.  Breach  of  trust  by  corporate  officers ;  no  place  of 
business  and  no  corporate  officers ;  trust  deed  securing  un- 
authorized notes  of  bank;  deadlock  among  directors.  In 
New  York,  the  jurisdiction  over  corporations  conferred  by 
statute  upon  courts  of  equity  powers  is  sufficient  to  authorize 
the  appointing  of  a  receiver,  when  it  is  apparent  that  the  cor- 
poration has  ceased  to  act  as  such,  and  when  the  president  and 
principal  shareholders  have  assumed  to  use  the  corporate  prop- 
erty as  their  own,  and  the  president  has  been  guilty  of  a  breach 
of  trust  in  making  an  assignment  of  such  property. 29  So  when 
it  is  apparent  to  the  court  that  the  corporation  against  which 
the  proceedings  are  instituted  is  without  any  office  or  place  of 

25  Wallace  v.  Pierce-Wallace  Pub-  27  Bauer  v.   Haggerty,  42  Wash., 
lishing  Co.,  101  Iowa,  313,  70  N.  W.,      313,  84  Pac,  871. 

216,  38  L.   R.   A.,   122,  63  Am.   St.  28  Taylor  v.  Cuban  L.  &  S.  Co., 

Rep.,  389.  106  Fed.,  437;  Brady  v.  Bay  State 

26  Coal  &  Mining  Co.  v.  Edwards,      Gas  Co.,  106  Fed.,  584. 

103  111.,  472;   Doe  v.   Northwest   C.  29  Conro  z;.  Gray,  4  How.  Pr.  K/). 

&  T.  Co.,  64  Fed.,  928.    See  Stevens  And  see  Consolidated  T.  L.  Co.  v. 

V.   South  O.  L.   Co.,   14  Utah,  232,  Kansas  City  V.  Co.,  43  Fed..  204. 
47  Pac,  81. 


CHAP.  X.]  CORPORATIONS.  351 

business,  that  it  has  no  officers  to  attend  to  its  affairs  and  no 
person  authorized  to  take  charge  of  and  manage  its  business, 
it  is  proper  to  appoint  a  receiver,  upon  a  bill  by  a  stockholder, 
to  preserve  the  effects  of  the  company  for  the  benefit  of  the 
stockholders  generally.^^  And  when  a  banking  association 
has  issued  notes,  which  are  unauthorized  and  expressly  pro- 
hibited by  the  banking  laws  of  the  state,  and  has  secured  these 
notes  by  a  deed  of  trust  of  certain  securities,  upon  a  bill  to  set 
aside  such  trust  deed,  the  court  may  appoint  a  receiver  in  limine, 
to  take  charge  of  the  securities  assigned  until  the  final  deter- 
mination of  the  cause  upon  its  merits.^^  So  in  an  action 
brought  by  creditors  of  a  pretended  banking  corporation  aver- 
ring that  the  bank  was  never  incorporated,  but  transacted  busi- 
ness under  a  corporate  name  under  the  management  of  its 
principal  promoter,  its  supposed  assets  being  in  fact  his,  and 
averring  his  death  and  that  his  representative  is  wasting  his 
assets,  the  bill  seeking  to  set  aside  certain  judgments  and  to 
recover  the  assets  and  for  an  accounting,  a  proper  case  is 
presented  for  the  appointment  of  a  receiver  pendente  lite.^^ 
And  where,  after  the  death  of  one  of  a  board  of  three  direct- 
ors, who  was  also  president  of  the  corporation  and  a  share- 
holder and  large  creditor,  the  two  remaining  directors  are  un- 
able to  agree  upon  a  president  or  third  director,  and  the  busi- 
ness of  the  corporation  is  suspended  and  is  being  seriously  im- 
paired, a  receiver  pendente  lite  is  properly  appointed. ^^  And 
where  there  are  dissensions  among  the  directors  of  a  corpora- 
tion which  have  resulted  in  a  deadlock  in  the  management  of 
the  business,  a  receiver  pendente  lite  may  be  appointed.^^ 

§  294.  Receiver  of  unauthorized  issue  of  stock,  when 
refused ;  shareholder  who  has  parted  with  his  interest  not 
entitled  to  relief.    While  receivers  are  thus  allowed  for  the 

30  Lawrence    v.    Greenwich    Fire  33  Sheridan  Brick  Works  v.  Ma- 
Insurance  Co.,  1  Paige,  587.                     rion  Trust  Co.,  157  Ind.,  292,  61  N. 

31  Leavitt  v.  Yates,  4  Edw.   Ch.,       E.,  666,  87  Am.  St.  Rep.,  207. 

173,  175.  34  Sternberg  v.    Wolff,   56    N.   J. 

32  Dobson  V.  Simontcn,  78  N.  C,       Eq..  389.  39  Atl..  397,  39  L.  R.  A., 
63.  762,  67  Am.  St.  Rep.,  494. 


352  RECEIVERS.  [chap.  X. 

protection  of  shareholders  in  certain  classes  of  cases,  the  courts 
proceed  with  much  caution  in  the  exercise  of  the  jurisdiction. 
And  in  an  action  brought  by  a  shareholder  for  the  purpose  of 
canceling-  certain  shares  of  stock,  alleged  to  have  been  illegally 
issued  by  the  corporation,  and  to  restrain  the  holders  of  such 
shares  from  assigning  or  incumbering  them,  the  appointment 
of  a  receiver  of  the  shares  in  controversy  is  unauthorized  and 
improper,  upon  an  ex  parte  application,  before  answer,  and 
when  it  is  not  shown  that  defendants  are  irresponsible,  or  that 
there  is  any  danger  of  loss  from  the  transfer  of  the  stock. ^^ 
Nor  is  a  former  shareholder  entitled  to  a  receiver  as  against 
trustees  or  officers  of  the  corporation,  upon  the  ground  of  mis- 
management of  their  trust,  when  he  has  sold  and  parted  with 
his  entire  interest  in  the  corporation  and  in  its  effects. ^^ 

§  295.  Long  acquiescence  of  shareholder  a  bar  to  relief ; 
receiver  of  rents  and  tolls  refused;  effect  of  shareholder's 
participation  in  fraud.  It  is  also  to  be  observed,  with  ref- 
erence to  this  species  of  relief  when  sought  in  behalf  of  share- 
holders of  a  corporation,  that  the  acquiescence  or  consent  of  a 
shareholder  for  a  long  period  of  years  in  any  given  state  of 
facts  or  conduct  on  the  part  of  the  corporate  authorities,  which 
he  afterward  seeks  to  make  the  foundation  for  the  appoint- 
ment of  a  receiver,  will  generally  prove  a  bar  to  the  relief 
sought.^'^  For  example,  when  the  authorities  of  a  corporation 
have  made  an  agreement  in  the  nature  of  a  lease,  for  letting 
the  tolls  of  the  company  for  a  longer  period  than  they  are 
authorized  to  do  under  the  act  of  incorporation,  but  such  agree- 
ment is  acquiesced  in  by  the  shareholders  for  a  period  of  forty- 
seven  years  without  objection  or  complaint,  during  which  time 
the  lessee  and  his  successors  have  remained  in  undisturbed  pos- 
session and  receipt  of  the  tolls,  equity  will  not  appoint  a  receiver 
of  the  rents  and  tolls  in  limine,  in  an  action  by  a  shareholder  to 

35  People    v.    Albany   &    Susque-  37  Gray  v.  Chaplin,  2  Russ.,  126; 
hanna  R.  Co.,  7  Ab.  Pr.,  N.  S.,  290.      Hager  v.  Stevens,  2  Halst.  Ch.,  374. 

36  Smith  V.  Wells,  20  How.   Pr., 
158. 


CHAP.  X.]  CORPORATIONS.  353 

set  aside  the  agreement  or  leasees  So  when  a  shareholder 
files  a  bill  for  a  receiver  to  take  charge  of  certain  real  estate 
in  another  state,  alleged  to  have  been  purchased  with  the  funds 
of  the  corporation  and  the  title  taken  in  the  name  of  another 
person,  when  the  situation  of  the  title  has  remained  unchanged 
for  a  number  of  years,  during  all  which  time  the  plaintiff  has 
been  a  shareholder,  and  no  greater  danger  is  shown  to  the  title 
than  has  existed  during  all  this  period,  and  it  is  not  shown  that 
the  person  holding  the  legal  title  is  insolvent,  no  sufficient  cause 
is  presented  for  the  extraordinary  aid  of  the  court  by  a  re- 
ceiver. Especially  will  the  court  be  justified  in  refusing  to  in- 
terfere in  such  case,  when  it  is  apparent  from  the  bill  that  the 
property  over  which  the  receiver  is  sought  was  accumulated  by 
fraud,  of  which  the  plaintiff  shareholder  was  himself  cogni- 
zant.39  And  a  shareholder  seeking  a  receiver  over  a  corpora- 
tion, upon  the  ground  of  misconduct  or  breach  of  trust  on  the 
part  of  its  officers,  must  himself  be  free  from  participation  in 
such  misconduct.^^ 

§  295a.  Bill  by  minority  shareholders;  when  receiver 
not  appointed.  A  minority  of  the  stockholders  of  a  cor- 
poration is  not  entitled  to  a  receiver  because  of  dissatisfaction 
with  the  policy  and  management  of  a  majority  of  the  officers 
and  directors  in  the  absence  of  any  showing  of  fraud  or  of  in- 
solvency. ■*!    And  especially  will  the  appointment  of  a  receiver 

38  Gray  v.  Chaplin,  2  Russ.,  126.  &  M.  Assn.  v.  Storrow,  34  C.  C.  A., 

39  Hager  v.  Stevens,  2  Halst.  Ch.,  182,  92  Fed.,  5 ;  North  America 
374.  Land  &  T.  Co.  v.   Watkins,  48  C. 

40  Hyde  Park  Gas  Co.  v.  Kerber,  C.  A.,  254,  109  Fed.,  101 ;  Worth 
5  Bradw.,  132.  Manufacturing  Co.  v.   Bingham,  54 

41  Fluker  v.  Emporia  City  R.  Co.,  C.  C.  A.,  119,  116  Fed.,  785.  And 
48  Kan.,  577,  30  Pac,  18;  Bartow  see  Jacobs  v.  Jacobs  M.  Co.,  37 
Lumber  Co.  v.  Enwright,  131  Ga.,  Mont.,  321,  96  Atl.,  723;  Stokes  v. 
329,  62  S.  E.,  233 ;  Callaway  v.  Pow-  Knickerbocker  Investment  Co.,  70 
hattan  Improvement  Co.,  95  Md.,  N.  J.  Eq.,  518,  61  Atl.,  736;  Downing 
177.  52  Atl.,  916;  Hill  v.  Gould,  129  v.  Dunlap  Coal,  I.  &  R.  Co.,  93 
Mo.,  106,  30  S.  W.,  181 ;  Edison  v.  Tenn.,  221,  24  S.  W.,  122.  In  Mor- 
Edison  U.  P.  Co.,  52  N.  J.  Eq.,  620,  ris  v.  Elyton  Land  Co.,  125  Ala., 
29  At!.,  195;  Texas  Consolidated  C.  263,  28  So.,  513,  it  was  held  proper, 

Receivers — 23. 


354  RECEIVERS.  [chap.  X. 

be  denied  where  the  corporation  is  solvent  and  its  business 
prosperous  and  it  is  not  sought  to  have  it  wound  up,  since,  in 
such  case,  the  wrongs  complained  of  may  be  remedied  under 
the  ordinary  powers  of  a  court  of  equity  and  without  the  ap- 
pointment of  a  receiver.42  Nor  will  the  relief  be  granted  in 
liynine  and  before  answer  upon  a  bill  by  a  minority  of  share- 
holders charging  misconduct  by  the  president,  the  management 
being  satisfactory  to  a  majority  of  the  shareholders  and  the 
corporation  being  solvent.'*^  Nor  will  a  receiver  be  appointed 
at  the  instance  of  the  minority  stockholders  upon  the  ground 
that  the  affairs  of  the  corporation  are  not  managed  for  the  best 
interests  of  the  stockholders  and  that  a  different  policy  should 
be  adopted. ^^  Nor  should  a  receiver  be  appointed  at  the  in- 
stance of  a  minority  shareholder  where  the  corporate  property 
is  in  no  way  endangered  and  there  is  no  mismanagement  of  the 
business  of  the  company,  the  only  charge  being  the  refusal  to 
allow  the  plaintiff  to  inspect  the  books  of  the  company  on  ac- 
count of  his  failure  to  pay  his  subscription  to  the  capital  stock."*^ 
Nor  are  the  minority  stockholders  entitled  to  a  receiver  upon 
the  ground  that  another  stockholder  has  obtained  control  of 
the  management  of  the  corporation  and  that  there  are  no  meet- 
ings of  the  directors  and  no  reports  of  the  condition  of  the 
company  have  been  filed,  where  it  does  not  appear  that  the 
corporation  is  insolvent  or  that  other  stockholders  are  dissat- 
isfied with  the  management.^^  Nor  is  the  loss  of  the  property 
of  the  corporation  or  its  failure  to  continue  business  sufficient 

upon  the  facts,  to  appoint  a  receiver  44  Peatman  v.   Centerville  L.,  H. 

over  the  property  of  a  corporation  &  P.  Co.,  100  Iowa,  245,  69  N.  W., 

upon  a  bill  filed  by  a  minority  stock-  541. 

holder  to   set  aside  an  ultra  vires  ^5  Ridpath  v.  S.  P.  &  C.  R.  F.  & 

sale  and  conveyance  of  all  the  cor-  T.  Co.,  26  Wash.,  427,  67  Pac,  229. 

porate  property  to  another  corpora-  ^6  Rumney  v.  Detroit  &  Montana 

tion.  Cattle  Co.,  116  Mich.,  640,  74  N.  W., 

42  Miller  v.  Kitchen,  73  Neb.,  711,  1043. 
103  N.  W.,  297. 

43  Ranger  v.  Champion  C.  P.  Co., 
52  Fed.,  609. 


CHAP.  X.]  CORPORATIONS.  355 

ground  for  a  receiver  at  the  instance  of  the  minority  stock- 
holders in  the  absence  of  a  showing  of  mismanagement,  nor 
will  general  averments  of  negligence  and  mismanagement  sup- 
ply the  deficiency,  nor  the  belief  of  the  plaintiff  that  frauds 
have  been  committed,  where  it  is  not  clearly  shown  of  what 
such  frauds  consist.^'^  Nor  can  a  minority  stockholder  main- 
tain a  bill  for  a  receiver,  where  there  is  no  contest  concerning 
the  corporate  property  and  no  dispute  of  any  kind  between  the 
parties,  and  the  only  object  of  the  bill  is  to  have  the  court  take 
the  property  of  the  corporation  under  its  management  during 
the  pendency  of  a  writ  of  error  to  be  sued  out  by  the  corpora- 
tion with  respect  to  judgments  obtained  in  another  court,  which 
the  corporation,  by  reason  of  its  insolvency,  would  be  unable 
to  supersede.48  Nor  will  the  relief  be  granted  upon  the  ground 
that  there  is  a  difference  of  opinion  as  to  the  best  method  of 
carrying  on  the  business  of  the  corporation ;  49  nor  upon  the 
ground  that  the  officers  and  directors  are  fraudulently  misap- 
propriating the  assets  of  the  corporation,  where  it  appears  that 
the  defendants  are  all  perfectly  solvent ;  50  nor  to  enable  a 
stockholder,  who  has  deposited  his  stock  as  collateral  for  a 
debt,  to  have  an  account  of  the  corporate  assets.^i  Nor  will  a 
receiver  be  appointed  without  notice  at  the  instance  of  the 
minority  stockholders  upon  the  ground  that  the  business  of 
the  corporation  is  being  mismanaged  and  that  it  is  being  car- 
ried on  by  the  officers  in  violation  of  a  resolution  of  the  stock- 
holders calling  for  a  winding-up  and  dissolution  of  the  cor- 
poration.52  Nor  will  a  receiver  be  appointed  over  a  foreign 
corporation  upon  behalf  of  the  minority  stockholders,  where  no 
receiver  has  been  appointed  in  the  state  of  its  domicile  and 
where  no  creditors  appear  and  there  is  no  showing  that  the 

47  Clark  v.  National  Linseed  Oil  50  Hayes  v.  Jasper  Land  Co.,  147 
Co.,  45  C.  C.  A.,  S3,  105  Fed.,  787.  Ala.,  340,  41  So.,  909. 

48  Becker  v.   Hoke,  26  C.   C.  A.,  51  Huet  v.  Lumber  Co.,  138  N.  C, 
282,  80  Fed.,  97Z,  53  U.  S.  App.,  366.  443,  50  S.  E.,  846. 

49  Edison  v.  Edison  U.  P.  Co.,  52  52  State     v.     District     Court,    20 
N.  J.  Eq.,  620,  29  Atl.,  195.  Mont.,  284,  50  Pac,  852. 


356  RECEIVERS.  [chap.  X. 

corporation  is  insolvent. ^^  Nor  will  a  receiver  be  appointed 
at  the  instance  of  a  minority  stockholder  who  acquired  his  stock 
with  full  knowledge  of  the  conditions  of  which  he  complains.^* 
Even  after  the  dissolution  of  a  corporation  a  minority  of  its 
shareholders  is  not  necessarily  entitled  to  a  receiver  to  wind 
up  its  affairs  and  to  dispose  of  its  assets ;  especially  when  they 
are  in  the  hands  of  a  responsible  trustee  and  no  mismanage- 
ment or  improper  conduct  in  the  discharge  of  his  trust  is 
shown. ^^  And  where  a  receiver  has  been  appointed  at  the  in- 
stance of  the  minority  stockholders  of  a  corporation  which  is 
shown  to  be  entirely  solvent  and  conducting  a  prosperous  busi- 
ness, it  is  proper  for  the  reviewing  court,  upon  an  appeal  by 
the  defendant  from  such  order  of  appointment,  to  order  a  stay 
and  restitution  of  the  property  by  the  receiver  to  the  corpora- 
tion pending  such  appeal. ^^ 

§  295b.  The  same;  when  receiver  appointed;  action 
against  directors ;  when  demand  on  receiver  to  sue  unnec- 
essary. Where,  however,  it  appears  that  the  officers  and  a 
majority  of  the  stockholders  of  a  corporation  are  grossly  mis- 
managing its  affairs  in  their  own  interests  and  are  fraudulent- 
ly and  wrongfully  misappropriating  the  corporate  property  for 
their  individual  profit,  a  proper  case  is  presented  for  the  ap- 
pointment of  a  receiver  at  the  instance  of  the  minority  stock- 
holders.^"^ And  the  relief  may  be  granted  where  the  bill  dis- 
closes a  scheme  upon  the  part  of  the  majority  of  the  directors 
to  wreck  the  corporate  property  in  the  interest  of  a  wrongful 
combination  of  a  majority  of  the  stockholders  with  a  majority 
of  the  board  of  directors.^^    And  the  relief  has  been  granted 

53  Parks  V.  United  States  B.  Cor-  57  Ponca  Mill  Co.  v.  Mikesell,  55 
poration,  140  Fed.,  160.  Neb.,  98,   75   N.  W.,  46;   Hampton 

54  Von    Schlemmer    v.    Keystone  v.  Buchanan,  51  Wash.,  155,  98  Pac, 
Life  Ins.  Co.,  121  La.,  987,  46  So.,  374. 

991.  58  Cantwell  v.  Columbia  Lead  Co., 

53  Baltimore  &  O.  R.  Co.  v.  Can-  198  Mo.,  1,  95  S.  W.,  856.     And  in 

non,  72  Md.,  493,  20  Atl.,  123.  State   v.   District   Court,   15    Mont.,. 

56  Forrester  v.  B.  &  M.  C.  C.  &  324,  39  Pac,  316,  27  L.  R.  A.,  392, 

S.   M.  Co.,  22  Mont.,  430,  56  Pac,  48  Am.  St.  Rep.,  682,  a  receiver  was 

868.  appointed    upon   behalf   of   the    mi- 


CHAP.  X.]  CORPORATIONS.  357 

although  it  appeared  that  the  corporation  was  quite  solvent. 
Thus,  a  receiver  has  been  held  properly  appointed  at  the  in- 
stance of  a  minority  of  the  stockholders  of  a  solvent  corpora- 
tion where  it  is  shown  that  there  are  two  sets  of  persons,  each 
claiming  to  be  the  board  of  directors,  and  where,  as  the  re- 
sult of  the  conflict  between  them,  the  affairs  of  the  corporation 
are  being  seriously  jeopardized.^^  So  where  the  board  of  di- 
rectors are  a  majority  of  the  stockholders  and  are  grossly  mis- 
managing the  affairs  of  the  corporation  and  are  conducting  the 
business  for  their  own  individual  gain,  the  minority  stockhold- 
ers are  entitled  to  the  appointment  of  a  receiver  although 
it  appeared  that  the  corporation  was  solvent. ^^  a^^j  where  an 
insolvent  corporation  has  been  placed  in  the  hands  of  one  of  its 
directors  as  receiver,  a  minority  of  the  stockholders  may  insti- 
tute an  action  against  the  receiver  and  the  other  directors  for 
the  purpose  of  enforcing  their  individual  liability  for  mis- 
conducting the  affairs  of  the  corporation ;  and  in  such  case  it 
is  unnecessary  to  allege  any  demand  upon  the  receiver  to  bring 
the  action,  since  he  can  not  sue  himself,  nor  is  he  the  proper 
person  to  prosecute  an  action  against  his  fellow  wrong-doers. 
The  receivers  should,  nevertheless,  be  made  a  party  defendant 
in  order  that  he  may  defend  the  action,  and  the  corporation 
should  be  joined  as  plaintiff  or  defendant  in  order  to  be  bound 
by  any  decree  which  may  be  entered. ^^  And  where  the  re- 
ceiver of  a  corporation  has  failed  or  refused  to  bring  an  action 
necessary  for  the  protection  of  the  interests  of  the  corporation 
and  of  its  stockholders  and  creditors  and  it  is  apparent  from  his 
conduct  that  a  demand  upon  him  would  be  unavailing,  a  stock- 
holder of  the  corporation  may  maintain  a  bill  in  his  own  name 
against  the  corporation  and  the  receiver  without  any  previous 
demand  upon  the  receiver  to  institute  such  proceeding.^2    g^t 

nority     stockholders     upon    similar  ing  Co.  v.  Washed  B.  S.  D.  Co.,  136 

facts.     And   see   Hall   v.    Nieukirk,  Fed.,  710. 

12  Idaho,  33,  85  Pac,  485.  61  Weslosky   v.   Quarterman,    123 

59  Jasper  Land  Co.  v.  Wallis,  123  Ga.,  312,  51  S.  E.,  426. 

Ala.,  652,  26  So.,  659.  62  Farwell  v.  Great  Western  Tel. 

60  Columbia  National  Sand  Dredg-      Co./  161  111,  522,  44  N.  E.,  891. 


358  RECEIVERS.  [chap.  X. 

a  stockholder  in  a  corporation  which  is  in  the  hands  of  a  receiv- 
er can  not  maintain  a  suit  upon  a  cause  of  action  due  to  the  cor- 
poration which  the  receiver  refuses  to  enforce,  in  the  absence  of 
a  showing  that  he  has  apphed  to  the  court  for  an  order  upon 
the  receiver  to  institute  the  necessary  proceedings.^^  But  a 
stockholder  of  an  insolvent  bank  may  maintain  a  bill  for  an 
accounting  against  the  directors  for  their  negligent  manage- 
ment, and,  in  such  case,  it  is  unnecessary  that  the  action  should 
be  brought  by  the  receiver  of  the  bank  where  he  is  also  one  of 
the  di rectors. ^^ 

§  295c,  The  same;  demand  upon  ojEficers  and  directors 
to  proceed.  In  order  to  entitle  a  minority  of  the  stock- 
holders to  a  receiver  over  the  corporation,  it  must  appear  that 
the  complaining  stockholders  have  made  all  reasonable  efforts 
to  procure  the  directors  or  other  stockholders  to  redress  their 
grievances,  or  to  obtain  authority  to  prosecute  the  action  in  the 
name  of  the  company,  or  else  to  show  why  this  could  not  have 
been  done.^^  But  when  the  directors  and  officers  of  the  cor- 
poration, who  are  defendants  to  the  action,  are  themselves 
charged  with  fraudulent  mismanagement  of  the  affairs  of  the 
corporation  and  misappropriation  of  its  assets  as  a  ground 
for  the  relief,  upon  a  bill  by  a  shareholder  for  a  receiver  and 
an  accounting,  a  previous  demand  upon  such  directors  and 
officers  to  bring  suit  is  unnecessary  to  sustain  the  action.  In 
such  case,  it  being  apparent  that  a  demand  would  be  unavail- 
ing, equity  will  not  require  a  useless  or  fruitless  thing  as  a 
condition  to  bringing  the  action. ^^    Nor  is  the  demand  neces- 

63  Swope  V.  Villard,  61  Fed.,  417.  65  West  Va.,  721,  —  S.  E.,  — .    See, 

64  Flynn  v.  Third  National  Bank,  also,  Bacon  v.  Irvine,  70  Cal.,  221, 
122  Mich.,  642,  81  N.  W.,  572.  11  Pac,  646. 

65  Roman  v.  Woolfolk,  98  Ala.,  66  Wayne  Pike  Co.  v.  Hammons, 
219,  13  So.,  212;  Wenzel  v.  Palmetto  129  Ind.,  368,  27  N.  E.,  487;  Iron 
B.  Co.,  48  S.  C,  80,  26  S.  E.,  1 ;  Hall  v.  Baker,  134  Ind.,  293,  33  N. 
Becker  v.  Hoke,  26  C.  C.  A.,  282,  E.,  1128;  Bridgeport  Development 
80  Fed.,  973,  53  U.  S.  App.,  366;  Co.  v.  Tritsch,  110  Ala.,  274,  20  So., 
Worth  Manufacturing  Co.  v.  Bing-  16;  Jasper  Land  Co.  v.  Wallis,  123 
ham,  54  C.  C.  A.,  119,  116  Fed.,  Ala.,  652,  26  So.,  659;  Ponca  Mill 
785;  Ward  v.  Hotel  Randolph  Co.,  Co.  v.  Mikesell,  55  Neb.,  98,  75  N. 


CHAP.  X.]  CORPORATIONS  359 

sary  where  there  is  no  directory  or  other  governing  body  upon 
which  it  may  be  made.^'^ 

§  296.  Legislation  and  decisions  of  other  states,  when 
considered  in  refusing  receiver  over  new  issue  of  stock. 

The  propriety  of  the  reHef  as  against  corporations  is  some- 
times determined  by  the  legislation  or  decisions  of  other  states, 
in  which  the  association  was  incorporated,  upon  the  matter 
urged  as  a  ground  for  a  receiver.  Thus,  in  an  action  brought 
by  holders  of  the  original  stock  of  a  corporation  created  by 
and  under  the  laws  of  other  states,  to  set  aside  a  new  issue  of 
stock  made  by  the  corporation,  it  is  not  proper  to  grant  an  in- 
junction against  the  action  of  the  corporate  officers  and  to 
appoint  a  receiver  of  the  new  issue,  when  the  states  in  which 
the  company  was  incorporated  have,  by  legislative  action  and 
by  the  decision  of  a  court  of  last  resort,  ratified  the  acts  of  the 
corporation  in  issuing  the  new  stock,  and  have  declared  it  to 
be  legal.68 

§  297.  Sequestration  for  benefit  of  creditors;  rights  of 
attaching  creditors  subordinate;  transfer  to  nev/  corpora- 
tion. When  the  statutes  of  a  state  authorize  and  provide 
for  appointing  receivers  in  proceedings  against  corporations 
whose  charters  have  expired,  the  courts  being  vested  with  full 
jurisdiction  in  equity  for  that  purpose,  and  being  fully  empow- 
ered by  statute  to  make  all  orders  necessary  for  the  enforcement 
of  the  trust,  and  the  statute  requiring  the  receiver  to  divide  the 
fund  collected  among  the  creditors  pro  rata,  the  remedy  thus 
provided  is  regarded,  in  effect,  as  a  method  of  sequestration 
for  the  benefit  of  all  the  creditors  of  the  corporation.  In  such 
case,  attaching  creditors  of  the  property  of  the  corporation  can 
not  acquire  valid  liens,  so  as  to  prevent  the  receivers  from  sell- 
ing the  property  and  applying  the  proceeds  in  payment  of  all 
the  creditors.     And  the  mode  of  sequestration  thus  afforded 

W.,    46;    Columbia    National    Sand  rion  Trust  Co.,  157  Ind.,  292,  61  N. 

Dredging  Co.  v.  Washed  B.  S.  D.  E.,  666,  87  Am.  St.  Rep.,  207. 

Co.,  136  Fed.,  710.  68  O'Brien  v.   Chicago,   Rock  Is- 

67  Sheridan  Brick  Works  v.  Ma-  land  &  Pacific  R.  Co.,  53  Barb.,  568. 


360  RECEIVERS.  [chap.  X. 

by  the  statute  will  be  held  to  take  effect  as  against  attaching 
creditors,  even  though  they  may  have  attached  before  the  re- 
ceivers were  actually  appointed,  but  after  the  filing  of  the  bill 
and  the  issuing  of  an  injunction  restraining  the  corporation 
from  further  conducting  its  affairs. ^^  But  when  a  corporation 
becomes  extinct  by  virtue  of  an  act  of  legislature,  its  assets  and 
powers  being  transferred  to  a  new  corporation,  the  courts  are 
powerless,  upon  an  ex  parte  application,  to  appoint  a  receiver 
over  the  former  corporation,  it  having  ceased  to  exist,  and 
there  being  no  person  competent  to  represent  it,  the  new  cor- 
poration not  being  made  a  party  to  the  action. "^^ 

§  298.  Right  of  judgment  creditors  to  receiver  over  cor- 
poration, conferred  by  statute.  The  right  of  judgment 
creditors  of  a  corporation  to  a  sequestration  of  the  corporate 
effects  and  to  a  receiver,  in  aid  of  their  judgments  at  law  after 
execution  returned  unsatisfied,  is  a  right  which  is  given  by  stat- 
ute in  many  if  not  in  most  of  the  states ;  and  it  may  be  regarded 
as  an  extension  or  enlargement  of  the  general  jurisdiction  of 
courts  of  equity,  which,  as  already  shown,  does  not  extend  to 
sequestrating  the  property  and  winding  up  the  business  of  the 
corporation.'''^  It  is  inconsistent  with  the  purpose  and  scope 
of  this  work  to  attempt  any  discussion  of  these  various  stat- 
utes, and  it  is  believed  that  each  practitioner  is  sufficiently  fa- 
miliar with  the  legislation  and  practice  of  his  own  state  to 
render  any  such  discussion  unnecessary  in  the  present  treatise. 
And  it  will  be  sufficient,  for  the  purposes  of  the  present  work, 
to  present  the  principles  deduced  from  the  decisions  in  the  va- 
rious states,  without  attempting  to  discuss  or  to  analyze  the  stat- 
utes, which  are  undergoing  constant  modification  and  change. 

§  299.  Officers  and  shareholders  required  to  account  to 
receiver  to  pay  judgment  creditors.  It  is  held  in  Wiscon- 
sin, that  a  creditor  of  a  corporation  who  has  established  his  de- 

69  Atlas  Bank  v.  Nahant  Bank,  23  laws  of  New  Jersey,  when  the  corn- 
Pick.,  480.  pany  has  ceased  to  do  business,  see 

70  Young  t;.  Rollins,  85  N.  C,  485.  Streit    v.    Citizens    Fire    Insurance 
As  to  the  right  to  a  receiver  over  Co.,  29  N.  J.  Eq.,  21. 

an    insurance    company    under    the  71  See  §  288,  ante,  and  cases  cited. 


CHAP.  X.]  CORPORATIONS.  361 

mand  by  judgment  at  law,  may,  after  execution  returned  un- 
satisfied in  whole  or  in  part,  file  a  bill  in  behalf  of  himself  and 
such  other  creditors  of  the  corporation  as  may  elect  to  become 
parties  thereto,  against  both  the  corporation  and  its  delinquent 
or  withdrawing  shareholders,  whereupon  he  may  have  a  decree 
for  an  account  of  the  assets  and  liabilities  of  the  corporation, 
and  for  a  receiver.  And  the  officers  and  shareholders  will  be 
required  to  pay  in  and  account  to  the  receiver  for  so  much  of 
the  capital  stock  as  will  be  sufficient  to  pay  plaintiff's  judgment, 
and  the  debts  of  such  other  creditors  as  may  choose  to  come  in 
under  the  decree.  In  such  case,  the  maxim  of  the  law  that 
"equality  is  equity"  applies,  and  the  creditors  must  all  share 
alike  in  the  funds  realized,  in  proportion  to  the  amount  of 
their  respective  claims.'^^ 

§  300.  Judgment  creditor  allowed  receiver  over  rents 
and  tolls  of  bridge  company.  The  question  of  the  extent 
to  which  equity  will  interfere  with  the  tolls  and  franchises  of  a 
corporation,  such  as  a  bridge  company,  in  aid  of  judgment 
creditors,  when  the  chief  value  consists  in  such  tolls  or  fran- 
chise, is  not  altogether  free  from  difficulty.  But  it  is  held  by 
the  Supreme  Court  of  the  United  States,  that  when  the  rents 
and  profits  of  the  company  for  a  given  period  are  sold  under 
execution,  and  purchased  by  the  judgment  creditor,  he,  with 
other  judgment  creditors,  may,  upon  a  bill  in  equity,  have  a  re- 
ceiver to  collect  the  tolls  and  pay  them  into  court,  to  the  end  of 

72  Adler  v.  Milwaukee  Patent  corporation,  and  appointing  a  re- 
Brick  Manufacturing  Co.,  13  Wis.,  ceiver  to  wind  up  its  concerns, 
57.  The  jurisdiction  of  equity,  in  exists  at  common  law  and  inde- 
this  class  of  cases,  is  said  by  Dixon,  pendent  of  statute  is  certainly  un- 
C.  J.,  delivering  the  opinion,  to  supported  by  the  weight  of  author- 
exist  at  common  law  and  inde-  ity,  as  already  shown.  See  §  288, 
pendent  of  statutory  authority,  "as  ante,  and  cases  cited.  Nor  does  the 
a  sort  of  distinct  exercise  of  equi-  assertion  of  this  doctrine  seem  to 
table  jurisprudence."  As  regards  have  been  necessary  to  the  decision 
the  remedy  against  delinquent  of  the  case,  as  regards  the  appoint- 
shareholders,  the  statement  is  ment  of  a  receiver,  since  the  power 
doubtless  true.  But  the  assertion  of  appointment  in  this  class  of  cases 
that  the  jurisdiction  of  equity  by  was  expressly  conferred  by  statute. 
sequestrating    the    property    of    the 


362 


RECEIVERS. 


[chap.  X. 


discharging-  the  judgment  indebtedness.  And  the  relief  is  ex- 
tended, in  such  case,  upon  the  ground  of  the  inadequacy  of  the 
remedy  at  law  and  the  difficulty  of  obtaining  complete  satis- 
faction of  the  judgments  without  the  aid  of  equity. "^^ 

§  301.  Creditor  not  entitled  to  receiver  before  judg- 
ment ;  nor  when  there  is  a  remedy  at  law.  In  New  York, 
it  is  held  that  a  creditor  at  large,  i.  e.,  before  judgment,  of  a 
manufacturing  corporation,  is  not  entitled  to  a  receiver  in  an 
action  brought  by  him  for  a  dissolution  of  the  corporation  and 
a  sequestration  of  its  effects,  upon  the  ground  of  insolvency 


73  Covington  Drawbridge  Co.  v. 
Shepherd,  21  How.,  112.  In  this 
case,  the  corporation  was  created 
by  act  of  legislature  of  the  state  of 
Indiana,  and  built  a  drawbridge 
over  the  Wabash  river  in  that  state, 
pursuant  to  its  charter.  Judgments 
were  had  against  the  corporation 
in  the  United  States  circuit  court 
for  the  district  of  Indiana,  under 
which  execution  was  levied  upon 
the  bridge  as  real  property,  and  the 
marshal  sold  the  rents  and  profits 
of  the  bridge  under  the  execution 
for  the  term  of  one  year,  the  exe- 
cution creditor  becoming  the  pur- 
chaser. He,  with  other  judgment 
creditors,  then  filed  a  bill  in  the 
United  States  circuit  court  and  ob- 
tained a  decree  appointing  a  re- 
ceiver, with  directions  to  take  pos- 
session of  the  bridge,  receive  its 
tolls  and  pay  them  into  court,  to  be 
applied  in  satisfaction  of  the  judg- 
ments pro  rata.  Upon  appeal,  the 
decree  was  sustained,  the  court, 
Catron,  J.,  using  the  following  lan- 
guage, p.  124:  ".  .  .  By  the 
laws  of  Indiana,  lands  and  tene- 
ments can  not  be  sold  under  execu- 
tion until  the  rents  and  profits 
thereof  for  a  term  not  exceeding 
seven  years  shall  have  been  first  of- 


fered for  sale  at  public  auction ;  and 
if  that  term,  or  a  less  one,  will  not 
satisfy  the  execution,  then  the  debt- 
or's interest  or  estate  in  the  land 
may  be  sold,  provided  it  brings  two- 
thirds  of  its  appraised  vahie.  The 
tolls,  under  the  idea  that  they  were 
rents  and  profits  of  the  bridge,  were 
sold  for  one  year,  according  to  the 
forms  of  this  law.  The  tolls  of  the 
bridge  being  a  franchise,  and  sole 
right  in  the  corporation,  and  the 
bridge  a  mere  easement,  the  corpor- 
ation not  owning  the  fee  in  the  land 
at  either  bank  of  the  river,  or  un- 
der the  water,  it  is  difficult  to  say 
how  an  execution  could  attach  to 
either  the  franchise  or  the  struc- 
ture of  the  bridge  as  real  or  person- 
al property.  This  is  a  question  that 
this  court  may  well  leave  to  the 
tribunals  of  Indiana  to  decide  on 
their  own  laws,  should  it  become 
necessary.  One  thing,  however,  is 
plainly  manifest,  that  the  remedy 
at  law  of  these  execution  creditors 
is  exceedingly  embarrassed,  and  we 
do  not  see  how  they  can  obtain  sat- 
isfaction of  their  judgments  from 
this  corporation  (owning  no  cor- 
porate property  but  this  bridge),  un- 
less equity  can  aflford  relief.  .  .  . 
All  that  we  are  called  on  to  decide 


CHAP.  X.]  CORPORATIONS.  363 

and  suffering  other  creditors  to  obtain  a  preference."^^  So  a 
simple  contract  creditor  of  a  mining  corporation  can  not  have 
a  receiver  to  prevent  the  corporation  from  fraudulently  dis- 
posing of  its  property  and  from  placing  beyond  its  power  the 
ability  to  respond  in  damages.'^^  And  it  may  be  stated  as  a 
general  proposition,  founded  upon  established  principles  of 
equity,  that  a  creditor  of  a  corporation  is  not  entitled  to  the  ex- 
traordinary aid  of  equity  in  the  enforcement  of  his  demand, 
when  he  can  obtain  full  and  adequate  relief  at  law.  When, 
therefore,  proceedings  are  instituted  by  a  creditor  of  a  banking 
corporation  for  the  appointment  of  a  receiver  to  wind  up  its 
affairs,  but  it  is  apparent  from  his  bill  that  whatever  rights  he 
may  have  are  cognizable  at  law,  and  may  be  remedied  by  fol- 
lowing the  mode  pointed  out  by  law  for  that  purpose,  the  appli- 
cation for  a  receiver  will  be  denied,  and  the  creditor  will  be  left 
to  pursue  his  legal  remedy. "^^ 

§  302.  Prior  lien  of  judgment  creditor  not  divested  or 
affected  by  receivership;  title  to  real  estate  not  divested. 
As  regards  the  effect  of  appointing  a  receiver  over  a 
corporation,  upon  the  lien  previously  acquired  by  a  judg- 
ment creditor,  the  rule  in  Indiana  is,  that  the  appoint- 
ment does  not  operate  to  divest  or  affect  the  judgment 
lien.    And   when   a   judgment   creditor   may   enforce   his 

in  this  case  is  that  the  court  below  New  York,  under  a  statute  of  the 

had   power  to   cause   possession   to  state,  to  appoint  a  receiver  over  a 

be  taken  of  the  bridge,  to  appoint  corporation    which    had    been    dis- 

a  receiver  to  collect  tolls  and  pay  solved,   upon   the   ground   of   delay 

them  into  court,  to  the  end  of  dis-  on    the    part    of    the    trustees    ap- 

charging    the    judgments    at    law;  pointed  to  wind  up  its  affairs,  see 

and  our  opinion  is  that  the  power  In  re  Pontius,  26  Hun,  232.     And 

to   do    so    exists,    and   that   it    was  see,    for    this    subject    generally,    § 

properly  exercised.    It  is,  therefore,  406,  post. 

ordered   that   the   decree  below   be  '^^  International     Trust     Co.     v. 

affirmed,  and  the  circuit  court  is  di-  United  Coal  Co.,  27  Colo.,  246,  60 

rected  to  proceed  to  execute  its  de-  Pac,  621,  83  Am.  St.  Rep.,  59,  and 

cree."  note. 

74  Galway  v.  United  States  Steam  76  Parmly  v.  Tenth  Ward  Bank,  3 

Sugar  Refining  Co.,  13  Ab.  Pr.,  211.  Edw.   Ch.,   395.     And   see,  post,   § 

As  to  the  power  of  the  courts  of  403. 


364  RECEIVERS.  [CIIAP.  X. 

judgment  in  the  ordinary  way,  by  levy  upon  and  sale  of  the 
real  estate  of  the  corporation  on  which  his  judgment  is  a  lien, 
the  court  may  properly  refuse  to  grant  an  order  upon  the  re- 
ceiver to  pay  the  judgment  out  of  moneys  in  his  hands,  when 
it  is  not  shown  that  such  moneys  are  the  proceeds  of  a 
sale  of  the  property  upon  which  the  judgment  was  a  lien.'^'^ 
A  somewhat  similar  doctrine  prevails  in  Michigan,  and  it  is 
there  held  that  a  receivership  of  a  corporation  pendente  lite, 
and  before  a  final  decree  of  forfeiture,  is  merely  conditional 
and  inchoate,  the  right  of  the  receiver  being  only  a  possessory 
right  for  the  purposes  of  the  suit.  His  appointment,  therefore, 
does  not  divest  the  title  of  the  corporation  to  its  real  estate, 
and  when  no  conveyance  of  such  title  is  made  by  the  corpora- 
tion to  the  receiver,  who  afterward  becomes  functus  officio, 
the  real  estate  of  the  corporation  is  subject  to  the  lien  of  a  judg- 
ment and  execution,  as  if  there  had  never  been  a  receiver.'^^ 

§  303.  Title  divested  by  appointment  of  receiver  on  final 
dissolution;  departure  from  common-law  rule.  While,  as 
is  thus  seen,  the  appointment  of  a  receiver  pendente  lite,  and 
before  a  final  dissolution  of  the  corporation,  does  not  have  the 
effect  of  divesting  the  title  to  its  real  property,  a  different  ef- 
fect results  from  the  appointment  when  made  upon  final  dis- 
solution of  the  corporate  body.  At  the  common  law,  upon  the 
dissolution  or  civil  death  of  a  corporation,  all  its  real  property 
remaining  unsold  at  the  time  of  such  dissolution  reverted  to  the 
original  grantors  or  to  their  heirs,  the  reversion  being  a  condi- 
tion annexed  by  law  and  resulting  from  the  failure  of  the 
cause  for  which  the  grant  was  made."^^  The  common-law  rule, 
however,  is  now  almost  entirely  obsolete,  and  in  this  country 
the  disposition  to  be  made  of  the  corporate  property  upon  dis- 

77  Southern  Bank  of  Kentucky  v.  title  to  its  real  estate  vests  in  the 
Ohio   Insurance   Co.,  22  Ind.,   181.  receiver,    see    Attorney-General    v. 

78  Montgomery  v.  Merrill,  18  Atlantic  M.  L.  I.  Co.,  100  N.  Y., 
Mich.,  338.    As  to  the  effect  of  a  re-  279. 

ceivership     over    an     insolvent    in-  "9  Angell    &    Ames    on    Corpora- 

surancc  company  under  the  statutes       tions,  §  779,  and  cases  cited, 
of  New  York  and  as  to  whether  the 


CHAP.  X.]  CORPORATIONS.  365 

solution  is  usually  regulated  by  legislative  enactments,  having 
for  their  object  the  protection  of  creditors  and  shareholders. 
And  the  general  tendency  of  the  legislation  and  judicial  deci- 
sions upon  this  subject  is  to  regard  all  the  property  of  a  cor- 
poration, upon  its  dissolution,  as  a  trust  fund  pledged  to  the 
payment  of  the  demands  of  creditors  and  shareholders.^^ 
Thus,  in  New  York,  the  common-law  rule,  that  upon  dissolu- 
tion of  the  corporate  body  the  title  to  its  realty  reverts  to  the 
original  proprietors  or  grantors,  or  to  their  heirs,  is  entirely 
obsolete,  and  under  the  laws  of  that  state,  the  title  to  all  the 
property,  real  or  personal,  vests  in  the  receiver  of  the  corpora- 
tion appointed  upon  its  dissolution,  for  the  benefit  of  the  cred- 
itors and  shareholders.^^ 

§  304.  Waste  of  trust  fund  by  officers  of  insurance  and 
loan  association  ground  for  receiver;  insolvency  and  as- 
signment; building  and  loan  association;  foreign  life  in- 
surance company.  When  creditors  of  a  corporation  have 
a  charge  upon  a  particular  fund  in  the  nature  of  a  trust  fund, 
for  the  satisfaction  of  their  demands,  the  mismanagement  and 
waste  of  such  fund  by  the  corporate  officers  intrusted  with  its 
control  may  warrant  the  court  in  appointing  a  receiver  for  the 
preservation  of  the  property  pendente  lite.  For  example,  upon 
a  bill  filed  by  persons  insured  in  an  insurance  and  loan  associa- 
tion, against  the  directors  and  managers,  showing  gross  mis- 
management upon  the  part  of  defendants,  and  that  a  large  por- 
tion of  the  trust  funds  out  of  which  the  assured  were  to  be  paid 
had  been  lost  by  the  negligence  of  defendants,  and  its  appear- 
ing that  the  secretary  of  the  association  had  absconded  with  a 
large  amount  of  its  funds,  and  that  there  was  great  danger  of 
the  remainder  being  wasted,  the  case  was  regarded  as  a  plain 
one  for  an  injunction  and  a  receiver.  And  the  aid  of  equity,  in 
such  a  case,  is  founded  upon  the  necessity  of  interfering  to  pre- 
vent waste  of  the  funds  in  question,  and  also  upon  the  breach 
of  trust  of  the  defendants  charged  with  the  management  of  the 

80  Angell   &    Ames   on   Corpora-  81  Owen  v.  Smith,  31  Barb.,  641. 

tions,  §  779a. 


366 


RECEIVERS. 


[chap.  X. 


trust  fund.S2  j^  federal  court  may  also  entertain  jurisdiction 
of  a  bill  by  a  shareholder  of  a  building  and  loan  association 
for  a  receiver,  the  requisite  conditions  of  citizenship  existing", 
and  may  appoint  a  receiver,  the  corporation  being  shown  to  be 
insolvent,  and  its  officers  being  charged  with  gross  misman- 
agement of  its  affairs,  and  with  fraudulent  misappropriation 


82  Evans  v.  Coventry,  5  DeG.,  M. 
&  G.,  911,  reversing  S.  C.,  3  Drew., 
75.  The  motion  for  an  injunction 
and  receiver  having  been  refused 
by  the  vice-chancellor,  his  decision 
was  reversed  by  the  lords  justices 
upon  appeal,  and  a  receiver  and 
an  injunction  were  allowed.  The 
grounds  upon  which  the  interfer- 
ence was  based  were  stated  by  Lord 
Justice  Knight  Bruce,  as  follows, 
p.  916 :  ".  .  .  The  application  be- 
fore the  court  is  founded  on  the 
common  right  of  persons  who  are 
interested  in  property  which  is  in 
danger  to  apply  for  its  protection. 
Upon  the  bill  and  answer  it  appears 
that  the  plaintiffs  are  interested  in 
the  funds  of  that  which  was  an 
association,  under  whatsoever  cir- 
cumstances of  honesty  or  dishon- 
esty constituted  or  carried  on,  but 
the  affairs  of  which  have  ceased  to 
be,  and  probably  can  never  again 
be,  in  a  state  of  activity.  It  was 
intimately  connected  with  another 
society  or  alleged  society,  of  a  sub- 
sidiary nature.  The  defendants  are 
persons,  or  include  persons,  who 
owed  duties  to  those  represented 
by  the  plaintiffs  in  respect  of  the 
funds  of  the  society,  for  the  pur- 
pose of  care  and  protection.  Those 
duties  appear  to  have  been  aban- 
doned in  a  manner  deserving,  as 
it  would  at  present  appear,  the 
strongest  observation.  This  has  led 
to  a  grievous  loss,  which  has  been 


sustained  by  persons  of  small  means 
and  in  humble  circumstances,  who 
are  ill  able  to  bear  it.  These  same 
defendants  have  now  under  their 
control,  or  in  their  power,  a  poor 
remnant  of  the  property  which  they 
have  so  ill  cared  for.  Whatever 
may  be  the  specific  allegations  or 
want  of  specific  allegations  in  the 
bill,  the  true  and  necessary  result 
of  the  entire  pleadings  as  they  stand 
is,  that  this  remnant  of  property  is 
in  danger.  In  my  judgment,  the 
objections  which  have  been  argued 
against  this  application,  at  the  exist- 
ing stage  of  the  cause,  might  be 
urged  with  as  much  reason,  as  much 
force,  and  as  much  effect,  if  this 
were  an  application  to  restrain  the 
felling  of  timber  or  the  destruction 
of  a  house.  It  is  a  case  of  waste, 
partly  perpetrated  and  obviously 
imminent.  But  for  the  judgment 
which  has  been  given,  and  for  which 
I  feel  the  most  unaffected  respect, 
I  should  have  said,  from  my  ex- 
perience of  the  practice  of  the  court 
in  Lord  Eldon's  time,  that  this  was 
a  plain  case  for  that  injunction,  and 
that  receiver,  which  I  think  ought 
now  to  be  granted."  And  Lord 
Justice  Turner  adds :  "Whatever 
else  may  be  said  of  this  motion,  it 
can  not  be  said  that  any  argument 
has  been  omitted  which  could  be 
urged  against  it.  What  the  court 
has  to  look  at  is  the  position  of  the 
parties   on   the   record.     According 


CHAP.  X.] 


CORPORATIONS. 


367 


and  waste  of  its  assets.^^  So  the  insolvency  of  a  life  insurance 
company  and  its  assignment  of  all  its  property  to  a  trustee  for 
its  creditors,  without  the  authority  of  its  stockholders,  being  an 
abandonment  of  the  franchises  of  the  company,  constitute  suffi- 
cient ground  for  a  receiver  in  behalf  of  creditors.^^  But  a  re- 
ceiver should  not  be  appointed  over  a  foreign  life  insurance 
company  where  there  are  no  assets  within  the  state  which 
could  come  into  the  possession  of  the  receiver  except  assess- 
ments to  become  thereafter  due  from  policy-holders  resident  in 
the  state.85 

§  305.  Receivers  in  behalf  of  creditors  of  foreign  cor- 
porations. Under  the  New  York  code  of  procedure,  courts 
of  equity  jurisdiction  are  empowered  to  appoint  receivers  over 


to  the  allegation  of  the  bill,  verified 
by  affidavit  or  admitted  by  the  an- 
swer, the  plaintiffs  are  in  the  posi- 
tion of  parties  who  have  a  charge 
on  the  funds  of  what  I  may  for  the 
present  purpose  call  the  original 
association.  The  defendants  are  in 
the  position  of  trustees  of  the  asso- 
ciation. It  appears  that  funds  of 
that  association  have  been  lost  by 
the  act  of  the  treasurer,  whose  con- 
duct it  was  the  duty  of  the  other  de- 
fendants to  superintend.  Prima 
facie,  therefore,  there  appears  a 
clear  case  for  the  interference  of 
the  court;  for  I  certainly  can  not 
accede  to  Mr.  Selwyn's  argument, 
that  a  breach  of  trust  is  not  a  suffi- 
cient ground  for  the  interference  of 
the  court  by  the  appointment  of  a 
receiver.  Whether  the  plaintiffs  will 
ultimately  establish  the  commission 
of  a  breach  of  trust  is  not  the  ques- 
tion now  before  the  court.  It  is  ad- 
mitted that  funds  have  been  lost, 
of  which  it  was  the  duty  of  the  de- 
fendants to  take  care.  That  loss  is 
prima  facie  evidence  of  a  breach  of 
the  duty  of  the  defendants,  sufficient 


to  authorize  the  interference  of  the 
court  by  the  appointment  of  a  re- 
ceiver." 

83  Towle  V.  American  B.,  L.  &  I. 
Society,  60  Fed.,  131.  And  see 
Strauss  v.  Inter-State  B.  &  L.  Assn., 
117  N.  C,  308,  23  S.  E.,  450,  30  L. 
R.  A.,  693,  53  Am.  St.  Rep.,  585; 
S.  C,  118  N.  C,  556,  24  S.  E.,  116. 
As  to  the  power  of  the  court,  under 
the  statute  of  Missouri,  to  appoint 
a  receiver  of  a  building  and  loan 
association  during  vacation,  see 
State  V.  Phoenix  Loan  Assn.,  159 
Mo.,  102,  60  S.  W.,  74;  State  v. 
Woodson,  161  Mo.,  444,  61  S.  W., 
252.  See  Sjoberg  v.  Security  S.  & 
L.  Assn.,  73  Minn.,  203,  75  N.  W., 
1116,  72  Am.  St.  Rep.,  616,  where 
the  facts  were  held  insufficient  to 
justify  the  appointment  of  a  re- 
ceiver of  a  building  and  loan  asso- 
ciation upon  a  bill  filed  by  a  minor- 
ity of  the  shareholders. 

84  Buck  V.  Piedmont  &  Arlington 
Life  Insurance  Co.,  4  Fed.,  849,  4 
Hughes,  415. 

85  Blackwell  v.  Life  Association, 
141  N.  C,  117,  53  S.  E.,  833. 


36S  RECEIVERS.  [chap.  X. 

the  effects  of  foreign  corporations,  upon  the  apphcation  of  judg- 
ment creditors,  and  are  fully  authorized  to  take  charge  of  the 
property  of  such  corporations  in  order  to  preserve  it  for  the 
benefit  of  creditors  and  shareholders.^^  And  the  courts  of  a 
state  may  appoint  a  receiver  over  a  foreign  corporation  having 
assets  within  the  jurisdiction  of  the  appointing  court,  although 
the  courts  of  the  domicile  of  the  corporation  or  of  some 
other  state  may  already  have  placed  its  affairs  in  the  hands 
of  a  receiver,  the  foreign  receivership,  in  such  case,  being  re- 
garded as  ancillary  to  the  original  receivership.  But  a  state 
court  will  not  appoint  a  receiver  over  a  foreign  corporation, 
where  it  has  no  property  in  the  state  of  appointment  and  has 
not  appeared  or  been  served  with  process  and  has  no  officers  or 
other  agents  to  control  or  represent  it  in  the  state  of  appoint- 
ment.^'^ And  when  a  creditor  of  a  foreign  corporation  has  ob- 
tained judgment  against  the  company  in  the  state  where  it  is 
incorporated,  and  in  aid  of  his  judgment  has  procured  the  ap- 
pointment of  a  sequestrator  of  the  property  of  the  corporation 
in  that  state,  but  the  defendant  transfers  its  property  and  assets 
to  a  new  corporation  in  New  York,  upon  no  other  consideration 
than  shares  of  stock  in  the  new  company,  the  judgment  creditor 
may  enforce  his  judgment  against  the  new  company  in  New 
York,  and  may  have  a  receiver  in  aid  of  such  proceedings.^^ 
But  when  an  association,  incorporated  in  a  foreign  country,  has 
been  dissolved  by  a  decree  or  order  of  the  government  of  that 
country,  but  the  decree  of  dissolution  is  not  absolute  and  still 
leaves  the  corporation  in  existence  for  certain  specified  pur- 
poses, and  it  has  property  within  the  limits  of  this  country  un- 
der control  of  its  officers  resident  here,  the  courts  of  this  coun- 
try will  not  appoint  a  receiver  of  the  assets  here,  upon  grounds 
which  would  not  have  availed  for  that  purpose  in  the  foreign 

86DeBemer   v.    Drew,    57    Barb.,  88  Barclay  v.  Quicksilver  Mining 

438;  Murray  z*.  Vanderbilt,  39  Barb.,  Co.,  9  Ab.  Pr.,  N.  S.,  283.  See, 
140.  also,  S.  C,  6  Lans.,  25. 

STHolbrook  v.  Ford,  153  111.,  633, 
39  N.  E.,  1091,  27  L.  R.  A.,  324,  46 
Am.  St.  Rep.,  917. 


CHAP.  X.] 


CORPORATIONS. 


369 


country.^9  And  a  receiver  will  not  be  appointed  over  a  for- 
eign corporation  upon  behalf  of  local  creditors  unless  it  can  be 
shown  that  he  will  be  able  to  exercise  the  powers  of  a  receiver.^^ 
§  306.  Receiver  appointed  in  one  state  over  assets  of 
corporation  organized  in  another  state.  It  is  held  in  New 
York  that  when  a  corporation  is  created  in  another  state  and  is 
in  process  of  voluntary  dissolution  there,  but  a  portion  of  its 
assets  is  in  New  York,  in  possession  of  some  of  its  officers  resi- 
dent there  and  subject  to  the  jurisdiction  of  the  New  York 
courts,  and  not  amenable  to  the  courts  of  the  state  under  whose 
laws  the  corporation  was  created  and  exists,  upon  a  bill  by 
shareholders  in  New  York  for  an  accounting  and  distribution, 
the  court  may  appoint  a  receiver  when  it  is  shown  that  the  cor- 
porate officers  in  New  York  are  insolvent,  and  that  the  funds 
are  in  jeopardy.  Under  such  circumstances,  the  courts  of  New 
York,  having  undoubted  jurisdiction  over  the  officers  of  the 
corporation  resident  in  that  state,  as  well  as  over  the  property 
there  located,  may  properly  interfere  to  preserve  a  fund  which 
is  endangered  by  the  insolvency  or  improper  conduct  of  de- 
fendants.^1 


89  Hamilton  v.  Accessory  Transit 
Co.,  26  Barb.,  46.  And  see  Murray 
V.  Vanderbilt,  39  Barb.,  140. 

90Stock]ey  v.  Thomas,  89  Md., 
663,  43  Atl,  766. 

91  Redmond  v.  Hoge,  3  Hnn,  171. 
The  grounds  of  the  jurisdiction,  in 
such  a  case,  are  very  clearly  set 
forth  by  Davis,  P.  J.,  as  follows, 
p.  175 :  "The  whole  scope  and 
story  of  this  action  may  be  stated 
almost  in  a  sentence.  The  officers 
who  have  complete  control  of  a 
foreign  corporation,  now  in  process 
of  voluntary  dissolution,  being  all 
residents  of  this  city  and  having  in 
their  possession  here  certain  funds 
of  the  corporation,  which  their  own 
insolvency  has  put  in  jeopardy,  and 
Receivers — 24. 


neither  they  nor  the  funds  being 
amenable  to  the  jurisdiction  of  the 
state  under  whose  laws  the  corpora- 
tion was  created  and  exists,  refuse 
to  make  application  of  such  funds 
to  the  creditors  and  stockholders 
in  conformity  to  the  proceedings  for 
dissolution,  or  to  put  the  same  in  a 
place  of  safety.  They  possess,  be- 
ing all  the  executive  and  a  majority 
of  the  administrative  officers  of  the 
corporation,  such  power  of  control, 
that  no  suit  can  be  commenced  by 
the  corporation  itself  to  protect  the 
fund.  Is  a  court  of  equity  of  the 
state  powerless,  at  the  suit  of  a 
minority  of  the  officers  who  are 
stockholders  and  personally  inter- 
ested in  the  application  and  dislribu- 


370 


RECEIVERS. 


[chap.  X. 


§  306a.  Domiciliary  receiver  of  mutual  benefit  associa- 
tion, when  entitled  to  possession  of  assets  in  another  state ; 
ancillary  receiver.  Where  a  mutual  benefit  association 
having  a  reserve  fund  held  by  subordinate  lodges  in  various 
states,  but  owned  and  controlled  by  the  supreme  body,  has  be- 
come insolvent  and  a  statutory  assignee  or  a  receiver  in  the  na- 
ture of  an  assignee  has  been  appointed  by  a  court  of  the  domicile 
of  the  corporation  with  power  to  collect  the  assets  wherever 
found,  or  with  the  powers  usually  conferred  upon  receivers  in 
such  cases,  such  receiver  or  assignee  may  have  ancillary  receiv- 
ers appointed  in  other  states  who  will  be  ordered  to  collect 


tion  of  the  fund,  to  appoint  a  re- 
ceivership of  the  particular  fund, 
and  apply  it,  first,  to  the  creditors 
of  the  corporation,  and  secondly,  to 
the  stockholders,  in  accordance  with 
the  proceedings  for  dissolution  in 
the  home  state  of  the  corporation? 
We  have  clearly  jurisdiction  of  the 
persons  of  the  officers  in  the  state. 
We  have  jurisdiction  of  the  prop- 
erty because  it  is  within  our  terri- 
tory. The  plaintiffs  are  also  citizens 
of  our  state  and  show  themselves 
to  be  remediless  both  in  Connecticut 
and  in  the  federal  courts.  We  are 
not  prepared  to  say,  until  some 
higher  tribunal  shall  admonish  us 
to  the  contrary,  that  this  court  has 
not,  under  such  circumstances, 
power  to  intervene,  so  far  as  re- 
lates to  the  property  actually  within 
the  state.  The  court  is  not  power- 
less, in  such  a  case,  to  enforce  any 
judgment  it  may  render,  so  long  as 
it  is  limited  to  the  particular  fund 
which  it  finds  here  and  takes  from 
the  hands  of  persons  over  whom  its 
jurisdiction  is  complete  and  puts  it 
into  the  safe  keeping  of  its  own  of- 
ficers ;  and  we  are  aware  of  no  au- 
thority which  denies  to  us  jurisdic- 
tion in  a  case  containing  all  the  ele- 


ments of  that  before  us.  It  is  idle 
to  answer  that  the  courts  of  Con- 
necticut have  jurisdiction  over  the 
corporation;  for  such  jurisdiction, 
so  far  as  it  affects  the  questions 
and  remedies  here,  is  futile.  Its 
impotency  was  illustrated  in  the 
proceeding  commenced  in  the  supe- 
rior court  of  that  state  in  which 
Eaton  was  appointed  receiver,  and 
in  which  he  was  forced,  in  sub- 
stance, to  report  that  all  the  assets 
of  the  corporation  were  detained 
in  the  city  of  New  York,  and  that 
'he  never  has  had,  nor  permitted 
to  have,  possession  of  any  of  the 
assets  of  the  said  corporation.*  A 
receiver,  if  appointed  there,  must 
resort  to  our  courts  to  reach  the 
appellants  and  the  fund  in  their 
hands,  by  an  action  similar  to  the 
present,  and  become  substantially 
the  receiver  of  this  court,  in  order 
to  acquire  possession  of  the  fund. 
But  while  no  such  officer  exists  in 
Connecticut,  there  seems  to  us  no 
sound  reason  why  the  jurisdiction 
of  this  court  may  not  be  invoked 
to  preserve  a  fund  now  in  the  hands 
of  persons  in  our  jurisdiction  and 
in  danger  of  being  lost  by  their 
insolvency  or  improper  use." 


CHAP.  X.] 


CORPORATIONS. 


371 


and  transmit  the  local  assets  to  the  domiciliary  receiver,  or, 
if  a  receiver  has  already  been  appointed  in  the  foreign 
state,  the  domiciliary  receiver  may  intervene  in  such  pro- 
ceeding and  the  receiver  there  appointed  will  be  required 
to  turn  over  the  local  assets  to  the  domiciliary  receiver.  Such  a 
case  differs  from  one  in  which  there  is  a  contest  between  gen- 
eral creditors  for  the  possession  of  assets,  since  the  members 
of  such  an  association  are  held  to  have  contracted  with  refer- 
ence to  an  equal  and  ratable  distribution  of  the  assets  among  all 
members  wherever  located  without  regard  to  their  domicile, 
and  to  have  impliedly  agreed  that  such  distribution  shall  be 
made  by  a  court  of  the  domicile  of  the  corporation  which  is 
the  only  court  by  which  it  may  be  effectively  done.^^  And 
in  such  case  the  application  to  have  the  local  receiver  surrender 
the  local  assets  to  the  domiciliary  receiver  may  be  maintained 
by  a  certificate-holder  and  member  of  the  association.^^  But 
it  is  important  to  observe  that  the  local  court,  in  directing 
its  receiver  to  surrender  the  local  assets  to  the  principal  re- 
ceiver, will  see  that  the  necessary  steps  are  taken  to  presei-ve 
equality  and  to  secure  to  the  local  members  their  proportionate 
share  of  the  assets  upon  the  final  distribution.^^     And  where 


92  Buswell  V.  Supreme  Sitting, 
161  Mass.,  224,  36  N.  E.,  1065,  23 
L.  R.  A.,  846 ;  Ware  v.  Supreme  Sit- 
ting, (N.  J.)  28  Atl.,  1041;  Bald- 
win V.  Hosmer,  101  Mich.,  119,  59 
N.  W.,  432,  25  L.  R.  A.,  739;  Dur- 
ward  V.  Jewett,  46  La.  An.,  559,  15 
So.,  386;  Smith  v.  Taggart,  30  C. 
C  A.,  563,  87  Fed.,  94,  57  U.  S., 
App.,  493 ;  Wheeler  v.  Dime  Savings 
Bank,  116  Mich.,  271,  74  N.  W.,  496, 
72  Am.  St.  Rep.,  521.  In  Fawcett 
V.  Supreme  Sitting,  64  Conn..  170, 
29  Atl.,  614,  24  L.  R.  A.,  815,  it 
was  held  that  the  certificate-holders 
in  Connecticut  had  the  right  to 
treat  their  contracts  with  the  order 
as  rescinded  upon  the  insolvency 
of    the    corporation    and    thereupon 


to  demand  the  return  of  what  they 
had  paid  in,  and  that  their  claims 
then  became  in  the  nature  of  those 
of  general  creditors,  and  the  court 
accordingly  denied  the  application 
of  the  domiciliary  receiver  to  have 
the  local  receiver  surrender  the  as- 
sets collected  by  him.  And  in 
Failey  v.  Fee,  83  Md.,  83,  34  Atl., 
839,  it  was  held  that  the  holders  of 
matured  certificates  were  to  be  con- 
sidered and  treated  as  general  cred- 
itors and  that  their  prior  attach- 
ment liens  should  therefore  be 
given  a  preference  over  the  claim  of 
the  domiciliary  receiver. 

93  Ware  v.  Supreme  Sitting,   (N, 
J.)  28  Atl,  1041. 

94  Buswell    V.    Supreme    Sitting, 


372  RECEIVERS.  [chap.  X. 

the  court  of  original  appointment  had  ordered  that  all  funds 
of  the  local  branches  be  turned  over  to  the  domiciliary  receiver 
and  that,  in  default  thereof,  the  local  receivers  should  be  barred 
from  receiving  any  distribution  upon  the  claims  represented  by 
them  until  all  others  who  had  accounted  should  be  fully  paid, 
it  was  held  that  members  of  the  association  who  were  within 
the  jurisdiction  of  a  foreign  court  which  refused  to  comply  with 
such  order  but  directed  the  local  funds  to  be  distributed  among 
the  local  creditors  and  who  were  thereby  prevented  from  com- 
plying with  the  order  of  the  domiciliary  court,  might  intervene 
in  the  original  proceeding  and  prove  their  claims  therein  for 
the  balance  remaining  due  after  the  payment  of  the  amounts  re- 
ceived under  the  distribution  made  by  the  foreign  court.^^  And 
upon  the  appointment  of  a  receiver  to  wind  up  the  affairs  of  an 
insolvent  life  insurance  company  in  the  state  of  its  incorpora- 
tion, in  accordance  with  the  laws  of  that  state,  policy-holders 
residing  in  another  state  will  not  be  allowed  a  receiver  over 
the  property  of  the  company  in  the  latter  state,  as  against  the 
receivers  of  the  state  in  which  the  company  was  incorporated. 
In  such  case  the  policy-holders  are  treated  as  having  contract- 
ed with  reference  to  the  laws  of  the  state  of  incorporation,  and 
are  bound  thereby.  And  the  receivers  thus  originally  appointed 
may  have  an  ancillary  receiver  appointed  in  such  foreign  state 
to  convert  the  assets  of  the  company  there  located  into  money, 
and  to  remit  the  proceeds  for  distribution  in  the  original  suit.^^ 
§  306&.  Ancillary  receiverships.  It  has  already  been 
shown  that  a  receiver  has  no  extraterritorial  right  of  action  and 
that  it  is  only  upon  considerations  of  comity  that  he  will  be 
permitted  to  maintain  actions  in  the  courts  of  a  foreign  state, 
and  that  such  comity  has  never  been  carried  to  the  extent  of 
permitting  a  foreign  receiver  to  deprive  local  creditors  of  their 

161   Mass.,  224,  36  N.   E.,   1065,  23  96  Parsons    v.    Charter    O.    L.    I. 

L.  R.  A.,  846;  Baldwin  v.  Hosmer,  Co.,  31  Fed.,  305.     See,  further,  as 

101  Mich.,  119,  59  N.  W.,  432,  25  L.  to  ancillary  receiverships,  Williams 

R.  A.,  739.  V.  Hintermeister,  26  Fed.,  889. 

93  Cowan  v.  Failey,  149  Ind.,  382, 
49  N.  E.,  270. 


CHAP.  X.]  CORPORATIONS.  373 

rights  in  local  assets  to  which  the  receiver  lays  claim. ^'^  In 
accordance  with  this  principle,  it  is  held  that  where  a  receiver 
appointed  by  the  court  of  one  state  over  an  insolvent  corpora- 
tion goes  into  another  state  and  procures  the  appointment 
of  an  ancillary  receiver,  attachment  liens  obtained  upon  local 
assets  by  local  creditors  prior  to  the  appointment  of  the  ancil- 
lary receiver  will  be  given  preference  over  the  claims  of  the 
latter,  and  such  ancillary  receiver  will  accordingly  not  be  per- 
mitted to  transmit  the  local  assets  to  the  court  of  original 
appointment  until  the  claims  of  such  local  creditors  have  been 
satisfied.  ^^  Upon  the  other  hand,  where  a  receiver  has  been 
appointed  over  an  insolvent  corporation  by  the  court  of  the 
state  of  its  domicile  and  an  ancillary  receiver  is  afterward  ap- 
pointed in  another  state  to  take  possession  of  assets  there  lo- 
cated, the  latter  may  be  required  tO'  turn  over  such  assets  to  the 
domiciliary  receiver  where  no  creditors  of  the  foreign  state  have 
acquired  any  priority  of  lien  upon  such  assets.^^  And  where 
the  original  order  of  appointment  of  a  receiver  over  an  in- 
solvent corporation  gives  him  power  to  institute  actions  to  re- 
cover property  or  money  due  the  corporation,  and  he  after- 
ward receives  an  ancillary  appointment  in  another  district  with 
the  same  powers  as  were  given  by  the  original  order  of  ap- 
pointment, he  may  maintain  an  action  in  the  federal  court  of 
the  latter  district.^  Ai;id  upon  the  presentation  of  the  proceed- 
ings of  a  court  of  a  foreign  state  appointing  a  receiver  over 
an  insolvent  corppration  of  that  state,  a  federal  court  in  another 
state  may  appoint  an  ancillary  receiver  to  take  possession  of 
the  property  and  assets  of  the  corporation  in  the  latter  state 
and  may  authorize  him  to  sell  and  dispose  of  them.^    But  the 

97  Ante,  §  47.  99  Sands  v.  Greeley  &  Co.,  31  C. 

98  Second      National      Bank      v.      C.   A.,  424,  88  Fed.,   130,  59  U.   S. 
Lappe   T.    Co.,    198    Mass.,    159,   84      App.,  610. 

N.  E.,  301 ;  Thornley  v.  Walsh  Co.,  1  Bay   State   Gas    Co.   v.   Rogers, 

200  Mass.,  179,  86  N.  E.,  355.     See  147  Fed.,  557. 

Irwin  V.  Granite  S.  P.  Assn.,  56  N.  2  Scaife    v.    Scammon    I.    &     S. 

J.  Eq.,  244,  38  Atl.,  680,  as  to  the  Assn.,  71  Kan.,  402,  80  Pac,  957. 

practice  in  New  Jersey  in  ancillary 

receiverships. 


374  RECEIVERS.  [chap.  X. 

receiver  of  an  insolvent  foreign  corporation  appointed  by  a 
court  of  the  state  of  its  domicile  in  a  proceeding  for  the  wind- 
ing-up of  the  corporation,  with  power  to  demand,  sue  for  and 
collect  all  the  property  and  effects  of  the  corporation  can  not 
maintain  an  action  in  another  state  against  the  corporation  as 
sole  defendant  for  the  sole  purpose  of  procuring  the  appoint- 
ment of  an  ancillary  receiver.^ 

§  307.  In  proceedings  by  quo  warranto  against  corpora- 
tion, receiver  not  appointed  before  judgment  of  forfeiture ; 
nor  upon  involuntary  dissolution  by  expiration  of  charter. 
It  is  held,  under  the  code  of  procedure  in  New  York,  upon  pro- 
ceedings by  the  attorney-general  in  the  nature  of  a  quo  zvar- 
ranto,  for  the  dissolution  of  a  corporation  and  the  forfeiture 
of  its  franchises,  that  the  court  has  no  power  to  appoint  a  re- 
ceiver before  judgment  of  forfeiture,  although  an  injunction 
may  properly  issue  to  prevent  the  corporation  from  doing  any 
illegal  act,  or  from  disposing  of  its  funds."*  And  in  proceed- 
ings in  quo  luarranto  for  the  forfeiture  of  the  charter  and  fran- 
chises of  a  corporation,  under  the  code  of  procedure  of  Califor- 
nia, pending  an  appeal  from  a  judgment  of  forfeiture,  the  court 
has  no  jurisdiction  to  appoint  a  receiver  of  the  property  of  the 
corporation.^  And  it  is  held  that  the  involuntary  dissolution 
of  a  corporation  resulting  from  the  expiration  of  its  charter  by 
limitation  of  time  constitutes  no  ground  for  a  receiver  upon 
behalf  of  shareholders,  where  its  property  and  assets  and  the 
management  of  its  affairs  are  in  the  hands  of  the  persons  des- 
ignated by  statute.^ 

3  Mabon  v.  Ongley  Electric  Co.,  with  the  business  and  property  of 
156  N.  Y.,  196,  50  N.  E.,  805.  the  corporation  in  such  case,  after 

4  People  V.  Washington  Ice  Co.,  the  issuing  of  a  writ  of  prohibition 
18  Ab.  Pr.,  382.  And  see  Eel  River  to  the  court  below,  Havemeyer  v. 
R.  Co.  V.  State,  155  Ind.,  433,  57  Superior  Court,  87  Cal.,  267,  25 
N.  E.,  388.  Pac,  433. 

5  Havemeyer  v.  Superior  Court,  6  Anderson  v.  Buckley,  126  Ala., 
84  Cal.,  327,  24  Pac,  121.  And  see.  623,  28  So.,  729.  But  see  Buckley 
as  to  proceedings  against  such  a  re-  v.  Anderson,  137  Ala.,  325,  34  So., 
ceiver   for   contempt   in   interfering  238,  where,  upon  the  facts,  it  was 


CHAP.  X.]  CORPORATIONS.  375 

§  308.  Corporation  allowed  to  give  bond  to  judgment 
creditor  in  lieu  of  receiver;  case  retained  for  accounting. 

In  the  case  of  a  corporation  transacting  a  large  business  and 
where  large  interests  are  involved,  upon  application  for  a  re- 
ceiver in  behalf  of  a  judgment  creditor  seeking  the  enforce- 
ment of  his  judgment  against  the  corporation,  the  court  may 
give  the  defendant  an  opportunity  of  preventing  the  interfer- 
ence of  a  receiver  by  giving  security  in  lieu  thereof.  And  for 
this  purpose  a  reasonable  time  may  be  allowed  the  defendant 
corporation,  within  which  to  file  a  bond  with  sufficient  sureties, 
to  secure  the  plaintiff  in  any  recovery  which  may  be  had  in  his 
action.'^  And  although  the  facts  may  not  warrant  a  receiver 
in  behalf  of  mortgage  bondholders  of  a  corporation,  as  of  a 
canal  company,  the  court  may  yet  retain  the  cause  for  the  pur- 
pose of  requiring  the  company  to  render  accounts  from  time 
to  time  of  its  receipts  and  disbursements,  for  the  information 
and  protection  of  such  bondholders.^ 

§  309.  Appointment  of  receiver  no  defense  to  action 
against  shareholder  for  unpaid  subscription.  When  an  ac- 
tion has  been  instituted  by  a  corporation  against  one  of  its 
shareholders,  to  recover  the  amount  of  his  unpaid  subscription 
to  the  capital  stock  of  the  company,  it  constitutes  no  defense  to 
such  action,  that  a  receiver  is  afterward  appointed  over  the 
corporation,  and  the  action  will  not  be  defeated  because  of  such 
appointment ;  especially  when  the  receiver  has  taken  no  steps  to 
possess  himself  of  the  cause  of  action,  or  to  collect  the  amount 
due  from  defendant.^  And  the  appointment  of  a  temporary 
receiver  over  a  foreign  corporation  by  a  federal  court  in  an- 
other state  will  not  prevent  the  corporation  from  maintaining 

held  that  plaintiff  was  entitled  to  a  8  Stewart  v.   Chesapeake  &  Ohio 

receiver  over  the  corporate  property  Canal  Co.,  5  Fed.,  149,  4  Hughes, 
after  the  dissolution  of  the  corpora-      47. 

tion  by  expiration  of  its  charter  by  9  Glenville  Woolen  Co.  v.  Ripley, 

limitation  of  time.  43  N.  Y.,  206. 

7  Barclay  v.  Quicksilver  Mining 
Co.,  9  Ab.  Pr.,  N.  S.,  283.  And  see, 
ante,  §§  9,  124,  post,  §  478. 


376  RECEIVERS.  [CIIAP.  X. 

an  action  against  a  shareholder  for  the  recovery  of  his  unpaid 
stock  subscription.^^ 

§  310.  Registration  of  shares  in  receiver's  hands.  Where 
certain  shares  of  stock  in  an  incorporated  company  are  in  the 
hands  of  its  receiver,  the  certificates  having  been  duly  issued  to 
him,  and  the  certificates  are  entitled  to  be  registered  by  the 
registering  agent  of  the  company,  and  to  be  certified  as  repre- 
senting shares  duly  registered,  such  registration  being  a  val- 
uable privilege  appurtenant  to  the  shares,  one  who  prevents 
them  from  being  so  registered,  and  who  converts  the  privilege 
to  his  own  use,  by  procuring  it  to  be  conferred  upon  an  equal 
number  of  shares  of  his  own  stock,  may  be  compelled  by  the 
court  to  make  good  the  stock  in  the  hands  of  the  receiver  by 
restoring  such  privilege.^l 

§  311.  Receiver  not  granted  over  dividends  due  from 
college  fellowship.  It  has  been  held  in  England,  in  a  case 
where  the  defendant,  holding  a  fellowship  in  a  college  corpora- 
tion, had  assigned  the  profits  thereof  to  the  plaintiff,  that  the 
latter  could  not  have  a  receiver  of  the  dividends  and  moneys 
due  from  such  fellowship. 12 

§  312.  One  corporation  may  be  appointed  receiver  over 
another.  The  principles  governing  courts  of  equity  in  the 
selection  of  receivers  over  corporations  are  sufficiently  treated 
elsewhere  in  this  volume.^^  It  may  be  here  observed,  how- 
ever, that  the  receiver  of  a  corporation  need  not  necessarily  be 
an  individual  person,  and  a  corporate  body  may  itself  be  ap- 
pointed receiver  of  another  corporation,  upon  the  insolvency  of 
the  latter.l4 

§  312a.  Duty  of  officers  to  deliver  assets  to  receiver. 
When  a  receiver  is  appointed  over  a  corporation,  with  the  usual 

10  Sigua  Iron  Co.  v.  Brown,  171  14  Jn  ye  Knickerbocker  Bank,  19 
N.  Y.,  488,  64  N.  E.,  194.  Barb.,  602.     And  see  as  to  consid- 

11  Erie  R.  Co.  v.  Heath,  BBlatchf.  erations  governing  the  court  in  se- 
536.  lecting  a  receiver  of  a  large  bank- 

12  Berkeley  v.  Kings  College,  10  ing  corporation,  whose  assets  are 
Beav.,  602.  of  great  value.  In  re  Empire  City 

13  See  chapter  III,  ant,.  Bank,  10  How.  Pr.,  498. 


CHAP.  X.]  CORPORATIONS.  377 

powers  of  receivers,  and  specially  empowered  by  the  order  of 
the  court  to  receive  all  the  effects  and  choses  in  action  of  the 
corporation,  such  order  involves  a  correlative  duty  upon  the 
part  of  the  corporate  officers  to  deliver  the  assets  to  the  receiv- 
er, even  though  such  delivery  is  not  specifically  directed  by  the 
court.  A  failure,  therefore,  by  the  officers  of  the  corporation 
to  deliver  its  assets  to  the  receiver,  and  their  sale  by  such  offi- 
cers, constitute  a  contempt  of  court  and  will  be  punished  as 
such.i^ 

§  312b.  Receiver's  certificates.  The  question  of  the 
power  of  a  court  of  equity  which  has  undertaken  to  administer 
the  assets  of  an  insolvent  corporation,  other  than  a  railway 
company,  by  the  appointment  of  a  receiver,  to  create  indebted- 
ness for  the  management  and  operation  of  the  property,  and  to 
charge  the  same  as  a  lien  upon  the  property,  or  upon  the  pro- 
ceeds of  its  sale,  prior  to  mortgage  indebtedness,  and  to  issue 
receiver's  certificates  of  indebtedness  therefor,  has  given  rise 
to  some  conflict  of  authority.^^  It  has  been  held  in  the  case 
of  a  water-works  company  that  the  court  might,  in  the  distri- 
bution of  the  proceeds  of  sale,  allow  priority  over  mortgage 
bondholders  to  receiver's  certificates  issued  for  the  maintenance 
and  operation  of  the  property,  for  expenses  of  administration 
and  for  the  costs  of  litigation.^"^  Receiver's  certificates  have 
also  been  issued  to  raise  funds  for  the  completion  of  a  ship  canal 
when  such  completion  within  a  given  time  was  necessary  to 
prevent  the  lapsing  of  a  valuable  land  grant.^^     The  result, 

15  Young  V.  Rollins,  90  N.  C,  125.  Rep.,  650.     As  to  the  effect  of  an 

16  As  to  the  power  to  issue  such  order  appointing  a  receiver  over  an 
certificates  in  cases  of  railway  re-  insolvent  corporation  and  requiring 
ceiverships  see  Chapter  XI,  post,  him  to  carry  out  existing  contracts 
Subdivision  VI,  entitled  "Receiver's  with  third  persons,  and  as  to  the 
Certificates."  rights  of  creditors  under  such  con- 

1'^  Ellis  V.  Vernon  I.,  L.  &  W.  Co.,  tracts  for  the  purchase  and  sale  of 

86  Tex.,  109,  23  S.  W.,  858.  materials,      as      against      mortgage 

18  See,   for   a   discussion   of  such  bondholders,    see    Olyphant    v.    St. 

certificates,  Jerome  v.  McCarter,  94  Louis  O.  &  S.  Co.,  28  Fed.,  729.    As 

U.  S.,  734;  Kent  v.  Lake  Superior  to  the  right  of  general  creditors  for 

Canal  Co.,  144  U.  S.,  75,  12  Sup.  Ct.  labor,    materials    and    supplies    fur- 


27S 


RECEIVERS. 


[chap.  X. 


however,  of  the  later  decisions  has  been  to  set  the  question  at 
rest,  and  it  may  now  be  stated  as  a  general  rule  supported  by 
the  overwhelming  weight  of  authority  that,  in  the  case  of  a 
purely  private  as  distinguished  from  a  quasi-public  corporation, 
the  court  will  not,  as  against  the  objection  of  a  minority  of  the 
bondholders,  issue  receiver's  certificates  and  make  them  a  prior 
lien  upon  the  mortgaged  property,  for  the  purpose  of  procur- 
ing funds  to  continue  the  management  and  operation  of  the 
business,  the  power  of  the  court  to  incur  liabilities  being  lim- 
ited strictly  to  the  necessary  care  and  preservation  of  the  prop- 
erty during  the  receivership.  Such  cases  are  held  to  be  dis- 
tinguishable from  receiverships  over  railways,  where,  from 
the  peculiar  character  of  the  property  and  its  relations  to  the 
public,  such  certificates  are  sometimes  issued.^^     Thus,  in  an 


nished  to  a  corporation  before  the 
appointment  of  a  receiver  to  pref- 
erence over  mortgage  bondholders, 
under  the  statutes  of  Virginia  and 
independent  of  statute,  see  Seventh 
National  Bank  v.  Shenandoah  Iron 
Co.,  35  Fed.,  436;  Fidelity  I.  &  S.  D. 
Co.  V.  Shenandoah  Co.,  42  Fed., 
372,  where  such  preference  was  de- 
nied, the  cases  being  distinguished 
from  receiverships  over  railways 
where  such  claims  have  been  pre- 
ferred. And  see  American  Pig  Iron 
S.  W.  Co.  V.  German,  126  Ala.,  194, 
28  So.,  603,  85  Am.  St.  Rep.,  21; 
Smiley  v.  Sioux  B.  S.  Co.,  71  Neb., 
581,  101  N.  W.,  253,  99  N.  W.,  263 ; 
Fisher  v.  Trust  Co.,  138  N.  C,  90, 
SO  S.  E.,  592;  Nisbet  v.  Great 
Northern  C.  Co.,  41  Wash.,  107,  83 
Pac,  15. 

19  Farmers'  Loan  &  Trust  Co.  v. 
Grape  Creek  Coal  Co.,  50  Fed.,  481, 
16  L.  R.  A.,  603;  International 
Trust  Co.  V.  United  Coal  Co.,  27 
Colo.,  246,  60  Pac,  621,  82  Am.  St. 
Rep.,  59,  and  note;  Standley  v.  Hen- 
drie  &  B.  M.  Co.,  27  Colo.,  331,  61 


Pac,  600;  Belknap  Savings  Bank  v. 
Lamar  L.  &  C.  Co.,  28  Colo.,  326, 
64  Pac,  212;  Hooper  v.  Central 
Trust  Co.,  81  Md.,  559,  32  Atl., 
505,  29  L.  R.  A.,  262;  Merriam  v. 
Victory  Mining  Co.,  37  Ore.,  321, 
56  Pac,  75,  58  Pac,  37,  60  Pac, 
997;  United  States  Investment  Cor- 
poration V.  Portland  Hospital,  40 
Ore.,  523,  64  Pac,  644,  67  Pac,  194, 
56  L.  R.  A.,  627;  Hanna  v.  State 
Trust  Co.,  16  C.  C.  A..  586,  70  Fed., 
2,  36  U.  S.  App.,  61,  30  L.  R. 
A.,  201 ;  Baltimore  B.  &  L.  Assn.  v. 
Alderson,  32  C.  C.  A.,  542,  90  Fed., 
142,  61  U.  S.  App.,  636;  Interna- 
tional Trust  Co.  V.  Decker  Bros., 
81  C.  C.  A.,  302,  152  Fed.,  78;  Bern- 
ard V.  Union  Trust  Co.,  86  C.  C.  A., 
610,  159  Fed.,  620;  Laughlin  v. 
United  States  Rolling  Stock  Co., 
64  Fed.,  25 ;  Fidelity  Insurance,  T. 
&  S.-D.  Co.  V.  Roanoke  Iron  Co., 
68  Fed.,  623 ;  Newton  v.  Eagle  &  P. 
Mfg.  Co.,  76  Fed.,  418;  Doe  v. 
Northwestern  C.  &  T.  Co.,  78  Fed., 
62.  And  see  Farmers'  Loan  & 
Trust  Co.  V.  Bankers  &  M.  T.  Co., 


CHAP.  X.]  CORPORATIONS.  379 

action  by  a  shareholder  to  dissolve  and  wind  up  the  affairs  of 
an  insolvent  hotel  company,  the  court  should  not,  by  an  ex  parte 
order,  issue  receiver's  certificates  for  the  payment  of  v^^ages  and 
make  such  certificates  a  lien  upon  the  property  prior  to  its  mort- 
gage bonds,  the  bondholders  not  being  parties  to  the  cause  and 
having  no  notice  of  the  application  for  such  order.  Nor  may 
such  priority  be  justified  upon  the  ground  that  the  laborers 
whose  wages  are  to  be  thus  paid  are  in  desperate  circum- 
stances and  have  become  riotous  and  threaten  the  destruction 
of  the  property,  since  such  facts  do  not  make  the  debt  one  which 
is  necessary  to  the  preservation  of  the  property,  and  it  will  not 
be  assumed  that  the  ordinary  agencies  of  the  law  are  inadequate 
to  furnish  the  necessary  protection.20  So  upon  a  bill  filed  by  a 
shareholder  and  simple  contract  creditor  of  a  hotel  company 
praying  for  the  appointment  of  a  receiver  over  the  property  of 
the  corporation  and  for  the  issuing  of  receiver's  certificates  to 
complete  and  furnish  the  hotel,  it  is  improper  to  authorize  the 
issuing  of  such  certificates  without  the  consent  of  the  creditors 
whose  liens  against  the  property  would  be  thereby  affected.^i 

148  N.  Y.,  315,  42  N.  E.,  707,  31  tion,  and  with  the  proper  parties 
L.  R.  A.,  403,  51  Am.  St.  Rep.,  690.  present,  through  the  instrumen- 
In  International  Trust  Co.  v.  Unit-  tality  of  a  receiver  carry  on  the 
ed  Coal  Co.,  27  Colo.,  246,  60  Pac,  business  of  private  corporations 
621,  83  Am.  St.  Rep.,  59,  supra,  or  individuals  temporarily,  and 
Campbell,  C.  J.,  uses  the  following  incur  obligations  therefor  that 
language:  "After  a  careful  con-  may  be  made  a  paramount  lien 
sideration  of  all  the  authorities  on  the  corpus  of  the  property,  such 
cited,  we  are  of  opinion  that,  in  obligations  must  have  been  con- 
administering  the  affairs  of  an  or-  tracted  for,  and  must  relate  strictly 
dinary  insolvent  private  business  tc,  the  preservation  of  the  status  of 
corporation  for  which  a  receiver  the  property  at  the  time  of  the  ap- 
has  been  appointed,  a  court  of  equity  pointment  of  the  receiver.  We  are 
has  not  the  power  to  authorize  the  not  disposed  to  extend  the  doctrine 
receiver  to  incur  indebtedness  for  established  by  the  federal  courts  in 
carrying  on  the  business  and  to  administering  upon  insolvent  rail- 
make  the  same  a  first  and  para-  way  corporations  to  those  of  or- 
mount  lien  upon  the  corpus  of  the  dinary  business  corporations." 
property  superior  to  that  of  prior  20Raht  v.  Attrill,  106  N.  Y.,  423, 
lien  holders  without  their  consent.  13  N.  E.,  282. 
While   it   may,   in   the   proper   ac-  2lBaltimore    B.    &    L.    Assn.    v. 


380  RECEIVERS.  [chap.  X. 

And  where  the  holders  of  certificates  which  have  been  issued 
by  the  receiver  of  a  private  corporation  and  which  have  been 
given  a  preference  over  other  claims  upon  the  property  in  the 
possession  of  the  receiver  are  voluntarily  surrendered  by  the 
holders  thereof,  who,  in  their  place,  take  a  later  issue  of  cer- 
tificates which  have  not  been  given  a  preference  by  the  order 
authorizing  them,  such  certificates  are  entitled  to  no  preference 
over  the  other  claims  against  the  estate.22 

§  312c.  Conflict  of  authority  as  to  preference  for  labor 
and  supply  claims  incurred  before  receivership.  As  to  the 
right  of  the  holders  of  labor  and  supply  claims,  incurred  a 
short  time  prior  to  the  appointment  of  a  receiver  over  a  purely 
private  corporation,  to  be  preferred  over  the  mortgage  bond- 
holders and  general  creditors  in  the  payment  of  their  claims, 
there  is  a  conflict  of  authority.  The  supreme  court  of  Alabama 
has  held  that  the  principle  upon  which  a  preference  is 
allowed  in  such  cases  is  one  of  equity,  and,  recognizing  the 
undoubted  right  to  a  preference  in  the  case  of  receiverships 
over  railway  and  other  quasi-public  corporations,  they  hold 
that  the  equity  in  favor  of  the  allowance  is  the  same  in  the  case 
of  a  private  corporation,  and  they  have  accordingly  allowed  a 
preference  over  the  mortgage  debt  in  favor  of  the  claims  of 
laborers  for  wages  incurred  a  short  time  prior  to  the  appoint- 
ment of  the  receiver.  The  right  to  the  preference  is  also  based 
upon  the  theory  that  the  claims  in  question  have  resulted  in  the 
betterment  of  the  property. ^3  And  the  doctrine  as  thus  laid 
down  has  been  applied  in  Mississippi. ^^  And  in  Massachu- 
setts it  is  held,  upon  a  bill  for  a  receiver  over  an  insolvent 

Alderson,  32  C.  C.  A.,  542,  90  Fed.,  son  v.   Saunders,  63  C.   C.  A.,  666, 

142,  61  U.  S.  App.,  636.  129    Fed.,    16,    where    a    preference 

22  Lewis  V.  Lindeen  Steel  Co.,  183  seems  to  have  been  allowed  by  con- 
Pa.  St.,  248,  38  Atl.,  606.  sent  of  the  parties.     As  to  the  al- 

23  Drennen  v.  Mercantile  T.  &  D.  lowance  of  such  claims  in  cases  of 
Co.,  115  Ala.,  592,  23  So.,  164,  39  railway  receiverships,  see  Chapter 
L.  R.  A.,  623,  67  Am.  St.  Rep.,  72.  XI,    post,    Subdivision   IV,    entitled 

24LeHote    v.    Boyet,    85     Miss.,      "Preferred  Debts." 
636,    38    So.,    1.     And    see   Dickin- 


CHAP.  X.]  CORPORATIONS.  381 

private  corporation  filed  by  creditors,  that  unpaid  wages  due  to 
operatives,  clerks  and  servants  of  the  corporation  to  an  amount 
not  exceeding  one  hundred  dollars  for  labor  performed  within 
one  year  prior  to  the  appointment  of  the  receiver  should  re- 
ceive a  preference  in  the  settlement  of  the  receiver's  accounts.^^ 
§  312d.  Weight  of  authority  is  opposed  to  preference. 
The  weight  of  authority,  however,  sustains  the  opposite  view, 
which  limits  the  right  to  a  preference  to  receiverships  over  rail- 
way or  other  quasi-public  corporations  and  will  not  recognize 
it  in  the  case  of  a  purely  private  corporation.  Thus,  in  Oregon 
it  is  held  that  claims  for  labor  and  supplies  furnished  shortly 
before  the  appointment  of  a  receiver  over  a  private  corporation 
should  not  be  allowed  a  preference  over  the  mortgage  indebt- 
edness.^6  So,  also,  where  a  railway  company,  although  or- 
ganized for  the  purpose  of  operating  a  railway,  was  in  fact  en- 
gaged in  a  private  business  and  claims  for  labor  and  supplies 
furnished  within  ninety  days  prior  to  the  appointment  of  a  re- 
ceiver were  incurred  in  connection  with  such  business,  a  pref- 
erence over  the  lien  of  the  mortgage  was  refused.^"^     As  is 

25  Jones  v.  Arena  Publishing  Co.,  of  estates  by  receivers,  be  entitled 
171  Mass.,  22,  50  N.  E.,  15.  In  this  to  priority  in  the  order  named : 
case  the  court  base  the  decision  up-  .  .  .  Second,  Wages  to  an 
on  the  ground  that  since  the  wage-  amount  of  not  more  than  one  hun- 
earners  would  have  been  allowed  a  dred  dollars  due  to  an  operative, 
preference  at  law  under  an  assign-  clerk  or  servant  for  labor,  either 
ment  for  the  benefit  of  creditors,  performed  within  one  year  last 
the  creditor  can  not  deprive  them  of  preceding  the  appointment  of  the 
this  preference  by  resorting  to  receiver  or  for  the  payment  for 
equity  for  the  appointment  of  a  re-  which  a  suit,  which  was  commenced 
ceiver,  although  Chief  Justice  Field,  within  one  year  after  the  perform- 
in  his  dissenting  opinion,  points  out  ance  of  the  labor,  is  pending  or  was 
that  there  was  no  statute  in  force  terminated  within  one  year  after 
when  the  suit  was  commenced  such  appointment." 
which  gave  priority  of  one  unse-  26  Merriam  v.  Victory  Mining 
cured  debt  over  another,  which,  in  Co.,  37  Ore.,  321,  56  Pac,  75,  58 
terms,  applied  to  the  proceeding.  Pac,  37,  60  Pac,  997. 
This  case  was  decided  in  1898.  By  27  Security  Trust  Co.  v.  Goble  R. 
the  Revised  Laws  of  1902,  c.  150,  Co.,  44  Ore.,  370,  74  Pac,  919,  75 
§  29,  it  is  provided :  "The  follow-  Pac,  697. 
ing  claims   shall,   in  the  settlement 


382  RECEIVERS.  [chap.  X. 

elsewhere  pointed  out,  the  allowance  of  such  claims  in  any  case 
is  indefensible  upon  sound  principle,  and,  while  the  right  to  the 
preference  is  too  firmly  established  to  admit  of  doubt  in  the  case 
of  railway  receiverships,  it  is  confidently  believed  that,  with- 
out the  aid  of  statutory  enactment,  the  doctrine  will  not  be  gen- 
erally extended  to  the  case  of  purely  private  corporations. 

§  312^.  Abuse  of  corporate  franchise  as  ground  for  re- 
ceiver in  quo  warranto  proceeding  for  forfeiture  of  charter. 
It  has  been  held,  w^iere  a  corporation  was  engaged  in  violating 
the  laws  of  the  state  and  was  misusing  its  corporate  powers 
and  franchise  by  holding  and  conducting  prize-fights  in  viola- 
tion of  the  statutes  of  the  state,  that  the  state,  upon  the  relation 
of  her  law  officers,  might  maintain  a  proceeding  brought  for 
the  dissolution  of  the  corporation  and  the  forfeiture  of  its 
franchise,  and  could  have  an  injunction  against  the  holding 
of  such  prize-fights,  and,  as  an  incident  thereto,  could  procure 
the  appointment  of  a  receiver  to  take  possession  of  the  proper- 
ty and  premises  in  which  such  events  were  being  carried  on. 28 
So  a  receiver  of  the  property  of  a  non-resident  corporation  do- 
ing business  in  Kansas  was  held  properly  appointed  in  an  or- 
iginal proceeding  in  the  supreme  court  by  quo  warranto  to 
oust  the  corporation  from  doing  business  in  the  state  upon  the 
ground  that  it  was  sellins:  intoxicating  liquors  in  violation  of 
the  laws  of  the  state.29 

28  Columbian    Athletic    Club    v.  29  State    v.    Anheuser-Busch    B. 

State,   143  Ind.,  98,  40  N.  E.,  914,      Assn.,  76  Kan.,  184,  90  Pac,  777. 
28  L.  R.  A.,  727,  52  Am.  St.  Rep., 
407. 


CHAP.  X.]  CORPORATIONS.  383 


II.  Functions,  Duties  and  Rights  of  Action  of  the 
Receiver. 

i  313.    Want  of  harmony  in  the  decisions. 

314.  Receiver  of  insolvent  corporation  a  trustee  for  creditors  and 

shareholders. 

315.  Receiver  represents  the  corporation  for  purposes  of  litigation; 

may  recover  funds  in  another  state. 
315o.  May  purchase  at  mortgage  sale;  may  prosecute  or  defend  suits. 

316.  Succeeds  to  all  rights  of  action  of  the  corporation;  trover  for 

conversion  of  note;  suit  on  note  for  policy  of  insurance;  suit 
for  money  due,  or  improperly  disposed  of. 

317.  Rights  of  action  of  receiver  of  insolvent  bank, 

317a.  Right   to   enforce   individual   or   additional   liability  of   stock- 
holders. 
317&.  Right  to  enforce  such  liability  in  foreign  state. 
317c.  The  same;  receiver  as  quasi-assignee. 

318.  Appointment  does  not  change  rights  of  action  or  contract  rela- 

tions;   same   defenses   allowed;   mutual   insurance   company; 
change  of  corporate  name. 

319.  Receiver   cannot  disaffirm  settlement  made  by  corporation;  can 

not  sue  on  canceled  note  of  insurance  company. 

320.  May  disaffirm  act  of  corporation  in  fraud  of  creditors;  illegal 

transfer    of    securities;    fraudulent    disposal    of    money    and 
notes;  illegal  mortgage;  fraudulent  judgment  and  transfers. 

321.  Right  of  action   to  recover  illegal  dividends  declared  by  in- 

solvent corporation. 

322.  When  powers  derived  wholly  from  statute. 

323.  Presumption    as    to    receiver's    right    to    divide    assets    among 

creditors. 

324.  Receiver's   right   of  action  to  recover  of  shareholders   unpaid 

subscriptions  to  capital  stock. 
324a.  Defenses  to  such  actions;  transfer  of  shares. 

325.  Shareholder   can   not   enjoin   receiver   from   collecting   unpaid 

subscription;  defense  of  fraud  not  admissible  when  all  parties 
participated. 

326.  Receivers  of  mutual  insurance  companies  may  recover  assess- 

ments due  on  premium  notes;  action  in  foreign  state. 

327.  What  receiver  must  allege  to  maintain  this  class  of  actions. 

328.  Liability  of  makers   of  premium  notes   not  increased  by   ap- 

pointment   of    receiver;    assessment    must    be    alleged    and 
proven. 

329.  Receiver  takes  place  of  directors  in  making  assessment,  sub- 

ject to  sanction  of  court. 


384  RECEIVERS.  [chap.  X. 

§  330.     Acts  in  a  ministerial  and  not  a  judicial  capacity;  may  re-assess 
for  unpaid  balances. 

331.  When  may  assess  all  notes;  what  proof  required  as  to     losses. 

332.  Receiver    may  allow  equitable  claims   for  losses. 

333.  Principles     governing     set-offs     in     actions     by     receivers     of 

corporations. 

334.  Discretion    as   to   compromising   demands   against   the   corpo- 

ration;  may  decline  to  ratify  contract;  may  not  waive  ex- 
press stipulations  of  insurance  policy. 

335.  Limited  to  allowance  of  claims  recoverable  against  the  corpo- 

ration. 

336.  Court  may  authorize  receiver  to  compromise  doubtful  claims; 

receiver  may  allow  salaries  of  ofiicers  pro  rata;  when  such 
salaries  not  allowed. 

337.  Receiver   may  exercise   option   of  company   as   to   deposit   of 

collaterals. 

338.  May  assign  chose  in  action;  sale  not  set  aside  because  applied 

for  by  creditor  who  was  also  a  judge  of  the  court. 

339.  When   defendant   entitled   to   costs   out   of  fund   in   receiver's 

hands. 

340.  Judgment   against   receiver    for   taxes,    enforced    only    against 

funds  in  his  hands  as  receiver. 

341.  Enforcement    of    demand    by    receiver    against    debtor,    not    a 

taking  under  legal  process. 

342.  Receiver  should  not  himself  apply  money  in  payment  of  judg- 

ments; distribution  made  by  court. 
342a.  Ancillary  bill  by  receiver  to  determine  claims  to  property  in 
his  possession;  injunction. 

§  313.  Want  of  harmony  in  the  decisions.  It  has  already 
been  shown,  that  in  most  of  the  states  of  this  country,  the  gen- 
eral jurisdiction  of  courts  of  equity  over  corporations  has  been 
enlarged  by  legislation  to  the  extent  of  authorizing  the  ap- 
pointment of  receivers  in  behalf  of  creditors  and  shareholders. 
The  general  purpose  of  these  legislative  enactments  has  been  to 
provide  adequate  protection,  in  case  of  insolvency  of  the  cor- 
porate body  or  of  misconduct  on  the  part  of  its  officers,  to  those 
who  might  otherwise  be  without  remedy  in  the  usual  course  of 
proceedings  at  law.  The  question  of  the  status  or  relation  oc- 
cupied by  receivers  thus  appointed,  and  of  their  duties  and 
functions,  is  one  of  much  importance;  and  while  a  want  of  har- 
mony is  sometimes  apparent  in  the  decisions  upon  these  points, 
it  is  believed  that  they  are  generally  susceptible  of  being  har- 


CHAP.  X.]  CORPORATIONS.  385 

monized,  and  that  they  are  not  inconsistent  with  established 
principles  of  equity. 

§  314.  Receiver  of  insolvent  corporation  a  trustee  for 
creditors  and  shareholders.  As  regards  the  relation  occu- 
pied by  the  receiver  of  an  insolvent  corporation  towards  the 
parties  in  interest,  the  better  doctrine  undoubtedly  is  that  he 
stands  as  the  representative,  both  of  the  creditors  of  the  cor- 
poration and  of  its  shareholders.  He  is  not,  therefore,  the 
agent  or  representative  of  the  corporation  exclusively,  but  is 
to  be  regarded  rather  as  a  trustee  for  both  creditors  and  share- 
holders.^^  Thus,  under  the  laws  of  New  York  authorizing  the 
appointment  of  a  receiver  of  the  effects  of  a  corporation,  upon 
the  application  of  a  judgment  creditor  after  return  of  execution 
unsatisfied,  it  is  held  that  the  receiver,  by  virtue  of  his  appoint- 
ment, becomes  a  trustee,  not  only  for  the  creditor  on  whose  ap- 
plication he  was  appointed,  but  for  all  other  creditors  of  the 
corporation,  and  also. a  trustee  for  the  shareholders,  in  which 
capacity  he  is  as  much  bound  to  guard  and  subserve  their  in- 
terests as  those  of  the  creditors.^^    And  while  a  receiver  rep- 

30  Gillet  V.  Moody,  3  N.  Y.,  479;  banking  corporation,  under  the  laws 
Talmage  v.  Pell,  7  N.  Y.,  347;  Libby  of  Ohio,  Lafayette  Bank  v.  Buck- 
V.  Rosekrans,  55  Barb.,  217;  In  re  ingham,  12  Ohio  St.,  419;  State  v. 
Coleman,  174  N.  Y.,  373,  66  N.  E.,  Claypool,  13  Ohio  St.,  14. 
983;  Alexander  v.  Relfe,  74  Mo.,  31  Libby  v.  Rosekrans,  55  Barb., 
495;  Farwell  v.  Great  Western  Tel.  217,  220.  But  see  Atchison  v.  Da- 
Co.,  161  111.,  522,  44  N.  E.,  891;  vidson,  2  Pin.  (Wis.),  48,  where  it 
Franklin  National  Bank  v.  White-  is  held  that  receivers  of  corpora- 
head,  149  Ind.,  560,  49  N.  E.,  592,  tions  are  appointed  for  the  benefit 
39  L.  R.  A.,  725,  63  Am.  St.  Rep.,  of  creditors,  with  power  and  author- 
302;  Hamor  v.  Taylor-Rice  E.  Co.,  ity  to  collect  and  pay  over  to  them 
84  Fed.,  392.  But  see  Atchison  v.  the  assets.  The  choses  in  action 
Davidson,  2  Pin.  (Wis.),  48.  See,  of  the  corporation,  it  is  held,  are  in 
as  to  functions  and  powers  of  a  re-  the  possession  of  the  receivers  for 
ceiver  of  a  moneyed  corporation  un-  the  creditors,  and  are  to  all  intents 
der  the  statutes  of  New  York,  ap-  and  purposes  the  property  of  the 
pointed  in  behalf  of  a  judgment  creditors,  the  receivers  holding  the 
creditor,  after  execution  returned  property  and  assets  of  the  corpora- 
unsatisfied,  Angell  V.  Silsbury,  19  tion  in  trust  for  the  creditors,  as 
How.  Pr.,  48.  And  see,  as  to  func-  the  agents  of  the  court, 
tions  of  a  receiver  over  an  insolvent 
Receivers— 2.'^ 


386  RECEIVERS.  [chap.  X. 

resents  the  court  in  the  sense  that  he  derives  his  power  from  the 
court  and  acts  for  it,  he  represents  all  the  parties  entitled  pri- 
marily or  otherwise  to  the  trust  fund  and  in  this  sense  is  to  be 
regarded  as  a  trustee  for  all.^^  /^ii^j  where  an  insolvent  cor- 
poration has  conveyed  property  to  one  of  its  creditors  in  pref- 
erence to  the  others,  such  a  conveyance  being  declared  by  stat- 
ute to  be  for  the  equal  benefit  of  all  creditors,  he  is  regarded  as 
more  than  the  representative  of  the  corporation,  but  as  repre- 
senting all  the  creditors,  and  he  may  consequently  maintain  an 
action  to  recover  the  property  so  conveyed,  although  the  as- 
signment would  have  been  valid  as  against  the  corporation  it- 
self.^3  And  the  receiver  of  an  insolvent  corporation  and  not  a 
creditor  is  the  proper  party  to  maintain  an  action  to  recover 
property  and  assets  belonging  to  the  corporation. ^^ 

§  315.  Receiver  represents  the  corporation  for  purposes 
of  litigation;  may  recover  funds  in  another  state.  While 
the  receiver  of  an  insolvent  corporation  is  thus  treated  as  the 
representative  of  both  creditors  and  shareholders,  so  far  as  any 
beneficial  interest  is  concerned,  yet,  for  the  purpose  of  deter- 
mining the  nature  and  extent  of  his  title,  he  is  regarded  as  rep- 
resenting only  the  corporate  body  itself,  and  not  its  creditors 
or  shareholders,  being  vested  by  law  with  the  estate  of  the 
corporation,  and  deriving  his  own  title  under  and  through  it. 
For  purposes  of  litigation,  therefore,  he  takes  only  the  rights 
of  the  corporation,  such  as  could  be  asserted  in  its  own  name, 
and  upon  that  basis  only  can  he  litigate  for  the  benefit  of  either 
shareholders  or  creditors,  except  when  acts  have  been  done  in 
fraud  of  the  rights  of  the  latter,  but  which  are  valid  as  against 


32  Harrigan  ^'.  Gilchrist,  121  Wis.,  330;  First  National  Bank  v.  Dove- 
127,  249,  99  N.  W.,  909,  941.  tail  B.  &  G.  Co.,  143  Ind.,  534,  42 

33  Industrial  Mutual  D.  Co.'s  Re-  N.  E.,  924;  Big  Creek  Stone  Co. 
ceiver  v.  Taylor,  118  Ky.,  851,  82  v.  Seward,  144  Ind.,  205,  42  N.  E., 
S.  W.,  574.     And  see,  post,  §  320.  464,    43    N.    E.,    5;     Northwestern 

34  National  State  Bank  v.  Vigo  Mutual  Life  Ins.  Co.  v.  Kidder, 
County    National    Bank,    141    Ind.,  162  Ind.,  382,  70  N.  E.,  489. 

352,  40  N.  E.,  799,  50  Am.  St.  Rep., 


CHAP.  X.] 


CORFORATIONS. 


387 


the  corporation  itself,  in  which  case  he  holds  adversely  to  the 
corporation. 35  And  as  regards  the  nature  of  the  defense  which 
he  may  interpose  in  an  action  brought  against  him  in  his  offi- 
cial capacity,  it  would  seem  that  he  stands  in  no  better  posi- 
tion than  the  corporation  would  have  done,  and  is  to  this  ex- 
tent its  representative.    Thus,  when  the  laws  of  the  state  pre- 


ss Curtis  V.  Leavitt,  15  N.  Y.,  44; 
Alexander  v.  Relfe,  74  Mo.,  495, 
Voorhees  v.  Indianapolis  C.  &  M. 
Co.,  140  Ind.,  220,  39  N.  E.,  738. 
The  doctrine  of  the  text  is  well 
stated  by  Mr.  Justice  Comstock,  in 
Curtis  V.  Leavitt,  15  N.  Y.,  44,  as 
follows :  "The  appellant,  as  re- 
ceiver (of  an  insolvent  banking  cor- 
poration), has  no  interest  in  or 
power  over  the  property  affected 
by  the  trusts  in  question,  except 
such  as  he  derives  under  the  stat- 
utes which  have  been  mentioned. 
It  has  been  said  in  this,  as  in  other 
cases,  that  he  represents  the  credit- 
ors and  the  stockholders,  but  for 
all  the  purposes  of  inquiring  into 
this  title,  he  really  represents  the 
corporation.  He  is  by  law  vested 
with  the  estate  or  the  corporate 
body,  and  takes  his  title  under  and 
through  it.  It  is  true,  indeed,  that 
he  is  declared  to  be  a  trustee  for 
creditors  and  stockholders ;  but  this 
only  proves  that  they  are  the  bene- 
ficiaries of  the  funds  in  his  hands, 
without  indicating  the  sources  of 
his  title  or  the  extent  of  his  powers. 
If,  then,  in  a  controversy  between 
the  receiver  and  thivd  parties,  in 
respect  to  the  corporate  estate,  it  is 
possible  to  form  a  conception  of 
rights,  legal  or  equitable,  belonging 
to  the  shareholders  as  individuals, 
which  the  corporation  itself  could 
not  assert  in  its  own  name,  the  re- 
ceiver   does     not     represent     those 


rights.  So  far  as  shareholders  are 
concerned,  he  can  litigate  respect- 
ing the  fund  upon  precisely  the 
grounds  which  would  be  available 
to  the  corporation,  if  it  were  still  in 
existence,  solvent,  and  no  receiver- 
ship had  been  constituted.  In  re- 
gard to  creditors,  I  should  certainly 
incline  to  take  the  same  view  of  his 
rights  and  powers  under  the  stat- 
utes referred  to.  It  has,  however, 
been  uniformly  assumed,  and  was 
not  denied  on  the  argument,  that 
he  succeeds  to  the  rights  of  credit- 
ors, and  takes  his  title  under  them, 
where  conveyances  have  been  made 
in  fraud  of  their  rights,  but  other- 
wise valid.  In  such  cases,  he  held 
adversely  to  the  debtor  corporation. 
For  all  the  purposes  of  the  present 
controversy,  I  shall  proceed  upon 
this  assumption.  In  general,  then, 
a  receiver  of  this  description  takes 
merely  the  rights  of  the  corpora- 
tion, such  as  could  be  asserted  in 
its  own  name,  and  on  that  basis 
only  can  he  litigate  for  the  benefit 
of  either  stockholders  or  creditors, 
except  when  acts  have  been  done 
in  fraud  of  the  rights  of  the  latter, 
but  valid  as  to  the  corporation 
itself."  See,  also,  Pittsburg  Carbon 
Co.  V.  McMillin,  119  N.  Y.,  46.  23 
N.  E.,  530;  Smith  v.  Johnson,  57 
Ohio  St.,  486,  49  N.  E.,  693.  But 
see,  contra,  Republic  Life  Insurance 
Co.  V.  Swigert,  135  111.,  150,  25  N. 
E.,  680.  where  it  is  held  that  a  re- 


388 


RECEIVERS. 


[chap.  X. 


hibit  a  corporation  from  interposing  the  defense  of  usury  to 
any  action  brought  against  it,  it  would  seem  that  the  receiver 
is  affected  by  the  prohibition  to  the  same  extent  as  the  corpora- 
tion itself  would  have  been.^'^  g^t  when  a  court  of  competent 
jurisdiction  has  appointed  a  receiver  over  an  insolvent  corpora- 
tion of  that  state,  and  has  undertaken  the  administration  of  its 
assets,  such  receiver  may  maintain  an  action  against  representa- 
tives of  the  corporation  in  another  state  to  recover  funds  of  the 
corporation  in  their  possession. ^'^ 


ceiver  of  an  insolvent  life  in- 
surance companj-,  under  the  stat- 
ute of  Illinois  for  the  winding  up 
of  such  companies,  may  enforce  no 
rights  of  action  which  the  company 
itself  might  not  have  enforced. 
And  the  company  having  surren- 
dered their  certificates  of  stock  to 
stockholders  who  had  paid  but 
twenty  per  cent,  of  their  subscrip- 
tions, and  having  issued  to  them 
new  certificates  for  the  number  of 
shares  at  par  represented  by  the 
twenty  per  cent,  so  paid,  it  was 
held  that  the  receiver  could  not 
maintain  an  action  against  such 
shareholders  to  recover  for  the  ben- 
efit of  creditors  the  amount  of 
their  original  unpaid  subscriptions, 
the  transaction  being  binding  as 
between  the  shareholders  and  the 
corporation,  and  one  which  the  lat- 
ter could  not  have  set  aside.  In 
Young  V.  Stevenson,  180  111.,  608,  54 
N.  E.,  562,  72  Am.  St.  Rep.,  236,  it 
was  held  that  the  receiver  of  a 
building  and  loan  association  ac- 
quired no  right  of  action  which  the 
association  itself  could  not  assert; 
and  it  was  accordingly  held  that 
where  defendant,  a  stockholder  and 
officer  of  the  association,  with 
knowledge  of  its  insolvency,  had 
surrendered  his  shares  at  their  with- 
drawal   value,    any    right   of   action 


which  might  accrue  to  recover  back 
such  withdrawal  value  was  in  the 
other  stockholders  and  not  in  the 
corporation,  and  that  the  receiver 
of  the  corporation  could  therefore 
not  maintain  an  action  to  recover 
such  withdrawal  value.  And  in 
Rickert  v.  Suddard,  184  111.,  149,  56 
N.  E.,  344,  the  same  principle  was 
applied  in  a  similar  case,  and  it  was 
held  that  where  the  shares  had  been 
surrendered  and  the  withdrawal 
completed  by  the  corporation  giv- 
ing its  check  for  the  amount  of  the 
surrender  value,  the  stockholder 
ceased  to  be  a  member  of  the  cor- 
poration and,  since  the  receiver  suc- 
ceeded to  no  greater  rights  than  the 
association,  he  had  no  right  to  open 
up  for  readjustment  the  settlement 
which  had  thus  been  made  between 
the  association  and  the  stockholder. 

36  Curtis  V.  Leavitt,  15  N.  Y.,  85, 
86,  per  Comstock,  J. 

37  Failey  v.  Talbee,  55  Fed.,  892. 
But  in  Kansas  it  is  held  that  the 
fact  that  a  receiver  has  been  ap- 
pointed over  a  corporation  of  an- 
other state,  in  such  state,  will  not 
prevent  the  corporation  from  main- 
taining an  action  in  Kansas  to  re- 
cover upon  a  promissory  note.  Wi- 
nans  v.  Gibbs  &  S.  M.  Co.,  48  Kan., 
m,  30  Pac,  163, 


CHAP.  X.]  CORPORATIONS.  389 

§  315a.  May  purchase  at  mortgage  sale;  may  prosecute 
or  defend  suits.  Since  the  receiver  succeeds  to  the  title 
and  rights  of  action  of  the  corporation  itself,  he  may  purchase 
property  at  a  mortgage  sale  in  satisfaction  of  a  debt  due  to  the 
corporation,  having  the  same  powers  in  this  regard  that  the 
corporation  might  have  exercised. ^^  And  a  receiver  appointed 
over  a  corporation,  under  the  statutes  of  North  Carolina,  for 
the  purpose  of  winding  up  its  affairs,  may  prosecute  an  action 
to  recover  its  property  after  the  corporation  has  ceased  to  exist 
by  reason  of  the  expiration  of  its  charter.^^  So  a  receiver  of  an 
insolvent  insurance  company,  under  the  laws  of  Pennsylvania, 
being  empowered  by  statute  to  defend  suits  in  the  name  of  the 
corporation  or  otherwise,  and  to  do  all  other  acts  necessary  to 
the  settlement  of  its  affairs,  may  be  substituted  in  an  action  of 
attachment  which  had  been  begun  against  the  corporation  prior 
to  his  appointment.^^  But,  under  the  New  York  code  of  pro- 
cedure, when  a  receiver  of  a  corporation  has  brought  an  action 
against  its  directors  to  recover  for  their  neglect  of  duty,  the 
stockholders  have  no  such  ownership  of,  or  interest  in  the  cause 
of  action  as  to  entitle  them  to  be  admitted  as  a  matter  of  right 
as  parties  plaintiff  with  the  receiver.^1 

§  316.  Succeeds  to  all  rights  of  action  of  the  corpora- 
tion ;  trover  for  conversion  of  note ;  suit  on  note  for  policy 
of  insurance ;  suit  for  money  due,  or  improperly  disposed 
of.  As  regards  the  rights  of  action  vested  in  the  receiver 
of  a  corporation  by  virtue  of  his  appointment,  the  general  rule 
is  that  he  takes  all  rights  of  action  which  the  corporation  itself 
originally  had,  and  may  enforce  them  by  the  same  legal  reme- 
dies.^2    He  may,  therefore,  maintain  an  action  of  trover  to  re- 

38  Jacobs  V    Turpin,  83  111.,  424.  good  v.  Laytin,  48  Barb.,  464.    And 

39  Asheville   Division    No.    15    v.  see  Shaughnessy  v.  The  Rensselaer 
Aston,  92  N.  C,  578.  Insurance  Co.,  21  Barb.,  605 ;  Stark 

40  pickersgill  z;.  Myers,  99  Pa.  St.,  v.  Burke,  5  La.  An.,  740;  New  Or- 
602.  leans   Gas  Light   Co.   v.    Bennett,   6 

41  Kimball  v.  Ives,  30  Hun,  568.  La.  An.,  457;  Gas  Light  &  Banking 

42  Brouwer  v.  Hill,  1  Sandf.,  629;  Co.  v.  Haynes,  7  La.  An.,  114;  Hyde 
White  V.  Haight,  16  N.  Y.,  310;  Os-  v.   Lynde,   4   N.    Y.,   387;    Atlantic 


390  RECEIVERS.  [chap.  X. 

cover  the  value  of  a  promissory  note  due  to  the  corporation 
and  converted  by  defendant,  the  right  of  action  accruing  be- 
fore his  appointment.^^  So  he  may  maintain  an  action  of 
trover  for  the  wrongful  conversion  of  property  of  the  corpora- 
tion.'*^ And  the  receiver  of  an  insolvent  corporation  is  en- 
titled to  enforce  all  the  securities  belonging  to  the  corporation 
for  the  purpose  of  paying  its  debts.  A  receiver  of  an  insolvent 
insurance  company  may,  therefore,  maintain  an  action  to  col- 
lect a  note  given  for  a  policy  of  insurance  by  the  assured."*^ 
And  in  New  York,  receivers  of  insolvent  corporations  are  held 
to  be  fully  authorized,  both  by  statute  and  by  virtue  of  their 
general  powers,  to  sue  for  all  money  due  to  the  corporation, 
and  for  all  property  improperly  disposed  of  in  violation  of 
either  the  rights  of  creditors  or  of  shareholders,  for  the  purpose 
of  paying  the  debts  of  the  corporation,  and  dividing  the  sur- 
plus, if  any,  among  the  shareholders.'*^ 

§  317.  Rights  of  action  of  receiver  of  insolvent  bank. 
The  same  general  doctrine  prevails  in  Rhode  Island,  where  it 
is  lield  that  the  receiver  of  an  insolvent  banking  corporation, 
appointed  under  a  statute  authorizing  the  proceeding,  is 
clothed  with  all  the  powers  and  rights  of  the  corporation  itself, 
with  respect  to  the  collection  of  its  debts  and  the  enforcement 
of  obligations  in  its  favor.  His  principal  duty  being  to  protect 
the  creditors  of  the  bank,  he  may  take  advantage  of  any  fraud 
in  derogation  of  the  rights  of  creditors  to  which  the  insolvent 

Trust  Co.  V.  Dana,  62  C.  C.  A.,  657,  it  held  that  a  receiver  succeeds  to 

128  Fed.,  209.  all  the  rights  of  action  of  a  corpora- 

43  Brouwer  v.  Hill,  1  Sandf.,  629.  tion  over  which  he  is  appointed,  and 

44  Terry  v.  Bamberger,  14  that  the  right  of  the  corporation  to 
Blatchf.,  234.  sue    is    suspended    pending    the    re- 

45  White  V.  Haight,  16  N.  Y.,  310.  ceivership.         Davis       v.       Ladoga 

46  Osgood  V.  Laytin,  48  Barb.,  Creamery  Co.,  128  Ind.,  222,  27  N. 
464.  And  see,  as  to  right  of  action  E.,  494;  Davis  v.  Talbot,  137  Ind., 
of  the  receiver  of  an  insolvent  in-  235,  36  N.  E.,  1098.  And  the  same 
surance  company  under  the  laws  of  doctrine  has  been  announced  in 
New  York,  upon  premium  notes  Montana.  Boston  &  M.  C.  C.  &  S. 
due  the  company,  Lawrence  v.  Mc-  M.  Co.  v.  Montana  O.  P.  Co.,  24 
Cready,    6    Bosw.,    329;    Berry    v.  Mont.,  142,  60  Pac,  990. 

Brett,  id.,  627.     And  in  Indiana  it 


CHAP.  X.]  CORPORATIONS.  391 

corporation  was  a  party,  and  may  maintain  an  action  to  re- 
cover money  of  which  the  corporation  has  been  defrauded. 
When,  therefore,  an  officer  of  the  bank,  in  breach  of  his  trust, 
has  wrongfully  appropriated  funds  of  the  bank  to  his  own  use, 
the  receiver  may  maintain  an  action  for  money  had  and  re- 
ceiver against  such  officer.  And  in  such  action  it  is  not  neces- 
sary that  the  receiver,  as  a  condition  precedent  to  his  recovery, 
should  prove  a  special  injury  resulting  from  the  wrong  com- 
plained of  to  some  creditor  or  shareholder  of  the  bank.  Nor 
need  the  receiver,  in  order  to  entitle  him  to  a  recovery,  tender 
to  the  defendant  his  shares  of  capital  stock  in  the  bank,  with 
which  he  had  parted  in  consideration  of  the  securities  for  the 
conversion  of  which  the  action  is  brought.^?  So  it  is  held  in 
Missouri  that  a  receiver  of  an  insolvent  savings  bank  may,  un- 
der the  direction  of  the  court,  maintain  an  action  against  direc- 
tors of  the  bank  for  losses  sustained  by  reason  of  loaning  money 
without  security,  contrary  to  the  provisions  of  a  statute  reg- 
ulating such  banks. ^8 

§  317a.  Right  to  enforce  individual  or  additional  liabil- 
ity of  stockholders.  The  authorities  are  not  wholly  recon- 
cilable as  to  the  right  of  a  receiver  of  a  corporation  to  maintain 
an  action  in  behalf  of  its  creditors,  to  recover  of  shareholders 
an  individual  or  additional  liability,  imposed  by  charter  or 
statute  upon  shareholders  for  the  protection  of  creditors.  Re- 
garding the  receiver  as  limited  to  such  rights  of  action  as 
might  have  been  enforced  by  the  corporation  itself,  under  a 
bank  charter  making  stockholders  liable  for  double  the  amount 
of  their  stock,  it  has  been  held  that  a  receiver  of  the  bank 
could  not  enforce  such  liability,  since  it  is  construed  to  exist 
in  favor  of  the  creditors  and  not  of  the  corporation.^^  /^j-,^^ 
the  rule  thus  laid  down  has  been  applied  under  the  statutes  of 
Utah  and  Iowa  creating  the  liability  of  stockholders  in  state 
banks.50    So  it  was  held,  under  a  former  statute  of  Minnesota 

4T  Hayes  v.  Kenyon,  7  R.  I,  136.  40  jacobson  v.  Allen,  20  Blatchf., 

48  Thompson  v.  Greeley,  107  Mo.,      525. 
577,  17  S.  W.,  962.  50  McLaughlin     v.     Kimball,     20 


392  RECEIVERS.  [chap.  X. 

creating  the  additional  liability  of  stockholders  of  corporations 
of  that  state,  that  the  liability  under  the  statute  was  to  the  cred- 
itors and  not  to  the  corporation  and  that  the  receiver  of  the  cor- 
poration could  therefore  not  maintain  an  action  for  its  enforce- 
ment.^i  And  under  a  statute  which  provided  that  the  stock- 
holders of  a  corporation  should  be  individually  liable  to  pay  all 
contracts  made  by  the  corporation  which  were  not  paid  by  it, 
it  w^as  held  that  the  liability  was  created  in  favor  of  the  cred- 
itors and  not  of  the  corporation  and  that  the  receiver  of  the 
latter  could  therefore  not  enforce  it.^^  And  in  an  action 
brought  by  the  receiver  of  an  insolvent  corporation  under  the 
statute  of  Kansas  to  enforce  the  additional  liability  of  the  stock- 
holders, it  is  held  that  the  proceeding  must  be  brought  against 
all  the  stockholders  within  the  jurisdiction  and  that  the  re- 
ceiver could  not  maintain  an  action  against  a  single  stock- 
holder.^^ So  when  stockholders  are  made  liable  by  statute  to 
the  creditors  of  the  corporation,  to  an  amount  equal  to  their 
stock,  for  all  debts  and  contracts  made  until  the  whole  amount 
of  capital  stock  is  paid  in,  the  liability  being  regarded  as  neither 
in  favor  of  the  corporation  itself,  nor  of  all  its  creditors,  but 
only  for  the  benefit  of  such  creditors  as  fall  within  the  pre- 
scribed conditions,  the  receiver  can  not  maintain  an  action  to 
enforce  such  liability.^'*  And  wdien,  by  the  charter  of  a  bank, 
its  shareholders  are  made  severally  and  individually  liable,  to 

Utah,  254,  58  Pac,  685,  11  Am.  St.  which  affirmed  S.  C,  102  Fed.,  790; 

Rep.,  908;   Steinke  v.   Loofbourow,  Hale  v.  Coffin,  114  Fed.,  567.     And 

17  Utah,  252,  54  Pac,  120.    The  case  see   Hale   v.   Tyler,    104   Fed.,   757. 

last  cited  fully  sustains  the  rule  as  For  the  statute  in  question  see  Ch. 

announced    in    the    text,    although  76,  of  the  General  Statutes  of  Minn- 

the  action  was  instituted  by  a  re-  esota,  of  1878  and  1894. 

ceiver  in  a  foreign  court.  52  Hammond   v.    Cline,    170   Ind., 

51  Palmer  v.  Bank,  65  Minn.,  90,  452,  84  S.  E.,  827. 

67  N.  W.,  893 ;   Minneapolis   Base-  53  Waller  v.  Hamer,  65  Kan.,  168, 

ball    Co.    V.    City    Bank,   66    Minn.,  69  Pac,   185;   Evans  v.   Nellis,   187 

441,  69  N.  W.,  331,  38  L.  R.  A.,  415;  U.  S.,  271,  23  Sup.  Ct.  Rep.,  74,  47 

Allen  V.  Walsh,  25  Minn.,  543;  Hale  L.  Ed.,  173. 

V.  Allison,  188  U.  S.,  56,  23  Sup.  Ct.  54  Farnsworth  v.  Wood,  91  N.  Y., 

Rep.,  244,  47  L.  Ed.,  380,  affirming  308. 
S.  C,  45  C.  C.  A.,  270,  106  Fed.,  258, 


CHAP.  X.]  CORPORATIONS.  393 

the  amount  of  their  stock,  to  depositors,  the  right  of  action  is 
construed  as  being  conferred  directly  upon  the  depositors,  and 
it  can  not,  therefore,  be  enforced  by  the  receiver.^^  But  under 
a  statute  making  all  persons  composing  the  corporation  liable 
to  the  extent  of  their  respective  shares  of  stock,  for  all  debts 
due  at  the  time  of  the  dissolution  of  the  corporation,  a  receiver 
appointed  in  an  action  brought  in  behalf  of  all  creditors  to 
wind  up  the  corporation,  may  enforce  such  liability  against  the 
shareholders. ^6  And  the  same  doctrine  has  been  announced  in 
Iowa  under  similar  provisions  of  the  code  of  that  state.^'^  And 
when  the  additional  stock  liability  is  created  by  charter  in  favor 
of  a  certain  class  of  creditors  as  an  entirety,  an  action  may  be 
maintained  by  some  of  such  creditors  in  behalf  of  all,  the  re- 
ceiver proceeding  concurrently  with  them  by  petition  in  the 
same  proceeding,  to  enforce  such  stock  liability  in  equity  for 
the  benefit  of  the  entire  body  of  creditors  interested  therein. 
And  in  such  action  the  court  may  enjoin  individual  creditors 
from  pursuing  their  separate  actions  at  law  to  enforce  such  lia- 
bility for  their  own  benefit.^^  And  it  is  held  that  the  individual 
liability  of  the  stockholders  in  an  insolvent  state  bank  under 
the  statute  of  Nebraska  is  for  the  benefit  of  all  creditors  and 
that  when  an  action  is  brought,  it  should  be  for  the  benefit  of 
all,  and  when  a  receiver  has  been  appointed,  the  action  should 
be  prosecuted  in  his  name.^^  And  under  the  statute  of  Wash- 
ington creating  the  additional  liability  of  stockholders  in  state 
banks,  it  is  held  that  the  proper  practice  for  the  purpose  of  en- 
forcing such  liability  is  by  a  proceeding  in  equity  brought  by 
the  receiver  of  the  bank  against  all  the  stockholders  and  upon 


55  Wincock  v.  Turpin,  96  III,  135.  58  Eames  v.  Doris,   102  111.,  350. 

56  Story  v.  Furman,  25  N.  Y.,  59  Farmers'  Loan  &  Trust  Co.  v. 
214.  See,  also,  McDonald  v.  Ross-  Funk,  49  Neb.,  353,  68  N.  W.,  520; 
Lewin,  29  Hun,  87;  Foster  v.  Row,  German  National  Bank  v.  Farmers 
120  Mich.,  1,  79  N.  W.,  696,  11  Am.  &  M.  Bank,  54  Neb.,  593,  74  N.  W., 
St.  Rep.,  565.  1086 ;  Brown  v.  Brink,  57  Neb.,  606, 

57  State    V.    Union    Stock    Yards  78  N.  W.,  280. 
State   Bank,   103   Iowa,   549,   70  N. 

W..  752,  72  N.  W.,  1076. 


394  RECEIVERS.  [chap,  X. 

behalf  of  all  the  creditors.^*^  And  this  practice  has  been  ap- 
proved and  followed  in  North  Carolina/^i  And  since  the  action 
should  be  brought  by  the  receiver,  it  is  held  that  it  can  not 
be  maintained  by  a  creditor  against  the  stockholders ;  nor  will 
it  avail  that  the  receiver  is  joined  as  a  party  defendant  to  such 
action. ^2  ^nd  in  an  action  brought  by  the  receiver  of  an  in- 
solvent state  bank  to  enforce  the  individual  liability  of  the 
stockholders,  it  is  only  necessary  to  allege  the  order  of  the  court 
authorizing  the  bringing  of  the  action,  and  it  is  not  necessary 
to  show  authority  upon  the  part  of  the  creditors  to  institute  the 
proceedings,  nor  is  it  necessary  that  a  copy  of  the  bill  or  peti- 
tion under  which  the  receiver  was  appointed  should  be  attached 
as  an  exhibit  to  the  declaration  against  the  stockholders.*^^ 

§  31 7^.  Right  to  enforce  such  liability  in  foreign  state. 
The  authorities  display  a  still  greater  want  of  harmony  as  to 
the  right  of  the  receiver  of  an  insolvent  corporation  to  maintain 
an  action  to  enforce  the  individual  or  additional  liability  of  the 
shareholders  in  the  courts  of  a  foreign  state.  Much  of  this 
want  of  harmony  is  due  to  the  varying  nature  of  the  provisions 
of  the  statutes  of  the  different  states  by  which  the  liability  is 
created  and  the  methods  of  its  enforcement  are  prescribed.  The 
right  of  the  receiver  to  maintain  the  action  has  been  denied  un- 
der the  general  rule  heretofore  discussed  that  the  powers  of  a 
receiver  are  co-extensive  only  with  the  court  of  his  appoint- 
ment and  that  he  has  no  extraterritorial  right  of  action. ^^ 
Other  courts  have  applied  the  general  rule  that  where  a  statute 
creates  a  liability  unknown  to  the  common  law  and  prescribes 
a  method  for  its  enforcement,  the  special  remedy  thus  created 
is  exclusive  of  all  other  remedies,  and  since  from  its  nature  it 

60  Wilson  V.  Book,  13  Wash.,  676,  63  Wheatley   v.    Glover,    125    Ga., 
43  Pac,  939 ;  New  York  N.  E.  Bank      710,  730. 

V.  Metropolitan  S.  Bank,  28  Wash.,  64  Hilliker  v.  Hale,  54  C.   C.  A., 

553.  68  Pac,  905.  252,  117  Fed.,  220,  reversing  S.  C, 

61  Smathers  v.   Bank,  135  N.   C,  109    Fed.,    273 ;    Covell    v.    Fowler, 
410,  47  S.  E.,  893.  144  Fed.,  535.     For  a  discussion  of 

62  Watterson     v.     Masterson,     15  the    general    rule    referred    to,    see 
Wash.,  511,  46  Pac,  1041.  ante,  §  239,  ef  seq. 


CHAP.  X.] 


CORPORATIONS. 


395 


can  not  be  applied  outside  of  the  courts  of  the  state  where  it 
is  created,  the  right  of  the  receiver  to  maintain  the  action  in 
the  courts  of  a  foreign  state  is  denied. ^^  And  where,  under 
the  law  or  statutes  of  the  state  creating  the  liability,  the  re- 
ceiver can  not  maintain  an  action  against  the  stockholder  to 
enforce  his  individual  liability,  or  where  he  can  do  so  only  after 
the  performance  of  certain  conditions  which  have  not  been  ful- 
filled, it  follows  that  he  can  not  maintain  a  similar  action  in  the 
courts  of  a  foreign  state.  Thus,  where  the  liability  is  construed 
as  being  to  the  creditors  and  not  to  the  corporation,  it  is  held 
that,  since  the  receiver  can  not  maintain  an  action  locally,  he 
can  not  maintain  it  in  a  foreign  court.^^  So,  under  the  stat- 
ute of  Kansas  providing  that  upon  the  insolvency  of  a  corpora- 
tion, a  receiver  shall  be  appointed  to  close  up  the  affairs  of  the 
corporation,  who  shall  immediately  institute  proceedings 
against  all  stockholders  to  enforce  their  liability,  the  statutory 
remedy  thus  provided  is  held  to  be  a  prerequisite  to  maintain- 
ing an  action  against  a  single  stockholder  in  a  foreign  court.^"^ 


65  Finney  v.  Guy,  106  Wis.,  256, 
82  N.  W.,  595,  49  L.  R.  A.,  486,  af- 
firmed in  189  U.  S.,  335.  23  Sup.  Ct. 
Rep.,  558,  47  L.  Ed.,  839;  Hunt  v. 
Whewell,  122  Wis.,  33,  99  N.  W., 
599;  Converse  v.  Hamilton,  136 
Wis.,  589,  118  N.  W.,  190.  And  see 
Murtey  v.  Allen,  71  Vt.,  377,  45 
Atl.,  752,  76  Am.  St.  Rep.,  779. 
For  the  application  of  the  rule  gen- 
erally, see  Erickson  v.  Nesmith,  4 
Allen,  233;  New  Haven  H.  N.  Co. 
V.  Linden  Springs  Co.,  142  Mass., 
349,  7  N.  E.,  nZ;  Bank  v.  Rindge, 
154  Mass.,  203,  27  N.  E.,  1015;  Fow- 
ler V.  Lamson,  146  111.,  472,  34  N.  E., 
932;  Tuttle  v.  National  Bank,  161 
111.,  497,  44  N.  E.,  984 ;  Marshall  v. 
Sherman,  148  N.  Y.,  9,  42  N.  E., 
419;  Nimick  &  Co.  v.  Iron  Works 
Co.,  25  West  Va.,  184;  Russell  v. 
Pacific  Ry.  Co.,  113  Cal.,  258,  45 
Pac,  323. 


66  Hale  v.  Allison,  188  U.  S.,  56, 
23  Sup.  Ct.  Rep.,  244,  47  L.  Ed., 
380,  affirming  S.  C,  45  C.  C.  A., 
270,  106  Fed.,  258,  which  affirmed 
S.  C,  102  Fed.,  790;  Steinke  v. 
Loofbourow,  17  Utah,  252,  54  Pac, 
120.  And  see  Hale  v.  Tyler,  104 
Fed.,  757;  Hale  v.  Coffin,  114  Fed., 
567.  But  see,  contra,  Hale  v.  Har- 
don,  37  C.  C.  A.,  240,  95  Fed.,  747, 
reversing  S.  C,  89  Fed.,  283. 

67  Evans  v.  Nellis,  187  U.  S.,  271, 
23  Sup.  Ct.  Rep.,  74,  47  L.  Ed.,  173, 
following,  as  to  the  construction  of 
the  statute,  Waller  v.  Hamer,  65 
Kan.,  168,  69  Pac,  185,  which,  how- 
ever, was  not  an  action  in  a  for- 
eign court.  For  the  statute  in  ques- 
tion, see  Laws  of  1898,  c.  10,  sec- 
tions 14  and  15. 


396  RECEIVERS.  [chap.  X. 

And  in  Vermont  it  is  held  that  the  receiver  of  an  insolvent 
state  bank  organized  under  the  laws  of  Nebraska  can  not  main- 
tain an  action  to  enforce  the  additional  liability  of  a  stock- 
holder, since,  under  the  laws  of  that  state,  the  liability  is  for 
the  benefit  of  the  creditors  and  the  receiver  has  no  such  title 
as  will  enable  him  to  maintain  an  action  at  law  in  his  own  name 
in  a  foreign  state. "^^  And  it  is  held  that  an  individual  creditor 
of  an  insolvent  Kansas  corporation  can  not  hold  a  stockholder 
upon  his  statutory  liability  in  a  foreign  court  where  the  cor- 
poration is  in  the  hands  of  a  receiver  under  the  statute,  since 
the  right  to  recover  from  the  stockholders  in  such  case  is  in 
the  receiver  for  the  common  benefit  of  all  creditors  and  not  in  a 
single  creditor.69  Aj-kJ  where  a  statute  makes  the  liability  of  a 
stockholder  of  a  state  bank  conditional  upon  the  insolvency  of 
the  bank  and  upon  there  being  insufficient  assets  to  pay  its 
debts  and  liabilities,  a  receiver  appointed  under  the  general 
chancery  powers  of  the  court  can  not  maintain  an  action  in  a 
federal  court  in  another  state  against  a  stockholder  to  enforce 
his  statutory  liability  until  there  has  been  an  ascertainment  of 
such  facts. '''^ 

§  317c.  The  same;  receiver  as  quasi-assignee.  Where 
the  statute  under  which  a  receiver  is  appointed  over  an  insolvent 
corporation  makes  him  a  quasi-assignee  of  the  property  and  as- 
sets of  the  corporation  and  gives  him  full  authority  to  maintain 
actions  in  his  own  name  in  other  jurisdictions  for  the  purpose 
of  enforcing  the  statutory  liability  of  the  stockholders,  the  right 
of  the  receiver  to  maintain  such  actions  in  foreign  courts  has 
frequently  been  recognized.  Thus,  it  is  held  that  the  receiver  of 
an  insolvent  state  bank  of  Washington  appointed  in  that  state 
under  the  statute,  is  to  be  regarded  as  a  quasi-assignee  and  as 
being  vested  with  the  legal  title  to  the  assets  of  the  bank,  and 
that  he  may  therefore  maintain  an  action  in  his  own  name  in  the 

68  Murtey  v.   Allen,  71   Vt.,  377,  69  Gushing  v.   Perot.  175  Pa.  St., 

45  Atl.,  752,  76  Am.  St.  Rep.,  779,  66,  34  Atl.,  447,  34  L.  R.  A.,  72>7, 

followed    by    King   v.    Cochran,    72  and  note,  52  Am.  St.  Rep.,  835. 

Vt.,  107,  47  Atl.,  3S4.  70  Wigton  v.  Bosler,  102  Fed.,  70. 


CHAP.  X.]  CORPORATIONS.  397 

courts  of  a  foreign  state  for  the  purpose  of  enforcing  the  statu- 
tory Hability  of  the  stockholders. '^i  And  the  action  may  be 
maintained  aUhough  the  Habihty  under  the  statute  is  to  the  cred- 
itors, since  it  is  also  to  be  regarded  as  a  secondary  asset  of  the 
bank,  the  title  to  which  is  in  the  receiver.'^^  ^j^^^  ^^g  right  of  the 
receiver  of  an  insolvent  state  bank  of  Washington  to  maintain 
such  an  action  as  a  quasi-assignee  has  been  recognized  in  New 
York,  where  it  is  held  that  the  action  may  be  maintained  upon 
principles  of  comity  if  it  works  no  detriment  to  citizens  of  the 
latter  state  and  is  not  repugnant  to  its  policy J^  Sq  under  the 
statute  of  Minnesota  which  provides  for  the  appointment  of  a 
receiver  of  an  insolvent  corporation  to  enforce  the  additional 
liability  of  the  stockholders  upon  behalf  of  the  creditors  and 
makes  such  receiver  a  quasi-assignee  with  power  to  institute 
proceedings  in  any  state  or  country,  it  is  held  that  the  receiver 
is  to  be  regarded  as  more  than  an  ordinary  chancery  receiver, 
and  that  he  may  maintain  such  an  action  in  a  foreign  stated** 
So,  under  the  statute  of  Ohio  which  creates  the  additional  lia- 
bility of  stockholders  and  provides  that  the  court  may  appoint 
a  receiver  to  enforce  such  liability  with  power  to  maintain  ac- 
tions in  his  own  name  in  other  jurisdictions,  it  is  held  that  such 
a  receiver  may  maintain  an  action  against  a  stockholder  in  a 
federal  court  in  another  state  for  the  purpose  of  enforcing  the 
liability. "^5  And  under  the  statute  of  Minnesota  providing  for 
the  appointment  of  a  receiver  in  an  action  brought  for  the  pur- 
pose of  enforcing  the  liability  of  stockholders  in  an  insolvent 
state  bank,  the  liability  being  for  the  common  benefit  of  all 
creditors,  it  is  held  that  a  receiver  appointed  in  such  a  proceed- 

71  Howarth  v.  Lombard,  175  S.,  516,  27  Sup.  Ct.  Rep.,  755,  51  L. 
Mass.,  570,  579,  56  N.  E.,  888,  891,  Ed.,  1163;  Converse  v.  Hears,  162 
49  L.  R.  A.,  301;  King  v.  Cochran,  Fed.,  IdT ;  Converse  v.  Ayer,  197 
76  Vt,  141,  56  Atl.,  667.  Mass.,  443,  84  N.  E.,  98.     For  the 

72  King  V.  Cochran,  16  Vt.,  141,  statute  in  question  see  Laws  of  1899, 
56  Atl.,  667.  c.  272,  p.  315. 

73  Howarth  v.  Angle,  162  N.  Y.,  75  Burr  v.  Smith,  113  Fed.,  858. 
179,  56  N.  E.,  489,  47  L.  R.  A.,  725.  And   see  Zieverink   v.   Kemper,   50 

74  Bemheimer  z;.  Converse,  206  U.  Ohio  St.,  208,  34  N.  E.,  250. 


398  RECEIVERS.  [chap,  X. 

ing  in  ]\Iinnesota  may,  upon  principles  of  comity,  maintain  an 
action  in  another  state  for  the  purpose  of  enforcing  the  habihty 
of  stockholders.'^'^ 

g  318.  Appointment  does  not  change  rights  of  action  or 
contract  relations;  same  defenses  allowed;  mutual  insur- 
ance company;  change  of  corporate  name.  It  follows  nec- 
essarily from  the  principles  already  discussed  and  illustrated, 
that  the  appointment  of  a  receiver  over  a  corporation  does  not 
have  the  effect  of  changing  any  rights  of  action,  or  of  changing 
the  contract  relations  existing  between  the  corporation  and  its 
debtors.'^'^  No  question  of  right,  as  between  these  parties,  being- 
affected  by  the  appointment,  any  defense  which  the  debtor  might 
have  urged  in  an  action  brought  against  him  by  the  corporation 
itself,  may  still  be  made  in  an  action  brought  against  him  by  the 
receiver.'''^  And  in  the  case  of  a  mutual  insurance  company, 
where  the  obligation  of  the  assured  upon  a  premium  note  given 
for  a  policy  of  insurance  depends  upon  an  assessment  and  notice 
thereof,  which  assessment  and  notice  have  never  been  given  by 
the  company,  so  that  it  could  maintain  no  action  against  the 
maker  of  the  note,  a  receiver  of  the  company  stands  in  the  same 
situation,  and  will  not  be  allowed  to  maintain  an  action,  without 

76  Childs  V.  Cleaves,  95  Me.,  498,  plaintiff,  as  receiver  of  the  Amer- 
50  Atl.,  714.  As  to  the  running  of  ican  Mutual  Insurance  Company, 
the  statute  of  limitations  in  an  ac-  takes  its  notes  and  assets  subject 
tion  brought  by  the  receiver  to  en-  to  all  the  conditions  and  legal  dis- 
force  the  statutory  liability  of  a  abilities  with  which  they  were  tram- 
stockholder    of    an    insolvent    Min-  meled  in  the  hands  of  the  corpora- 


nesota     corporation,     see     Hale    v. 
Cushman,  96  Me.,  148,  51  Atl.,  874, 

77  Williams  v.  Babcock,  25  Barb. 
109;  Bell  v.  Shibley,  33  Barb.,  610, 
And  see  Shaughnessy  v.  The  Reus 
selaer  Insurance  Co.,  21  Barb.,  605 
Savage  v.  Medbury,  19  N.  Y.,  32. 

78  Moise  V.  Chapman,  24  Ga.,  249 


tion  itself;  he  can  not  impeach  or 
disaffirm  its  authorized  acts,  nor  the 
authorized  acts  of  its  agents.  If 
a  note  in  the  hands  of  the  corpora- 
tion was  void,  or  incapable  of  en- 
forcement, by  reason  of  fraud  or  il- 
legality in  its  procurement  or  incep- 
tion, passing  it  into  the  hands  of  a 


Newport  Cotton   Mill  Co.  v.  Mims,  receiver  does  not  purge  it  of  these 

103  Tenn.,  465,  53  S.  W.,  736;  Dev-  defects."    See,  also,  Pine  Lake  Iron 

endorf  v.   Beardsley,  23  Barb.,  656.  Co.   v.   La   Fayette   Car  Works,  S3 

In  the  latter  case,  Mr.  Justice  James  Fed.,  853. 
cl serves,  p.  659,  as  follows:     "  The 


CHAP.  X.]  CORPORATIONS.  399 

having  taken  the  necessary  steps  to  fix  the  Hability  of  the  de- 
fendant.'^^  And  when  a  receiver  of  an  insolvent  corporation 
brings  an  action  upon  a  note  as  part  of  the  corporate  assets, 
but  the  note  is  by  its  terms  made  payable  to  the  order  of  a  dif- 
ferently named  corporation,  a  change  of  the  corporate  name 
having  been  effected,  it  is  necessary  for  the  receiver  to  show, 
by  proper  averments,  that  the  note  is  part  of  the  assets  of  the 
corporation  over  which  he  has  been  appointed.^0  jsj-qj-  ^^m 
the  receiver  be  permitted  to  litigate  questions  which  have  al- 
ready been  determined  adversely  to  the  corporation.  He  can 
not,  therefore,  enjoin  the  collection  of  a  tax  assessed  against 
the  corporation  which  has  already  been  determined  to  be  valid 
in  an  action  brought  in  behalf  of  the  corporation,  the  receiver 
being  as  much  concluded  by  such  former  litigation  as  the  cor- 
poration itself.^l  And  an  action  pending  against  a  corpora- 
tion at  the  date  of  a  receivership  may  proceed  to  judgment 
against  the  corporation,  and  such  judgment  will  be  conclusive, 
as  against  the  receiver,  of  the  amount  of  plaintiff's  demand.^^ 
And,  in  an  action  to  enforce  against  the  receiver  a  judgment 
previously  obtained  against  the  corporation,  the  receiver  can 
not  contest  the  amount  of  the  indebtedness,  or  reopen  questions 
which  were  litigated  in  the  former  action,  or  interpose  any  de- 
fense to  the  merits  which  might  then  have  been  interposed.  It 
is,  however,  still  reserved  for  the  court  appointing  the  receiver 
to  determine  the  respective  priorities  among  creditors  as  to  pay- 
ment out  of  the  fund  in  the  receiver's  hands.^^ 

§  319.  Receiver  can  not  disaffirm  settlement  made  by 
corporation;  can  not  sue  on  cancelled  note  of  insurance 
company.  Since  the  receiver  of  a  corporation,  as  we  have 
already  seen,  succeeds  to  the  estate  of  and  derives  his  title  from 
the  corporation,  he  is  bound  by  all  its  lawful  and  authorized 
acts  done  before  the  receivership,  and  will  not  be  allowed  to 

79  Williams  v.  Babcock,  25  Barb.,  81  Hopkins  v.  Taylor,  87  111.,  436. 
109;  Thomas  v.  Whallon,  31  Barb.,  82  pjne  Lake  Iron  Co.  v.  La  Fay- 
172.                                                                ette  Car  Works,  53  Fed.,  853. 

80  Hyatt  V.  McMahon,  25  Barb.,  83  Pringle  v.  Woolworth,  90  N. 
457.                                                              Y.,  502. 


400  RECEIVERS.  [chap,  X. 

disaffirm  or  set  them  aside.  As  to  all  such  matters,  he  stands 
in  precisely  the  same  position  as  the  corporation  itself  stood 
before  his  appointment;  and  he  can  not  avoid  a  settlement 
which  the  corporation  was  duly  authorized  to  make,  and  which 
was  effected  before  his  appointment.  When,  therefore,  an  in- 
surance company  has  surrendered  and  canceled  a  note  given 
for  insurance,  upon  the  assured  surrendering  his  policy,  and 
no  fraud  upon  the  creditors  of  the  company  is  shown,  a  re- 
ceiver subsequently  appointed  will  not  be  allowed  to  maintain 
an  action  upon  the  note,  since  he  can  have  no  greater  rights  for 
this  purpose  than  the  company  itself  had.^^ 

§  320.  May  disaffirm  act  of  corporation  in  fraud  of  cred- 
itors; illegal  transfer  of  securities;  fraudulent  disposal  of 
money  and  notes;  illegal  mortgage;  fraudulent  judgment 
and  transfers.  When,  however,  the  act  of  the  corporation 
which  it  is  sought  to  disaffirm  is  illegal  and  in  violation  of  the 
rights  of  creditors,  a  different  rule  prevails.  And  in  such  case, 
the  receiver,  being  regarded  for  all  beneficial  interests  connected 
with  the  receivership  as  the  representative  of  the  creditors 
and  stockholders,  will  not  be  concluded  by  such  act.^^    When, 

84  Hyde  v.  Lynde,  4  N.  Y.,  387.  mann,  50  N.  J.  Eq.,  120,  24  Atl.,  571 ; 
Bronson,  C.  J.,  observes,  p.  392:  Bennett  v.  Keen,  59  N.  J.  Eq.,  634, 
"He  (the  receiver)  is  as  much  43  Atl.,  1070;  Brockhurst  v.  Cox, 
bound  by  a  settlement  which  the  71  N.  J.  Eq.,  703,  64  Atl.,  182  (a 
company  was  authorized  to  make,  receivership  for  the  dissolution  of  a 
as  was  the  company  itself.  It  partnership  and  an  accounting)  ; 
would  be  strange,  indeed,  if  the  Washington  Mill  Co.  v.  Sprague 
legal  acts  of  a  corporation  did  not  Lumber  Co.,  19  Wash.,  165,  52  Pac, 
bind  the  receiver  of  its  effects.  If  1067.  And  see  Latta  v.  Catawba 
the  rule  were  not  so,  no  one  would  Electric  Co.,  146  N.  C,  285,  59  S.  E., 
dare  to  venture  to  deal  with  a  cor-  1028.  And  see,  ante,  §  314.  As  to 
poration."  the  right  of  the  receiver  of  an  in- 

85  Gillet  V.  Moody,  3  N.  Y.,  479 ;  solvent  corporation  under  the  code 
Tuckerman  v.  Brown,  33  N.  Y.,  of  New  York  to  maintain  an  ac- 
297;  Brouwer  v.  Appleby,  1  Sandf.,  tion  to  recover  money  paid  to  the 
158;  Brouwer  z;.  Hill,  1  Sandf.,  629;  defendant  by  the  corporation  for 
Attorney-General  v.  Guardian  Mut-  the  purpose  of  giving  an  unlawful 
ual  Life  Insurance  Co.,  77  N.  Y.,  preference  and  as  to  the  necessity 
272;   Graham  Button  Co.  v.   Spiel-  of  joining  the  corporation  as  a  par- 


CHAP.  X.]  CORPORATIONS.  401 

therefore,  the  directors  of  a  corporation  have  made  an  illegal 
transfer  of  securities,  constituting  a  part  of  the  corporate  assets, 
to  one  of  the  shareholders  in  exchange  for  his  stock,  the  trans- 
fer impairing  the  security  of  creditors  and  being  void  as  to 
them,  a  receiver  of  the  corporation  subsequently  appointed  may 
maintain  an  action  to  set  aside  such  transfer.  Indeed,  such  an 
action  is  regarded  as  the  most  appropriate  course  on  the  part  of 
the  receiver  to  compel  the  restoration  of  the  securities,  for  the 
benefit  of  all  the  creditors.^^  So  the  receiver  of  an  insolvent 
corporation  appointed  in  a  general  creditors  suit  may  maintain 
an  action  against  the  directors  of  the  corporation  to  recover  as- 
sets which  they  have  applied,  by  way  of  an  unlawful  preference, 
to  debts  for  which  they  were  personally  liable.^"^  So  when  the 
president  of  a  banking  corporation  has  put  into  the  bank  ficti- 
tious notes,  and  has  used  them  in  lieu  of  a  like  amount  of 
money  of  the  bank,  and  has  fraudulently  disposed  of  the  money, 
a  receiver  of  the  bank  may  maintain  an  action  against  the  presi- 
dent for  the  recovery  of  the  money.  And  in  such  case  the 
possession  of  the  notes  by  the  receiver  will  be  regarded  as  pre- 
sumptive evidence  that  the  money  has  not  beeij  repaid,  and 
as  sufficient  cause  of  action  on  his  part.^^  So  when  a  banking 
corporation,  while  in  a  condition  of  insolvency,  acting  through 
its  cashier,  has  made  an  illegal  and  unauthorized  transfer  of 
notes  held  by  the  bank,  to  one  of  its  directors  who  knew  of  its 
insolvency,  a  receiver  subsequently  appointed  to  wind  up  the 
affairs  of  the  bank  may,  as  the  representative  of  the  creditors, 
repudiate  the  transfer  and  maintain  an  action  to  recover  back 
the  value  of  the  notes,  or  the  amount  realized  on  them  by  the 
defendant.  And  in  such  an  action,  the  defendant  will  not  be 
allowed,  by  way  of  counter-claim,  the  amount  which  he  has  ac- 

ty   to    such    action,    see    Nealis    v.  87  Williams  v.   Turner,  63   Neb., 

American  T.  &  I.  Co.,  150  N.  Y.,      575,  88  N.  W.,  668. 

42,  44  N.  E.,  944.  88  Butterworth    v.     O'Brien,     24 

86  Gillet  V.  Moody,  3  N.  Y.,  479.      How.  Pr.,  438. 
And  see  Morgan  v.  South  M.  L.  V. 
Co.,  100  Wis.,  465,  76  N.  W.,  354. 
Receivers — 26. 


402  RECEIVERS  [chap.  X. 

tually  paid  for  the  notes,  since  such  defense  arises  out  of  his 
own  illegal  conduct. ^^  So  the  receiver  of  an  insolvent  cor- 
poration may  maintain  an  action  to  set  aside  a  mortgage  and 
sale  thereunder  to  the  directors  who  were  also  creditors  of  the 
corporation.^^  So  where  the  directors  of  an  insolvent  cor- 
poration who  were  also  creditors  have  executed  the  corporate 
note  to  themselves  as  payees  and  afterward  assign  it  for  the 
purpose  of  having  suit  brought,  and  an  action  is  instituted  and 
judgment  rendered  against  the  corporation,  the  receiver  may 
maintain  a  bill  to  set  aside  the  judgment  and  cancel  the  note.^^ 
So  in  New  York,  a  receiver  of  an  insolvent  corporation  may 
maintain  an  action  to  set  aside  a  mortgage  executed  by  the 
corporation  without  the  assent  of  the  requisite  number  of  its 
shareholders,  as  required  by  its  charter.^^  Sq  the  receiver  of 
an  insolvent  corporation  is  entitled  to  have  a  mortgage  given  by 
the  corporation  set  aside  which,  although  valid  as  against  the 
corporation  is  void  as  to  its  creditors.^^  So  the  receiver  of  an 
insolvent  corporation,  being  the  representative  of  the  creditors 
as  well  as  of  the  corporation,  may  set  aside  a  chattel  mortgage 
which,  under  the  laws  of  the  state,  is  void  as  to  creditors  for 
want  of  filing,  even  though  the  mortgage  is -good  as  against 
the  corporation.^^  So,  too,  he  may  maintain  an  action  to  set 
aside  fraudulent  agreements  and  transfers  of  its  property  made 
by  the  corporation,  being  to  this  extent  regarded  as  the  repre- 
sentative of  creditors.  And  the  court  by  which  the  receiver  is 
appointed,  having  jurisdiction  of  the  proceedings  for  winding 
up  the  corporation,  may,  upon  application  of  the  receiver,  en- 
join creditors  from  prosecuting  like  actions,  even  though  be- 

89  Gillet    V.    Phillips,  13    N.    Y.,  mann,  50  N.  J.  Eq.,  120,  24  Atl.,  571 ; 
114.  Curtis  V.   Lewis,  74  Conn..  367,  50 

90  Taylor  v.    Mitchell,  80  Minn.,  Atl.,  878.    And  see  Stephens  v.  Mer- 
492,  83  N.  W.,  418.  iden  B.  Co.,  160  N.  Y.,  178.  54  N.  K, 

91  Taylor  v.   Fanning,  87    Minn.,  781,  1Z   Am.    St.   Rep.,  678;    Brun- 
52.  91  N.  W.,  269.  nemer  v.  Cook  &  B.  Co.,  180  N.  Y., 

92  Vail  V.  Hamilton,  85  N.  Y.,  453,  188.     And  see,  post,  §  454. 
affirming  S.  C,  20  Hun,  355.  94  Bayne  v.  Brewer  Pottery  Co., 

93  Graham   Button    Co.   v.    Spiel-  90  Fed.,  754. 


CHAP.  X.]  CORPORATIONS.  403 

gun  prior  to  the  receiver's  appointment.  In  such  a  case,  the 
decree  dissolving  the  corporation  and  appointing  the  receiver 
being  regarded  as  in  the  nature  of  a  judgment  for  all  the  credit-, 
ors,  they  are  subject  to  the  summary  jurisdiction  of  the  court  in 
matters  pertaining  to  the  administration  of  the  estate.  It  is 
proper,  therefore,  to  enjoin  them  from  proceeding  with  their 
actions,  upon  petition  or  motion  by  the  receiver  in  the  cause  in 
which  he  was  appointed,  without  bringing  a  new  suit  for  this 
purpose.^^  And  since  the  capital  stock  of  a  corporation  is  re- 
garded as  a  trust  fund  for  the  payment  of  its  indebtedness,  a 
receiver  appointed  upon  its  insolvency  may  recover  from  share- 
holders money  paid  to  them  by  the  corporation  for  the  purchase 
of  their  stock  after  the  impairment  of  its  capital;  and  this, 
wholly  independent  of  any  actual  fraud  on  the  part  of  the 
shareholders  making  such  sales.^^  So  where  a  collusive  judg- 
ment has  been  rendered  by  default  against  an  insolvent  cor- 
poration upon  a  claim  against  which  the  corporation  had  a 
good  defense,  the  receiver  of  the  corporation  is  not  bound  by  its 
act  in  allowing  the  judgment,  and  he  may  accordingly  appear 
for  the  protection  of  the  corporation  and  its  creditors  and  move 
to  reopen  the  judgment  and  allow  a  defense  to  be  made  to  the 
claim  upon  which  it  was  rendered.^"^  And  the  receiver  of  an 
insolvent  corporation  may  move  to  set  aside  a  judgment  which 
has  been  rendered  by  confession  against  the  corporation  upon 
a  warrant  of  attorney  which  has  been  signed  by  the  president 
but  which  he  had  no  authority  to  make.^^  And  the  receiver 
of  a  corporation  may  maintain  an  action  to  set  aside  a  judg- 
ment which  has  been  rendered  against  the  corporation  by  fraud 
and  collusion  and  to  interpose  a  defense  to  the  alleged  claim 
upon  which  it  was  based. ^^ 

95  Attorney-General    v.    Guardian      Co.,  184  111.,  625,  56  N.  E.,  957,  75 
Mutual   Life  Insurance   Co.,   77   N.      Am.  St.  Rep.,  195. 

Y.,  272.  98  Stokes  v.   New  Jersey  P.   Co., 

96  Crandall  v.  Lincoln,  52  Conn.,      46  N.  J.  Law,  237. 

73.  99  Whittlesey   v.   Delaney,   73    N. 

97  Peabody  v.  New  England  W.      Y.,  571. 


404 


RECEIVERS. 


[chap.  X. 


§  321.  Right  of  action  to  recover  illegal  dividends  de- 
clared by  insolvent  corporation.  The  right  of  action  of  a 
receiver  of  an  insolvent  corporation,  to  recover  back  dividends 
which  have  been  improperly  paid,  may  be  based  upon  the  prin- 
ciples which  have  been  discussed  in  the  preceding  section.  And 
where  the  law  of  the  state,  regulating  the  incorporation  of  in- 
surance companies,  provides  that  no  dividend  shall  be  made  by 
any  company  incorporated  under  the  act  when  its  cap- 
ital stock  is  impaired,  or  when  the  making  of  such  dividend 
will  have  the  effect  of  impairing  the  capital  stock,  a  dividend 
paid  to  shareholders  of  the  corporation,  while  it  was  in  a  condi- 
tion of  insolvency,  may  be  recovered  back  by  its  receivers.  In 
such  case,  the  shareholders  being  made  liable  by  statute  to  the 
creditors  of  the  corporation  to  the  extent  of  such  illegal  divi- 
dends, the  action  to  enforce  this  liability  is  properly  brought  by 
the  receivers,  who  are,  to  this  extent  and  for  this  purpose,  re- 
garded as  trustees  for  the  benefit  of  all  the  creditors.^    And  in 


1  Osgood  V.  Laytin,  3  Keyes,  521, 
affirming  S.  C,  48  Barb.,  464;  Os- 
good V.  Ogden,  4  Keyes,  70.  And 
see  Minnesota  T.  M.  Co.  v.  Lang- 
don,  44  Minn.,  37,  46  N.  W.,  310. 
But  see,  contra,  Butterworth  v. 
O'Brien,  24  How.  Pr.,  438,  where  it 
was  held  that  the  right  of  action  to 
recover  such  dividends  was  in  the 
creditors  themselves.  Osgood  v. 
Laytin,  3  Keyes,  521,  in  which  the 
doctrine  of  the  text  was  very  clearly 
enunciated,  was  an  action  by  re- 
ceivers of  an  insolvent  insurance 
company  to  recover  illegal  dividends 
paid  to  shareholders,  and  to  enjoin 
certain  creditors  of  the  corporation, 
who  were  made  defendants,  from 
prosecuting  similar  actions.  The 
statute  under  which  the  company 
was  incorporated  provided  that  no 
dividend  should  ever  be  made  when 
the  capital  stock  was  impaired,  or 
when    the    effect   of   such    dividend 


would  be  to  impair  it,  and  that  any 
shareholder  receiving  such  a  divi- 
dend should  be  individually  liable 
to  the  creditors  of  the  corporation 
to  the  extent  of  the  dividend  re- 
ceived. Judgment  for  plaintiffs  on 
demurrer,  from  which  defendants 
appealed.  The  court  of  appeals 
affirmed  the  judgment,  Grover,  J., 
for  the  court,  holding  as  follows, 
p.  523:  "The  design,  plainly  ex- 
pressed by  the  language  of  the  sec- 
tion, was  to  prohibit  a  dividend  of 
the  capital  among  the  stockholders, 
but  to  preserve  the  same  intact  as 
a  fund  for  the  payment  of  creditors 
and  the  security  of  dealers.  It  fol- 
lows that  the  dividend  in  the  pres- 
ent case  was  illegal,  and  that  the 
stockholders  receiving  the  same  are 
liable  to  the  creditors  for  the 
amount  by  them  respectively  re- 
ceived. The  next  question  is,  how 
is   this    to   be   recovered    from    the 


CHAP.  X.] 


CORPORATIONS. 


405 


such  case,  it  is  the  duty  of  the  court  to  protect  the  shareholders 
from  being  harassed  by  other  actions  instituted  for  the  same 
purpose  by  individual  creditors  of  the  corporation,  and  it  may, 
therefore,  enjoin  such  creditors  from  prosecuting  their  actions.^ 
And  when  a  state  court  has  appointed  a  receiver  over  an  in- 


stockholders?  Their  liability  is  to 
the  creditors  of  the  company.  It 
is  clear  that  no  one  creditor  of  the 
company  can  maintain  an  action 
against  an  individual  stockholder, 
for  the  reason  that  the  liability 
created  by  statute  is  to  the  creditors 
generally,  and  not  to  individual 
creditors,  thus  creating  a  liability 
to  the  creditors  jointly.  Again,  a 
creditor,  if  permitted  individually 
to  sue  the  separate  stockholders, 
might  institute  actions  against  each, 
although  his  demand  amounted  to 
far  less  than  the  aggregate  liability, 
and  he  would  continue  a  creditor 
until  he  had  obtained  satisfaction 
of  his  debt,  and  could  obtain  judg- 
ment in  all  the  actions.  Again,  in 
equity,  this  liability  inures  to  the 
creditors  in  proportion  to  the 
amount  of  their  debts  respectively. 
The  maxim,  that  equality  among 
creditors  is  equity,  is  applicable  to 
the  case.  A  court  of  law  can  not, 
in  a  joint  action  by  all  the  cred- 
itors, vi'ork  out  this  equity  and  do 
justice  between  the  parties.  This 
confers  jurisdiction  in  equity,  upon 
the  ground  that  there  is  no  ade- 
quate remedy  at  law.  The  plain- 
tiffs, as  receivers,  are  trustees  for  all 
the  creditors,  and  the  appropriate 
parties  to  prosecute  in  their  behalf, 
thus  avoiding  the  troublesome  in- 
quiry as  to  who  are  creditors  in  the 
proceeding  to  collect  from  the  stock- 
holders the  several  amounts  each  is 
liable  to  pay.  All  the  stockholders 
who   are  liable  may  and   should  be 


included  as  defendants  in  the  same 
action.  There  is  no  difficulty  in  de- 
termining the  amount  each  is  to  pay, 
upon  the  trial  of  the  cause;  and  in 
case  the  whole  amount  of  the  lia- 
bility is  not  required  for  the  pay- 
ment of  the  debts  of  the  company, 
the  precise  amount  each  is  to  pay 
can  be  determined  in  the  action. 
This  course  of  proceeding  is  also 
necessary  to  prevent  multiplicity  of 
actions,  as  there  are  several  hun- 
dreds of  stockholders.  The  above 
views  dispose  of  the  case  as  to  the 
stockholders.  The  creditors  insist 
that  they  are  not  proper  parties  to 
the  action  against  the  stockholders, 
and  that,  upon  this  ground,  they  are 
entitled  to  judgment  upon  the  de- 
murrer. Equity  having  the  power 
to  enforce  payment  from  the  stock- 
holders, and  an  action  having  been 
instituted  in  the  proper  mode  for 
that  purpose,  which,  in  its  result, 
will  place  the  fund  in  the  possession 
of  the  court  for  distribution  among 
the  creditors,  it  is  the  duty  of  the 
court  to  protect  the  stockholders 
from  being  harassed  by  other  ac- 
tions instituted  to  enforce  the  same 
liability.  This  can  only  be  done  by 
restraining  such  actions.  To  enable 
the  court  effectually  to  do  this,  those 
creditors  who  have  instituted  such 
suits,  and  those  who  threaten  so  to 
do,  are  proper  parties  to  the  action. 
The  judgment  appealed  from  should 
be  affirmed." 

2  Osgood  V.  Laytin,  3  Keyes,  521. 


406  RECEIVERS.  [chap.  X. 

solvent  corporation  and  is  winding  up  its  affairs,  the  entire  as- 
sets of  the  corporation,  inckiding  its  choses  in  action,  are  re- 
garded as  subject  to  the  exclusive  jurisdiction  of  that  court.  A 
federal  court,  therefore,  will  not,  pending  such  proceedings, 
entertain  a  bill  by  shareholders  of  the  corporation  against  its 
officers  to  recover  for  fraudulent  misappropriations  of  its  prop- 
erty, since  this  would  be  an  interference  with  the  administra- 
tion of  the  estate  by  the  state  court;  and  this  is  true,  even 
though  the  state  court  has  refused  to  direct  its  receiver  to  en- 
force such  cause  of  action.^ 

§  322.  When  povirers  derived  wholly  from  statute. 
When  receivers  over  corporations  are  appointed  under  a  stat- 
ute which  regulates  their  functions  and  prescribes  their  pow- 
ers and  duties,  it  is  held  that  they  derive  their  powers 
wholly  from  the  statute  under  which  they  are  appointed, 
and  have  no  authority  other  than  such  as  is  thus  conferred. 
But  to  warrant  them  in  the  exercise  of  a  power,  it  need  not  be 
expressly  conferred,  and  if  it  can  be  fairly  implied,  either  from 
the  general  scope  and  purpose  of  the  statute,  or  as  an  incident 
to  a  power  expressly  given,  there  is  sufficient  warrant  for  its 
exercise.^ 

§  323.  Presumption  as  to  receiver's  right  to  divide  as- 
sets among  creditors.  It  is  held  in  Wisconsin,  that  in  a 
collateral  action,  in  the  absence  of  any  proof  as  to  the  authority 
of  receivers  of  a  corporation  to  dispose  of  its  assets,  they  are 
fully  empowered  to  dispose  of  and  divide  them  among  the 
creditors.  When,  therefore,  receivers  of  a  banking  corporation 
transfer  to  a  third  person  a  negotiable  note,  part  of  the  assets 
of  the  bank,  in  payment  and  satisfaction  of  a  demand  held  by 
him  against  the  bank,  in  an  action  upon  such  note,  the  court 
will  indulge  the  presumption  that  the  receivers  have  properly 
discharged  their  duties ;  and,  in  the  absence  of  any  proof  of 

3  Porter  v.  Sabin,  149  U.  S.,  473,  4  Runyon  v.  Farmers  &  Mechan- 

13  Slip.  Ct.  Rep.,  1008,  affirming  S.  ics    Bank    of    New    Brunswick,    3 

C,  36  Fed.,  475.     And  see  Werner  Green  Ch.,  480. 
V.  Murphy,  60  Fed.,  769. 


CHAP.  X.]  CORPORATIONS.  407 

fraud,  the  legal  title  to  the  note  will  be  held  to  have  passed  by 
the  action  of  the  receivers  to  the  assignee,  so  that  he  may  re- 
cover upon  it  against  the  makers.^ 

§  324.  Receiver's  right  of  action  to  recover  of  share- 
holders unpaid  subscriptions  to  capital  stock.  Under  the 
laws  and  practice  of  many  of  the  states,  the  right  of  action  to 
recover  of  shareholders  the  amounts  due  upon  their  subscrip- 
tions to  the  capital  stock  of  a  corporation,  vests  in  the  receiver 
appointed  in  behalf  of  creditors,  upon  the  insolvency  of  the 
company.  Thus,  in  New  York,  receivers  of  insolvent  corpora- 
tions are  vested  with  this  power,  and  may  maintain  actions  to 
recover  of  delinquent  stockholders  their  unpaid  subscriptions,^ 
and  to  enjoin  the  creditors  of  the  corporation  from  proceeding 
with  separate  actions  for  the  recovery  of  their  individual  de- 
mands.*^ And  it  was  formerly  held  in  New  York,  that  such 
actions  must  be  instituted  against  the  shareholders  individually, 
and  that  they  could  not  be  maintained  against  them  collective- 
ly ;  ^  but  the  later  doctrine  recognizes  the  right  of  the  receiver 
to  bring  the  action  against  all  shareholders  collectively,  or  to 
sue  them  individually. ^  So  in  Rhode  Island,  receivers  of  mu- 
tual insurance  companies  are  authorized  by  law  to  make  assess- 
ments upon  the  shareholders  for  paying  the  indebtedness  of 
the  corporation. 10  And  in  Louisiana,  on  the  appointment  of  a 
receiver  over  a  corporation  upon  its  insolvency,  the  right  of  ac- 
tion against  delinquent  shareholders  for  arrearages  of  their 
subscriptions  to  the  capital  stock,  for  the  purpose  of  paying 
the  debts  of  the  corporation,  is  distinctly  recognized  as  being 
in  the  hands  of  the  receiver  and  not  in  the  corporation  or  its 
individual  members. ^^     And  it  would  seem  that  the  remedy 

5  Atchison    v.    Davidson,    2    Pin.  12;    Rankine  v.    Elliott,    16   N.   Y., 
(Wis.),  48.  377. 

6  Pentz  V.   Hawley,   1   Barb.   Ch.,  8  Calkins    v.    Atkinson,    2    Lans., 
122;    Farmers    &    Mechanics    Bank  12. 

V.   Jenks,    7    Met.,   592;    Calkins   v.  9  Van  Wagenen  z;.  Clark,  22  Hun,' 

Atkinson,  2  Lans.,   12;   Rankine  v.  497. 

Elliott,  16  N.  Y.,  377.  10  Tobey  v.  Russell,  9  R.  I.,  58. 

7  Calkins    v.    Atkinson,    2    Lans.,  H  Stark    v.    Burke,    5    La.    An., 


408  RECEIVERS.  [chap.  X, 

of  creditors,  in  this  class  of  cases,  is  to  apply  to  the  court  for 
an  order  on  the  receiver  to  make  calls  upon  the  stockholders  for 
the  purpose  of  meeting  the  indebtedness  of  the  corporation.^^ 
Indeed,  where  the  receiver  of  an  insolvent  corporation  has  the 
right  to  maintain  actions  against  the  shareholders  for  their  un- 
paid stock  subscriptions,  the  individual  creditors  w^ho  have  had 
their  claims  allowed  in  the  receivership  proceeding  have  no 
right  to  maintain  such  actions  against  the  shareholders.  In 
such  case,  their  remedy,  upon  the  refusal  of  the  receiver  to  in- 
stitute the  actions,  is  to  proceed  in  the  receivership  cause  for 
the  removal  of  the  receiver  or  for  such  other  appropriate  re- 
lief as  the  court  may  grant  in  that  proceeding.^^  And  in 
Maryland,  a  receiver  under  a  statute  for  the  dissolution  of  cor- 
porations may  maintain  an  action  to  recover  a  balance  due  from 
a  shareholder  upon  his  unpaid  subscription. i*  And  the  right 
of  the  receiver  to  enforce  such  subscriptions  by  actions  against 
the  shareholders  is  also  recognized  in  Ohio,^^  in  lowa,^^  in 
Illinois,!^  in  Minnesota,^^  in  Washington,!^  and  in  Missouri.2<> 
And  while  an  action  will  not  lie  upon  behalf  of  the  receiver  of 

740;  New  Orleans  Gas  Light  Co.  v.  Minn.,    361,    51    N.   W.,    119.      See, 

Bennett,  6  La.  An.,  457;  Gas  Light  also,  Minnesota  T.  M.  Co.  v.  Lang- 

&  Banking  Co.  v.  Haynes,  7  La.  An.,  don,  44  Minn.,  37,  46  N.  W.,  310. 

114.  19  Elderkin  v.  Peterson,  8  Wash., 

12  New  Orleans  Gas  Light  Co.  v.  67A,  36  Pac,  1089;  Cole  v.  Satsop 
Bennett,  6  La.  An.,  457.  And  see  R.  Co.,  9  Wash.,  487,  37  Pac,  700, 
Wyman  v.  Williams,  52  Neb.,  833,  43  Am.  St.  Rep.,  858;  Cox  v.  Dickie, 
72,  N.  W.,  285.  48  Wash.,  264,  93  Pac,  523.    And  in 

13  Links  V.  Connecticut  River  B.  the  case  last  cited  it  was  held  that 
Co.,  66  Conn.,  277,  33  Atl.,  1003.  the  receiver  could  proceed  by  an  ac- 
And  see,  post,  §  352.  tion    against    the    individual    stock- 

14  Stillman  v.  Dougherty,  44  Md.,  holders  or  that  he  might  join  all 
380 ;  Frank  v.  Morrison,  58  Md.,  stockholders  in  the  action  to  recover 
423.  their    subscriptions.      And    in    the 

15  Clarke  v.  Thomas,  34  Ohio  St.,  same  case  it  was  also  held  that  it 
46.  constitutes  no  defense  that  the  stock 

16  Stewart  v.  Lay,  45  Iowa,  604.  was  purchased  by  the  stockholder  as 

17  Great  Western  T.  Co.  v.  Gray,  being  fully  paid  for. 

122  111.,  630,  14  N.  E.,  214.  20  Berry  v.  Wood,  168  Mo.,  3*6, 

18  Merchants    National    Bank    v.      67  S.  W.,  644. 
Northwestern     M.    &    C.     Co.,    48 


CHAP.  X.]  CORPORATIONS.  409 

an  insolvent  corporation  to  recover  unpaid  stock  subscriptions 
w^ithout  first  exhausting  the  other  corporate  property,  yet 
v\/^here  the  board  of  directors  have  made  a  call  upon  the  stock- 
holders, such  assessment  becomes  an  asset  of  the  corporation 
and  it  is  held  that  the  action  will  lie  without  showing-  that  the 
other  corporate  assets  have  been  exhausted. 21  And  it  is  held 
that  the  receiver  of  an  Oregon  corporation  has  the  power  to 
make  assessments  against  the  stockholders  upon  their  subscrip- 
tions where  the  board  of  directors  was  vested  with  the  power 
of  levying  and  collecting  such  assessments  but  had  failed  or  re- 
fused to  do  so. 22  But  [j^  New  York,  a  receiver  of  a  corporation 
appointed  on  a  creditors'  bill,  and  vested  with  only  the  ordinary 
powers  of  receivers  in  creditors'  suits,  can  not  maintain  a  bill 
in  equity  to  enforce  an  unpaid  balance  due  from  a  shareholder 
upon  his  subscription.23  Nor  can  a  receiver  of  an  insolvent  cor- 
poration recover  unpaid  subscriptions  when  the  corporation  it- 
self could  not  have  maintained  the  action.24  But  if  an  action 
for  the  recovery  of  unpaid  subscriptions  has  been  brought  by 
the  corporation  before  the  appointment  of  a  receiver,  it  may  be 
continued  in  the  name  of  the  original  plaintiff  for  the  benefit 
of  the  receiver.25  But  a  receiver  appointed  by  a  foreign  court 
over  a  non-resident  fire  insurance  company  can  not  maintain  an 
action  in  another  state  to  hold  the  defendants  liable  upon  their 
stock  subscriptions.26 

§  324a.  Defenses  to  such  actions;  transfer  of  shares. 
No  errors  which  may  have  been  committed  by  the  court  in  ap- 
pointing the  receiver,  or  in  directing  and  controlling  his  action, 
will  avail  in  defense  of  a  suit  by  the  receiver  to  enforce  unpaid 
subscriptions  to  capital  stock ;  nor  do  the  fraudulent  acts  of  the 
receiver,  or  of  the  officers  of  the  corporation,  constitute  a  de- 

21  Wyman  v.  Williams,  53  Neb.,  Mims,  103  Tenn.,  465,  53  S.  W.,  736. 
670,  74  N.  W.,  48.  25  Phoenix    Warehousing    Co.    v. 

22  Maxwell  v.  Akin,  89  Fed.,  178.  Badger,  67  N.  Y.,  294. 

23  Mann  v.  Pentz,  3  N.  Y.,  415.  ^GWyman    v.    Eaton,    107    Iowa, 

24  Billings  V.   Robinson,  28  Hun,  214,   77   N.   W.,  865,  43   L.  R.  A., 
122;   Newport   Cotton   Mill    Co.   v.  695,  70  Am.  St.  Rep.,  193. 


410  RECEIVERS.  [CIIAP.  X. 

fensc^"^  Nor  can  the  stockholder  defend  such  action  upon  any 
ground  whicli  questions  the  action  of  the  court  in  appointing 
the  receiver  and  in  ordering  the  assessment,  such  as  fraud  in 
procuring  the  receiver,  or  that  the  corporation  is  not  indebted, 
or  that  the  action  is  prosecuted  to  harass  the  defendant,  and  all 
such  defenses  should  be  interposed  in  the  proceeding  in  which 
the  receiver  is  appointed  and  the  assessment  ordered.^s  To 
conclude  a  stockholder  by  a  proceeding  under  the  Illinois  stat- 
ute to  wind  up  an  insolvent  corporation  and  to  recover  unpaid 
subscriptions,  when  a  receiver  appointed  in  such  proceeding 
sues  for  the  subscription,  the  stockholder  should  have  been 
made  a  party  to  the  original  proceeding,  and  the  receiver  should 
show  his  appointment  by  a  decree  which  is  conclusive  against 
the  defendant.2^  But  the  rule  is  otherwise  when  the  proceed- 
ing is  brought  independent  of  statute  to  wind  up  an  insolvent 
corporation  and  to  distribute  its  assets  for  the  benefit  of  its 
creditors.  In  such  case  a  shareholder  can  not  defeat  an  action 
brought  by  the  receiver  for  the  recovery  of  a  stock  subscrip- 
tion upon  the  ground  that  he  was  not  a  party  to  the  suit  in 
which  the  receiver  was  appointed. ^^  And  the  fact  that  the 
entire  capital  stock  had  not  been  subscribed  is  no  bar  to  the 
action,  if  the  defendant,  with  knowledge  of  that  fact,  partici- 
pated in  the  affairs  of  the  company  in  a  manner  which  could 

27  Stewart  v.  Lay,  45  Iowa,  604.  28  Schoonover    v.     Hinckley,    48 

And  see  this  case  for  a  general  dis-  Iowa,  82. 

cussion  of  the  defenses  which  may  29  Lamar  Insurance  Co.  v.  Gulick, 

and  may  not  be  interposed  in  such  102  111.,  41 ;   Chandler  v.  Brown,  77 

an  action.     In  an  action  by  the  re-  111.,    333 ;    S.    C,    8    Chicago    Legal 

ceiver   of  an   insolvent   corporation  News,  123.     And  in  the  latter  case 

against  the  president  of  the  corpora-  the  decree  was  also  held  objection- 

tion  to  recover  a  balance  due  upon  able   in  that  it   assumed  to   confer 

his  stock  subscription,  the  latter  is  upon  the  receiver  discretionary  pow- 

entitled  to  credit  for  an  amount  ad-  ers  to  compromise  with  stockholders 

vanced  by  him  for  the  employment  as  to  payment  of  subscriptions,  since 

of  counsel  to  represent  the  corpora-  each  stockholder  had  a  vested  right 

tion   in  threatened   litigation  before  in   the  contract   for   subscription   of 

the    appointment     of    the     receiver.  every  other  stockholder. 

Graebner  v.  Post,  119  Wis.,  392,  96  SO  Great  Western  T.  Co.  v.  Gray, 

N.  W.,  783.  122  III.,  630,  14  N.  E.,  214. 


CHAP.  X.]  CORPORATIONS.  411 

only  be  justified  upon  the  assumption  that  the  subscribers  in- 
tended to  proceed  with  the  capital  stock  only  partially  sub- 
scribed.21  So  in  an  action  by  a  receiver  to  recover  unpaid  sub- 
scriptions to  capital  stock,  the  fact  that  the  defendant  acted  as 
a  director  of  the  corporation  estops  him  from  denying  its  cor- 
porate existence,  and  from  asserting  that  the  amount  of  capital 
stock  required  to  be  paid  in  full  in  cash  had  not  been  paid,  and 
that  he  subscribed  upon  the  faith  of  representations  that  it  had 
been  fully  paid,  which  representations  were  false.^^  And  since, 
as  has  already  been  shown, ^^  the  receiver  succeeds,  for  the 
purposes  of  litigation,  only  to  the  rights  of  the  corporation,  ex- 
cept where  acts  have  been  done  in  fraud  of  the  rights  of  stock- 
holders or  creditors,  it  follows  that  in  an  action  brought  by 
the  receiver  against  a  stockholder  to  recover  his  unpaid  stock 
subscription,  the  receiver  must  base  his  right  to  recover  upon 
the  title  of  the  corporation,  and  it  is  accordingly  held  that  the 
receiver  can  not  maintain  the  action  where  the  subscription  was 
procured  by  fraud. ^'*  Nor  can  the  receiver  recover  where  the 
subscription  was  to  the  capital  stock  of  a  corporation  with  a 
given  amount  of  stock,  whereas  the  corporation  is  organized 
with  a  materially  greater  amount  of  authorized  capital. ^^  And 
when  a  shareholder  transfers  his  shares  in  good  faith  before 
the  appointment  of  the  receiver,  all  assessments  thereon  hav- 
ing been  fully  paid  to  the  time  of  such  transfer,  and  it  not  ap- 
pearing that  any  of  the  present  creditors  of  the  corporation 
were  creditors  at  the  time  of  such  sale,  such  shareholder  is 
not  liable  to  the  receiver  for  the  balance  of  the  subscription.^^ 
§  325.  Shareholder  can  not  enjoin  receiver  from  col- 
lecting unpaid  subscription;  defense  of  fraud  not  admis- 
sible when  all  parties  participated.     When  a  statute,  au- 

31  Stillman  v.  Dougherty,  44  Md.,  35  Newport    Cotton    Mill    Co.    v. 
380.                                                               Minis,  103  Tenn.,  465,  53  S.  W..  736. 

32  Ruggles  V.  Brock,  6  Hun,  164.  36  Billings  v.  Robinson,  28  Hun, 
^^Ante,  §  315.                                        122. 

34  Marion  Trust  Co.  v.  Blish,  170 
Ind.,  686,  84  N.  E.,  814,  85  N.  K, 
344. 


412  RECEIVERS.  [CIIAP.  X. 

thorizing  the  appointment  of  receivers  to  wind  up  the  affairs 
of  insolvent  corporations,  makes  it  the  receiver's  duty  to  collect 
from  the  shareholders  of  tlie  corporation  the  sums  remaining 
due  on  account  of  their  unpaid  subscriptions,  and  a  receiver, 
in  the  performance  of  this  duty,  has  obtained  a  decree  against 
a  shareholder  for  the  payment  of  the  balance  due  from  him, 
such  shareholder  is  not  entitled  to  an  injunction  to  restrain  the 
receiver  from  collecting  the  amount  until  all  the  debts  of  the 
corporation  may  be  ascertained,  and  the  amount  due  from  each 
shareholder  be  determined.  Any  equity  upon  which  such  share- 
holder might  rely  as  the  foundation  for  an  injunction  should 
have  been  urged  in  defense  of  the  action  brought  by  the  receiv- 
er, and  will  not  avail  the  shareholder  after  a  decree  against  him 
in  that  action.^?  And  when  a  receiver  is  appointed  to  close  up 
the  affairs  of  an  insolvent  banking  corporation  for  the  benefit  of 
its  creditors,  in  an  action  brought  by  him  upon  a  note  given  by 
a  stockholder  for  his  subscription  to  the  capital  stock  of  the 
bank,  it  constitutes  no  defense  to  the  action  that  the  note  was 
given  without  consideration,  and  in  aid  of  an  illegal  and  fraud- 
ulent transaction,  when  all  the  parties  participated  in  the 
fraud.^^ 

§  326.  Receivers  of  mutual  insurance  companies  may  re- 
cover assessments  due  on  premium  notes ;  action  in  foreign 
state.  Under  the  practice  prevailing  in  the  states  of  New 
York  and  Indiana,  receivers  of  insolvent  mutual  insurance 
companies  are  empowered  to  recover  assessments  due  upon 
premium  notes  held  by  such  companies  for  the  purpose  of  ad- 
justing losses  and  settling  the  indebtedness  of  the  corpora- 
tions. In  New  York,  the  power  of  the  receiver  to  thus  assess 
the  premium  notes  is  derived  wholly  from  statute,  as  will  be 
seen  by  an  examination  of  the  authorities  in  that  state.'^     In 

37Pentz  v.  Hawley,  1  Barb.  Ch.,  Hams    v.    Babcock,    25    Barb.,    109; 

122.  Thomas  v.  Whallon,  31  Barb.,  172; 

38  Farmers  &  Mechanics  Bank  v.  Sands  v.  Sweet,  44  Barb.,  108; 
Jenks,  7  Met.,  592.  Bangs  v.   Gray,   12  N.  Y.,  477,   re- 

39  Shaiighnessy  v.  The  Rensselaer  versing  S.  C,  15  Barb.,  264;  Sands 
Insurance  Co.,  21  Barb.,  605;  Wil-  v.  Sanders,  28  N.  Y.,  416;  Jackson 


CHAP.  X.]  CORPORATIONS.  .  413 

Indiana,  however,  it  is  held,  even  in  the  absence  of  any  state- 
ute  conferring  such  authority  upon  the  receiver  of  a  mutual 
insurance  company,  that  he  is  authorized  to  make  assessments 
upon  premium  notes  due  to  the  company,  for  the  purpose  of 
meeting  its  obligations.  The  authority  to  make  the  assessments 
is  impHed  from  the  necessity  of  making  them,  since  without 
such  power  it  would  not  be  possible  for  the  receiver  to  manage 
and  adjust  the  affairs  of  the  corporation. ^^  In  both  these 
states,  the  receiver  is  regarded,  for  the  purpose  of  making  such 
assessments,  as  standing  in  the  position  and  succeeding  to 
the  powers  of  the  directors  of  the  corporation. "^^  And  the  re- 
ceiver, being  empowered  in  the  state  of  his  appointment  to  in- 
stitute and  defend  all  suits  in  the  name  of  the  corporation,  or 
otherwise,  may  sue  in  another  state  to  recover  assessments  upon 
premium  notes,  no  creditor  in  the  latter  state  having  interfered 
to  prevent  the  prosecution  of  the  suit,  or  to  assert  any  claim  to 
its  proceeds. "^^  But  since  the  right  of  the  foreign  receiver  to 
maintain  the  action  in  such  case  rests  upon  principles  of  comity, 
it  is  subject  to  such  restrictions  and  limitations  as  the  state  may 
see  fit  to  impose.  Thus,  where  the  statute  of  the  state  in  which 
the  action  is  brought  prescribes  a  period  within  which  such  pro- 
ceedings shall  be  begun,  the  failure  of  the  receiver  to  institute 
the  suit  within  the  time  limited  is  a  bar  to  the  action.^^  And 
where  the  statute  authorizing  the  directors  to  levy  such  as- 
sessments  upon   premium   notes,    limits   the  power  to   cases 

V.  Roberts,  31  N.  Y.,  304 ;  Lawrence  40  Embree    v.    Shideler,    36   Ind., 

V.   McCready,  6  Bosw.,  329;  Berry  423,  sustained  in  Tippecanoe  Town- 

V.    Brett,   id.,   627.     See,   also,    Mc-  ship  v.  Manlove,  39  Ind.,  249. 

Donald  v.  Ross-Lewin,  29  Hun,  87.  41  Thomas  v.  Whallon,  31  Barb., 

And  in  Wisconsin  it  is  held  that  the  172;    Embree  v.    Shideler,   36   Ind., 

receiver  of  a  mutual  fire  insurance  423. 

company,  in  making  an  assessment  42  Lycoming     Insurance     Co.     v. 

on  premium  notes,  should  include  a  Wright,    55    Vt.,    526;     Parker    v. 

reasonable  amount  for  his  compen-  Stonghton   Mill    Co.,  91   Wis.,   174, 

sation  and  for  the  expenses  of  the  64  N.  W.,  751,  51  Am.  St.  Rep.,  881. 

receivership.     Davis  v.    Shearer,  90  43  Wyman  v.  Kimberly-Clark  Co., 

Wis..  250,  62  N.  W.,  1050 ;  Seamans  93  Wis.',  554,  67  N.  W.,  932. 
V.  Millers'  M.  I.  Co.,  90  Wis.,  490, 
63  N.  W.,  1059. 


414  RECEIVERS.  [chap.  X. 

where  it  is  necessary  for  the  payment  of  "just  claims  on  the 
corporation,"  and  it  is  apparent  that  neither  the  receiver,  nor 
the  court  appointing  him  and  to  which  he  reported  his  action, 
and  from  which  he  obtained  an  order  to  make  the  assessment, 
has  examined  or  passed  upon  the  vahdity  of  the  claims  or  de- 
mands against  the  corporation  for  which  the  assessment  was 
made,  the  receiver  can  not  maintain  an  action  to  collect  such 
assessment  upon  a  premium  note.^*  And  in  Rhode  Island  it  is 
held  that  the  receiver  of  a  mutual  insurance  company,  in  making 
an  assessment,  should  not  include  in  it  claims  for  losses  which 
have  occurred  since  his  appointment,  since  such  appointment 
operated  as  a  dissolution  of  the  company  and  the  contracts  of 
insurance  were  thereby  terminated  by  operation  of  law.^^ 

§  327.  What  receiver  must  allege  to  maintain  this  class 
of  actions.  The  rule  in  Indiana,  as  to  the  pleadings  re- 
quired in  actions  brought  by  receivers  of  insolvent  insurance 
companies  to  recover  assessments  upon  premium  notes,  is  that 
all  the  facts  necessary  to  show  a  liability  upon  the  note  must  be 
pleaded  by  the  receiver.  For,  while  the  court  appointing  him 
may  properly  pass  upon  the  question  of  the  necessity  for  a  re- 
ceiver, it  can  not  in  that  proceeding  settle  the  question  of  the 
liability  of  the  maker  of  a  premium  note  to  pay,  either  in  whole 
or  in  part."*^  And  the  receiver  must,  therefore,  allege  and  prove 
that  the  court  has  examined  and  determined  the  validity  of  the 
demands,  for  the  payment  of  which  the  assessment  is  made.^"^ 
But  it  is  not  necessary  that  he  should  present  with  his  pleadings 
a  transcript  of  the  decree  of  the  court  by  which  he  was  ap- 

44  Embree  v.  Shideler,  36  Ind.,  mutual  fire  insurance  company 
423;  Downs  v.  Hammond,  47  Ind.,  under  the  laws  of  Michigan  ta 
131.  make  assessments  upon  policy-hold- 

45  Insurance  Commissioner  v.  C.  ers  to  pay  the  liabilities  of  the  com- 
M.  Ins.  Co.,  20  R.  I.,  7,  36  Atl.,  930.  pany   and   the   expenses   of  the    re- 

46  Manlove  7^.  Burger,  38  Ind.,  211.  ceivership,  and  as  to  his  right  ta 
See,  also,  Embree  v.  Shideler,  36  maintain  an  action  upon  such  as- 
Ind.,  423,  sustained  in  Tippecanoe  sessment,  see  Wardle  v.  Townsend, 
Township  v.  Manlove,  39  Ind.,  249;  75  Mich.,  385,  42  N.  W.,  950. 
Manlove  v.  Naw,  39  Ind.,  289.  As  47  Downs  v.  Hammond,  47  Ind,, 
to   the   right    of   the    receiver   of   a  131. 


CHAP.  X.]  CORPORATIONS.  415 

pointed  receiver  of  the  company,  and  by  which  the  assessment 
was  made  upon  the  premium  notes,  since  the  evidence  of  his 
right  of  action,  although  essential  to  a  recovery,  is  not  the 
foundation  of  the  action,  and  rests  only  in  averment.'*^ 

§  328.  Liability  of  makers  of  premium  notes  not  in- 
creased by  appointment  of  receiver;  assessment  must  be 
alleged  and  proven.  In  New  York,  the  doctrine  is  well 
established,  in  the  class  of  cases  under  consideration,  that 
the  liability  of  the  members  of  mutual  insurance  companies 
upon  their  premium  notes  is  not  increased  by  reason  of  the 
insolvency  of  the  corporation  and  the  appointment  of  a  re- 
ceiver, since  the  receiver  is  merely  substituted  in  place  of  the 
directors  of  the  company,  and  vested  with  their  rights  and  pow- 
ers and  nothing  more.'^^  The  liability  of  the  makers  of  pre- 
mium notes  being  contingent  upon  certain  conditions,  such  as 
loss  by  the  company,  assessment  upon  the  notes  and  notice  to 
the  makers,  such  contingent  or  conditional  liability  is  not 
changed  into  an  absolute  one  by  the  insolvency  of  the  company 
and  the  appointment  of  a  receiver;  since  the  courts  can  not 
change  the  terms  of  the  agreement,  nor  make  that  an  absolute 
promise  which  was  before  a  conditional  one.  And  the  appoint- 
ment of  the  receiver  merely  clothes  him  with  the  power,  under 
the  statutes,  of  determining  the  amount  of  indebtedness  due 
upon  the  notes  by  proceeding  to  make  the  necessary  assess- 
ments, and  by  taking  such  other  steps  as  are  required  by  law  to 
fix  the  liability  of  the  makers  of  the  notes,  the  appointment 
itself  in  no  manner  fixing  such  liability.^^  The  statutes,  there- 
fore, requiring  an  assessment  in  order  to  fix  the  liability  of 
makers  of  premium  notes,  an  assessment  by  the  receiver  is  an 
indispensable  condition  to  his  right  of  action. ^1  And  such  an 
assessment  and  apportionment  of  losses  by  the  receiver,  being 

48  Boland  v.  Whitman,  33  Ind.,  64.  50  Williams  v.  Babcock,  25  Barb., 

49  Shaughnessy  v.  The  Rensselaer      109. 

Insurance  Co.,  21   Barb.,  605;  Wil-  51  Shaughnessy  7/.  The  Rensselaer 

liams    V.    Babcock,    25    Barb.,    109;  Insurance  Co.,  21  Barb.,  605.     See, 

Savage  v.   Medbury,   19  N.  Y.,  32.  also,  Williams  v.  Babcock,  25  Barb., 

And  see  Devendorf  v.  Beardsley,  23  109. 
Barb.,  656. 


416  RECEIVERS.  [CIIAP.  X. 

a  condition  precedent  to  his  recovery  upon  the  notes,  must  be 
pleaded  in  the  action  and  proved  upon  the  trial. ^^  When, 
therefore,  the  complaint  of  the  receiver  contained  no  averment 
as  to  the  liabilities  of  the  company,  and,  therefore,  laid  no 
foundation  for  the  introduction  of  proof  upon  that  point,  and 
there  was  no  proof  of  the  existence  of  any  liabilities  for  the 
payment  of  which  an  assessment  was  necessary,  the  receiver 
was  held  not  entitled  to  recover. ^^ 

§  329.  Receiver  takes  place  of  directors  in  making  as- 
sessment, subject  to  sanction  of  court.  It  is  also  the  doc- 
trine of  the  New  York  courts,  in  this  class  of  cases,  that  the 
receiver  takes  the  place  of  the  directors  in  ascertaining  the 
amount  of  demands  against  the  insurance  company,  and  in 
determining  the  necessity  for  an  assessment,  as  well  as  its 
amount,  with  this  limitation  upon  his  authority,  that  he  can 
not  act  without  the  sanction  of  the  court.  The  court,  however, 
does  not  make  the  assessment,  the  receiver  being  himself  the 
actor  for  that  purpose,  and  his  authority  depending,  not  upon 
the  order  of  the  court,  but  upon  the  existence  of  the  facts  ren- 
dering an  assessment  necessary  and  proper.  The  requirement 
of  the  sanction  and  approval  of  the  court  is  an  additional  re- 
striction and  limitation  upon  the  receiver's  authority,  but  does 
not  dispense  with  the  other  and  more  important  conditions. 
The  court,  therefore,  neither  adjudicates  upon  the  liability  of 
the  company,  nor  the  amount  for  which  assessments  shall  be 
made,  nor  the  ratio  of  assessment,  but  merely  sanctions  the 
acts  of  the  receiver  in  doing  these  things. ^^ 

§  330.  Acts  in  a  ministerial  and  not  a  judicial  capacity; 
may  re-assess  for  unpaid  balances.    In  thus  making  assess- 

52Devendorf     v.     Beardsley,     23  v.  Sanders,  28  N.  Y.,  416;  Jackson 

Barb.,  656;  Thomas  v.  Whallon,  31  v.  Roberts,  31  N.  Y.,  304. 
Barb.,  172.     And  see,  as  to  degree  53  Thomas  v.  Whallon,  31  Barb., 

of  particularity  required  of  the  re-  172. 

ceiver  in  making  the  assessment  and  54  Thomas  v.  Whallon,  31  Barb., 

giving  notice,  as  a  condition  prec-  172.     See,  also,  McDonald  v.  Ross- 

edent  to  his  right  of  action,  Bangs  Lewin,  29  Hun,  87. 
V.   Mcintosh,  23  Barb.,  591;   Sands 


CHAP.  X.]  CORPORATIONS.  417 

ments  upon  the  makers  of  premium  notes  under  the  laws  of 
New  York,  the  receiver  acts  under  the  statute  in  a  ministerial 
and  not  in  a  judicial  capacity.^^  And  his  action  being  minis- 
terial in  distinction  from  judicial,  the  fact  that  a  former  re- 
ceiver has  made  an  assessment  upon  the  same  notes,  which  still 
remains  unenforced,  will  not  prevent  his  successor  from  making 
a  new  assessment  for  the  same  purposes,  since  it  is  merely  re- 
peating the  performance  of  a  condition  precedent  to  a  right  of 
action  upon  the  notes  by  the  receiver,  and  is  by  no  means  a  ju- 
dicial determination  of  the  matter. ^^  Nor  is  the  approval  of  the 
assessment  by  the  court  regarded  as  a  judicial  decision,  or  as 
conclusive  upon  the  maker  of  the  note  as  to  the  particulars  of 
the  assessment,  in  an  action  brought  by  the  receiver  upon  the 
note ;  such  approval  by  the  court  only  serving  to  place  the  act 
of  the  receiver  in  making  the  assessment,  in  the  same  position 
as  the  act  of  the  directors,  had  the  assessment  been  made  by 
them.^''  And  the  receiver  in  levying  assessments  upon  such 
notes,  may  properly  include  as  a  portion  of  the  amount  to  be 
raised  an  unpaid  balance  of  former  assessments,  which  ought  to 
have  been  paid  by  delinquent  members,  but  which,  owing  to  the 
inability  or  insolvency  of  such  members,  have  not  been  paid.^^ 
§  331.  When  may  assess  all  notes;  what  proof  required 
as  to  losses.  As  regards  the  form  of  the  assessment  made 
by  a  receiver  in  this  class  of  cases  in  New  York,  it  is  held  that 
when  he  is  satisfied  from  the  liabilities  of  the  company,  and 
from  an  examination  of  all  classes  of  its  notes,  that  there  is 
no  note  which  is  not  chargeable  to  its  full  amount  for  lia- 
bilities justly  attaching,  he  may  make  a  general  assessment 
upon  all  the  notes  to  their  full  amount,  without  regard  to 
classes,  and  without  specifying  the  name  of  the  party  bound  to 

55  Thomas  v.  Whallon,  31  Barb.,      116,  note  a,  overruling  Campbell  v. 
172;  Sands  v.  Sweet,  44  Barb.,  108.      Adams,  38  Barb.,  132. 

And   see   Bangs   v.   Duckinficld,    18  ^1  Bangs  v.  Duckinfield,  18  N.  Y., 

N.  Y.,  592.  592. 

56  Sands  v.  Sweet,  44  Barb,  108;  58  Bangs  v.  Gray,  12  N.  Y.,  477, 
Tackson    v.    Van    Slyke,    44    Barb.,  reversing  S.  C,  15  Barb.,  264. 

Receivers — 27. 


418  RECEIVERS.  [chap.  X. 

contribute,  or  the  amount  of  the  note.^^  And  the  receiver  is  not 
required  to  prove  all  the  facts  upon  which  he  or  the  company- 
allowed  the  losses  for  v.^hich  the  assessment  was  made.  All  he 
is  required  to  show,  in  this  respect,  is  that  sufficient  claims  for 
losses  were  presented  to  the  company,  or  to  him,  and  which  he 
allowed,  to  make  up  the  sum  for  which  the  assessment  was 
levied.60 

§  332.  Receiver  may  allow  equitable  claims  for  losses. 
It  is  also  held  that  a  receiver  of  an  insolvent  mutual  insurance 
company,  under  the  laws  of  New  York,  may  properly  allow 
equitable  claims  for  losses  against  the  company,  although  no 
actions  to  recover  the  same  could  be  maintained,  by  reason  of 
the  neglect  of  the  claimants  to  bring  them  within  the  time  fixed 
by  the  charter  or  by-laws  of  the  corporation,  or  by  statute.  And 
when  such  claims  have  been  allowed,  the  receiver  is  bound  to 
pay  them,  if  there  be  funds  for  that  purpose ;  or,  if  there  are  no 
funds,  it  is  his  duty  to  collect  enough  from  the  makers  of  the 
premium  notes  to  satisfy  such  demands.  And  the  maker  of 
such  a  note  can  not  defeat  an  action  thereon  by  a  receiver, 
brought  for  the  collection  of  such  an  assessment,  upon  the 
ground  that  the  receiver  might  have  avoided  allowance  of  the 
claims  upon  merely  technical  grounds,  such  as  that  they  were 
not  brought  within  the  time  prescribed  by  law  for  that  pur- 
pose.^l 

§  333.  Principles  governing  set-offs  in  actions  by  receiv- 
ers of  corporations.  As  regards  the  right  or  power  of  a  re- 
ceiver of  a  corporation  to  allow  set-offs  claimed  by  debtors  to 
the  corporation,  against  the  indebtedness  which  he  is  seeking  to 
enforce,  it  would  seem  that  the  right  of  set-off  is  dependent 
upon  and  governed  by  the  same  equitable  principles  which  regu- 
late the  law  of  set-off  in  general,  as  between  creditors  and 
debtors.  And  when  the  debts  are  due  to  and  from  the  same 
persons  respectively,  and  in  the  same  capacity,  the  right  of  the 

59  Sands  v.  Sanders,  28  N.  Y.,  416.  61  Sands  v.  Hill,  42  Barb.,  651. 

60  Sands  v.   Hill,  42   Barb.,   651; 
Jackson  v.  Roberts,  31  N.  Y.,  504. 


CHAP.  X.]  CORPORATIONS.  419 

receiver  to  allow  one  to  be  set  off  against  the  other  may  be  re- 
garded as  clear;  but  if  otherwise,  he  will  not  be  justified  in  al- 
lowing the  set-off.  And  in  cases  of  this  nature,  when  there  is 
doubt  in  the  mind  of  the  receiver  as  to  what  course  he  should 
pursue,  it  is  proper  and  fitting  that  he  should  apply  to  the  court 
for  instructions. ^2  And  when  the  court  appointing  receivers 
over  an  insolvent  corporation,  is  empowered  by  statute  with  a 
general  direction  and  control  over  them  in  the  discharge  of 
their  duties,  it  may,  upon  a  summary  application,  direct  them 
to  allow  a  set-off  against  a  demand  which  they  are  seeking  to 
enforce,  if  satisfied  that  such  set-off  is  just  and  equitable. ^^ 
But  in  an  action  by  receivers  of  an  insolvent  corporation  against 
a  shareholder,  to  recover  illegal  dividends  declared  by  the  com- 
pany, in  violation  of  a  statute  prohibiting  any  dividends  which 
might  impair  the  capital  stock  of  the  corporation,  a  defendant 
shareholder  will  not  be  allowed  to  set  off  an  indebtedness  due 
to  himself  from  the  corporation ;  since,  for  the  purposes  of  such 
action,  the  receivers  do  not  represent  the  corporation,  but  its 
creditors,  for  whose  benefit  the  suit  is  brought.  The  dividends 
thus  illegally  paid  being  a  fraud  upon  the  creditors  of  the  in- 
solvent corporation,  and  the  reparation  sought  being  the  res- 
toration of  the  funds  for  the  benefit  of  the  creditors,  whom  alone 
the  receivers  represent  for  the  purposes  of  the  action,  claims 
growing  out  of  independent  matters  between  the  defendant  and 
the  corporation  itself  are  not  a  proper  subject  of  set-off. ^^ 

§  334.  Discretion  as  to  compromising  demands  against 
the  corporation;  may  decline  to  ratify  contract;  may  not 
waive  express  stipulations  of  insurance  policy.  The  first 
duty  of  receivers  of  insolvent  corporations  is  to  faithfully  col- 
lect and  justly  disburse  the  assets  of  the  corporation,  which  con- 
stitute a  trust  fund  for  its  creditors.  In  the  discharge  of  this 
duty,  they  are  properly  vested  with  a  certain  degree  of  discre- 

62  In  re  Van  Allen,  37  Barb.,  225.  64  Osgood  v.  Ogden,  4  Keyes,  70. 

63  Holbrook  z^.  Receivers  of  Amer-       See,  also,   Gillet  v.   Phillips,   13   N. 
ican   Fire  Insurance   Co.,  6   Paige,      Y.,  114. 

220. 


420  RECEIVERS.  [chap.  X. 

tion  in  the  compromising  and  settlement  of  demands  against 
the  corporation ;  but,  in  the  exercise  of  their  discretionary 
powers  they  should  keep  constantly  in  view  the  interest  of 
those  whom  they  represent,  and  for  whom  they  act.  As  illus- 
trating this  discretionary  power,  it  is  held  that  receivers  of  an 
insolvent  banking  corporation  may  properly  decline  to  ratify 
a  contract  made  by  the  corporation  after  its  insolvency,  when 
they  are  satisfied  that  the  ratification  of  the  contract  would 
result  in  the  loss  of  the  fund  intrusted  to  their  charge.^^  But 
a  receiver  of  an  insurance  company  would  seem  to  be  limited, 
as  to  his  powers  in  the  adjustment  of  losses,  to  such  powers  as 
might  have  been  lawfully  exercised  by  the  officers  of  the  com- 
pany. He  is  not,  therefore,  empowered  by  virtue  of  his  ap- 
pointment, in  adjusting  proofs  of  loss  against  the  company, 
to  dispense  with  or  to  waive  express  stipulations  of  the  policy 
which  relate  to  the  substance  of  the  contract.^^ 

§  335.  Limited  to  allowance  of  claims  recoverable 
against  the  corporation.  When  receivers,  who  have  been 
appointed  in  conformity  with  the  laws  of  the  state  for  winding 
up  the  affairs  of  an  insolvent  corporation,  are  authorized  by 
statute  to  settle  all  claims  against  the  corporation,  and  to  allow 
all  demands  of  whose  justice  they  are  satisfied,  they  are  limited 
to  the  allowance  of  such  claims  as  might  be  recovered  against 
the  corporation,  either  at  law  or  in  equity,  if  suit  be  brought. 
And  they  have  no  authority  to  allow  a  demand,  which  is  not 
a  proper  charge  upon  the  fund  in  their  hands,  without  the 
consent  of  all  persons  interested  in  having  the  claim  rejected, 
the  receivers  in  this  respect  being  considered  as  guardians  of  the 
rights  of  all  persons  in  interest.  And  when  such  receivers  have 
disallowed  demands  against  the  corporation,  and  the  matter 
has  been  referred  to  referees  for  adjustment,  it  is  the  duty  of 
the  receivers  to  resist  the  allowance  of  the  demands  before  the 
referees,  and  to  continue  their  defense  so  long  as  it  may,  in 

65  Suydam  v.  Receivers   of  Bank  66  Evans  v.   Trimountain   Mutual 

of  New  Brunswick,  2  Green  Ch.,  114.       Fire  Insurance  Co.,  9  Allen,  329. 
See,  also,  Same  v.  Same,  id.,  276. 


CHAP.  X,]  CORPORATIONS.  421 

their  opinion,  be  rendered  effectual. ^"^  So  when  claims  are  pre- 
sented to  the  receiver  of  a  corporation  after  the  expiration  of 
the  time  fixed  by  the  court  for  such  purpose,  the  receiver  is  not 
justified  in  allowing  them,  and  if  special  circumstances  exist 
which  in  his  opinion  render  it  just  that  they  should  still  be 
received,  application  should  be  made  to  the  court  for  the  neces- 
sary authority.^^ 

§  336.  Court  may  authorize  receiver  to  compromise 
doubtful  claims ;  receiver  may  allow  salaries  of  officers  pro 
rata;  when  such  salaries  not  allowed.  It  is  competent  for 
the  court  appointing  a  receiver  over  an  insolvent  corporation 
to  authorize  him  to  compromise  disputed  and  doubtful  claims 
by  the  allowance  of  such  an  amount  as  he  may  deem  just  and 
equitable ;  or  to  authorize  him  to  submit  such  claims  to  arbitra- 
tion when  this  method  of  settlement  is  provided  by  statute.^^ 
The  court  may  also  empower  him,  generally,  in  any  case  where 
he  may  deem  it  expedient  and  for  the  interest  of  the  creditors 
and  shareholders,  to  compromise  with  debtors  of  the  corpora- 
tion who  are  unable  to  pay  in  full.  And  the  receiver  of  such 
a  corporation  may  allow  its  officers  the  amounts  due  to  them 
for  salaries,  up  to  the  time  of  his  appointment,  as  debts  to  be 
paid  ratably  with  other  demands,  no  preference  being  given  to 
the  officers. "^0  And  where  a  receiver  has  been  appointed  over  a 
corporation,  and  all  its  property  has  come  into  his  possession 
and  he  has  assumed  the  entire  management  of  its  affairs,  such 
appointment  has  the  effect  of  suspending  the  functions  of  all 
the  officers,  and  there  are  no  further  duties  which  they  can  per- 
form, and  it  is  accordingly  held  in  such  case  that  they  are  not 
entitled  to  draw  their  salaries  for  the  period  during  which  the 
affairs  of  the  corporaticHi  were  in  the  hands  of  the  receiver. "^^ 

67  Attorney-General  v.  Life  &  Fire  70  /«  re  Croton  Insurance  Co.,  3 
Insurance  Co.,  4  Paige,  224.                     Barb.  Ch.,  642. 

68  Fogg  V.  Supreme  Lodge,  159  71  Lenoir  v.  Linville  I.  Co.,  126 
Mass.,  9,  33  N.  E.,  692.                           N.  C,  922,  36  S.  E.,  185. 

69  Insurance  Commissioner  v.  C. 
M.  Ins.  Co.,  20  R.  I.,  7,  36  Atl.,  930. 
And  see,  ante,  §  177. 


422  RECEIVERS.  [chap.  X. 

§  337.  Receiver  may  exercise  option  of  company  as  to 
deposit  of  collaterals.  When  an  incorporated  company  de- 
posits certain  securities  with  its  creditor,  as  collateral  to  an  in- 
debtedness due  from  the  corporation,  but  reserves  the  right  or 
option  of  having  such  securities  considered  as  an  absolute  pay- 
ment upon  notifying  the  creditor  to  that  effect,  and  the  corpora- 
tion subsequently  passes  into  the  hands  of  a  receiver,  the  op- 
tion reserved  to  the  company  may  be  legally  exercised  or  assert- 
ed by  the  receiver,  who  is  for  this  purpose  regarded  as  the  legal 
representative  of  the  corporation.  And  when  the  requisite  no- 
tice is  given  by  the  receiver,  it  has  the  effect  of  making  the 
deposit  of  collaterals  an  absolute  payment,  and  thus  releasing 
the  indebtedness.'^^ 

§  338.  May  assign  chose  in  action;  sale  not  set  aside  be- 
cause applied  for  by  creditor  v^^ho  was  also  a  judge  of  the 
court.  Receivers  of  an  insolvent  corporation,  appointed 
under  a  statute  authorizing  such  mode  of  winding  up  the  af- 
fairs of  insolvent  companies,  may  make  an  assignment  of  a 
chose  in  action  due  to  the  corporation,  without  using  the  cor- 
porate seal,  since  the  sale  or  assignment  by  the  receivers  is 
not  the  act  of  the  corporate  body  itself,  but  rather  the  act  of 
the  receivers  operating  under  the  statute.  And  a  sale  by  the 
receivers,  under  a  power  given  them  by  statute  for  that  purpose, 
is  as  effectual  to  convey  the  title  as  if  the  right  of  property  was 
vested  in  them,  and  such  sale  need  not,  therefore,  be  authen- 
ticated by  the  corporate  seal."^^  Nor  is  it  a  sufficient  ground  for 
setting  aside  a  sale  of  the  property  of  a  corporation,  made  by 
its  receiver,  that  the  application  for  the  order  of  sale  was  made 
by  a  judgment  creditor  of  the  corporation,  who  was  also  a  jus- 
tice of  the  court  to  which  the  appHcation  was  made,  or  that  it  is 
alleged  that  he  was  able,  by  means  of  his  official  position,  to 
exercise  an  improper  influence  upon  the  proceedings  in  the 
court  in  which  they  were  taken,  when  it  does  not  appear  that 

72  Phoenix  Iron  Co.  v.  New  York  73  Hoyt   v.   Thompson,    5    N.   Y., 

Wrought  Iron  Railroad  Chair  Co.,      320,  reversing  S.  C,  3  Sandf.,  416. 
3  Dutch.,  484. 


CHAP.  X.] 


CORPORATIONS. 


423 


his  official  position  resulted  in  producing  any  different  order 
from  that  authorized  by  the  settled  practice  of  the  court,  or 
from  that  which  would  have  been  given  upon  the  application  of 
any  other  person. '^^ 

§  339.  When  defendant  entitled  to  costs  out  of  fund  in 
receiver's  hands.  When  receivers  of  a  corporation  insti- 
tute an  action  for  the  collection  of  money  demands  alleged  to  be 
due,  the  proceeding  being  carried  on  for  the  enhancement  of 
the  fund  in  the  receivers'  hands  and  for  the  benefit  of  those 
who  may  be  finally  determined  to  be  entitled  thereto,  if  they 
are  unsuccessful  in  such  suit,  the  defendant  is  entitled  to  costs 
out  of  the  fund  in  the  receivers'  hands.  And  in  such  case,  the 
defendant  will  not  be  required  to  await  the  final  distribution 
of  the  assets  of  the  corporation,  and  then  share  with  other  cred- 
itors or  parties  in  interest  pro  rata,  but  is  entitled  to  an  imme- 
diate order  for  payment  of  the  costs  out  of  any  funds  in  the  re- 
ceivers' hands. "^5 


74  Libby  v.  Rosekrans,  55  Barb., 
218. 

"^5  Columbian  Insurance  Co.  v. 
Stevens,  37  N.  Y.,  536.  "The  right 
of  the  defendants,"  says  Woodruff, 
J.,  p.  537,  "to  have  judgment  for 
their  costs  in  such  an  action  as  the 
present,  brought  against  them  for 
the  recovery  of  money  only,  is  ab- 
solute as  well  by  the  law  before  as 
since  the  code  of  procedure.  There 
is  no  claim  nor  ground  of  claim 
that  the  allowance  of  costs  in  the 
action  was  discretionary.  The  lia- 
bility of  the  receiver  in  whom  the 
alleged  cause  of  action  became 
vested  after  the  summons  herein 
was  served,  and  by  whom  the 
action  was  prosecuted,  is  made  by 
section  321  of  the  code,  the  same 
as  if  he  had  caused  himself  to  be 
made  a  party.  The  questions  her^ 
are,  therefore :  1.  In  an  action 
prosecuted  by  receivers  for  the  col- 


lection of  alleged  money  demands, 
instituted  or  carried  on  for  the  en- 
hancement of  the  fund,  for  the 
benefit  of  those  to  whom  it  is  ulti- 
mately to  be  paid,  is  the  defendant 
entitled  to  costs  to  be  paid  to  him 
immediately,  or  must  he  stand  as 
a  general  creditor  to  await  the  final 
administration,  and  receive  only  (as 
the  case  may  be)  his  distributive 
share  of  the  fund  pro  rata,  with 
those  for  whose  benefit  he  has  been 
subjected  to  a  groundless  litigation? 
2.  Is  the  question  stated,  addressed 
to  the  discretion  of  the  court,  in 
such  sense  that  no  appeal  lies  to 
this  tribunal  from  the  decision 
made  below?  It  was  conceded  on 
the  argument  that  the  costs  in 
question  are  chargeable  upon  and 
are  to  be  collected  out  of  the  fund. 
This  could  not  well  be  denied,  and 
yet  in  a  case  in  which  it  does  not 
appear    by    anything    stated    in    the 


424  RECEIVERS.  [chap.  X. 

§  340.  Judgment  against  receiver  for  taxes,  enforced 
only  against  funds  in  his  hands  as  receiver.  Where  an  ac- 
tion is  brought  by  the  state  against  receivers  of  a  corporation, 
for  the  purpose  of  enforcing  the  collection  of  taxes  due  from 
the  corporation,  and  judgment  is  recovered  against  the  receiv- 
ers, the  judgment  should  be  so  entered  as  to  be  enforced  only 
against  the  funds  that  are  or  should  be  in  the  hands  of  defend- 
ants as  receivers."^^ 

§  341.  Enforcement  of  demand  by  receiver  against  debt- 
or, not  a  taking  under  legal  process.  When  a  corporation 
is  dissolved  under  proceedings  in  a  state  court,  and  a  receiver  is 
appointed  to  close  up  its  affairs,  the  enforcement  and  collection 
by  the  receiver  of  a  demand  against  a  debtor  of  the  corporation 
is  not  a  "taking  under  legal  process,"  within  the  meaning  of  the 
national  bankrupt  act  of  1867,  so  as  to  constitute  an  act  of 
bankruptcy.'^''' 

§  342.  Receiver  should  not  himself  apply  money  in  pay- 
ment of  judgments;  distribution  made  by  court.  When  a 
receiver  is  appointed  over  an  insolvent  insurance  company, 

papers  that  there  are  other  claims  opinion,  upon  clear  and  just  rules, 

on   that   fund,   of  any   sort,   except  governing   the    subject,    impair    the 

the  interests  of  the  stockholders  of  defendants'  right  to  be  paid  in  full, 

the  company,  it  would  seem  to  fol-  the    fund    being    confessedly    suffi- 

low,  as  of  course,  that  the  receiver  cient.     The  receiver  is  pro  hac  vice 

should   have  been   directed   to   pay  the  representative  of  the  company, 

those  costs.     Such  an  order  is  the  its  creditors  and  stockholders.    The 

appropriate  mode  of  reaching  funds  action  is  prosecuted  for  the  increase 

in  the  receiver's  hands.     Not  being  of  a   fund  which  is  to  be  paid  to 

in   form  a  party  to  the  action,  no  them.     It  is  not  according  to   any 

execution   could   reach   the   proper-  rule    of    justice    or    equity    toward 

ty  he   holds,   and  being  the   custo-  third   parties   that   actions   like   the 

dian  of  the  funds  as  an  officer  of  present    should    be    prosecuted    by 

the  court,  he  is  subject  to  immedi-  the    company    or    such    representa- 

ate   direction  to  pay   it  to  a  party  tive,  otherwise  than  at  the  expense 

entitled.     If  it  be  assumed  that  the  and   risk   of  the   fund   which   it   is 

company    was    insolvent,    and    that  sought  thereby  to  increase." 

the  funds  which  the  receiver  holds  '^^  Commonwealth  v.  Runk.  26  Pa. 

or  may  collect  may  not  prove  suf-  St.,  235. 

ficient  to  satisfy  all  the  creditors  of  '^'^  In  re  New  Amsterdam  Fire  In- 

the  company,  this  does  not,  in  my  surance  Co.,  6  Benedict,  368. 


CHAP.  X.]  CORPORATIONS.  425 

with  authority  to  collect  debts  and  to  pay  liabilities,  upon  a  bill 
by  judgment  creditors  of  the  corporation  against  the  receiver, 
to  compel  him  to  bring  suits  for  the  recovery  of  its  assets,  it 
is  not  proper  for  the  court  to  decree  that  the  receiver  should 
apply  the  money  in  payment  of  the  judgments;  but  he  should 
be  directed  to  bring  it  into  court,  in  order  that  the  court  itself 
may  distribute  it  to  the  parties  entitled.'^^ 

§  342a.  Ancillary  bill  by  receiver  to  determine  claims  to 
property  in  his  possession;  injunction.  Where  third  per- 
sons are  asserting  rights  and  making  claims  which  cast  a  cloud 
upon  the  title  to  the  property  of  an  insolvent  corporation  which 
is  in  the  possession  of  a  receiver  and  is  being  administered  by 
him  and  which  consists  largely  of  franchises  and  other  assets 
of  an  intangible  nature,  the  receiver  may,  under  the  direction 
of  the  court,  proceed  by  ancillary  bill  to  protect  the  jurisdiction 
and  right  to  administer  such  property  and  to  determine  and  ad- 
judicate the  validity  of  the  rights  and  claims  of  the  parties  in 
the  estate  in  his  possession ;  and  in  such  case  it  is  proper  to  grant 
an  injunction  until  the  rights  of  the  parties  are  determinedJ^ 

78  Benneson  v.  Bill,  62  III.,  408.  SO  L.  Ed.,  801,  reversing  S.  C,  132 

79  Blair  v.   City  of  Chicago,  201      Fed.,  84& 
U.  S.,  400,  26  Sup.  Ct  Rep.,  427, 


426  RECEIVERS.  [chap.  X. 


III.  Receivers  of  Insolvent  Corporations. 

§  343.  Statutes  authorizing  receivers  on  insolvency  of  corporation; 
power  of  appointment  may  be  conferred  upon  executive 
officer. 

344.  Object  to  preserve  assets  for  benefit  of  creditors;  when  corpo- 

ration allowed  to  resume  management;  shareholders  may 
have  relief;  effect  of  assignment. 

344a.  Receiver  not  appointed  over  insolvent  corporation  upon  its 
own  petition. 

344b.  Corporation  not  dissolved  by  appointment  of  receiver;  actions 
against  the  corporation  do  not  abate;  otherwise  on  dis- 
solution. 

345.  In  proceedings  to  forfeit  charter,  appointment  of  receiver  does 

not  revive  corporate  existence. 

346.  Allegations  as  to  insolvency;  when  affidavit  on  information  in- 

sufficient; notice  and  rule  to  show  cause. 
346a.  Shareholders  entitled  to  relief;  fraudulent  transfers;  discretion- 
ary powers  of  court. 

347.  Injunction  against  directors  and  officers  in  aid  of  receivership; 

when  management  left  in  hands  of  officers. 

348.  Appointment  of  receiver  does  not  impair  lien  already  acquired 

by  creditors;  attaching  creditors. 

349.  Lien  of  judgment  creditors  on  real  estate,  limited  to  interest 

of  corporation  at  time  of  appointment;  court  not  concluded 
by  judgment  in  another  state. 

350.  Creditors    may    be    prohibited    by    statute    from    proceeding 

against  corporation  after  receivership;  creditors  may  come  in 
under  decree. 

351.  Appointment  operates  as  transfer  of  corporate  property  to  re- 

ceiver; right  to  rents  before  and  after  sale  by  receiver;  legal 
services. 

352.  Liability  of  shareholders  for  unpaid  subscriptions  may  not  be 

enforced  by  creditors,  but  only  by  receiver. 

353.  Statutory   proceedings   by   attorney-general   against   insolvent 

bank. 

354.  Eligibility  of  corporate  officers  as  receivers. 

355.  Answer  of  corporation  can  not  determine  litigation  between 

claimant  and  receiver. 

356.  Purchaser    at    receiver's    sale    acquires     no     right     of     action 

against  former  officer;  when  shareholder  estopped  from  ques- 
tioning order  of  sale. 

357.  When  receiver  may  be  discharged. 


CHAP,  X.] 


CORPORATIONS. 


427 


§  343.  Statutes  authorizing  receivers  on  insolvency  of 
corporation ;  power  of  appointment  may  be  conferred  upon 
executive  officer.  Under  the  laws  and  practice  of  many  of 
the  states,  the  jurisdiction  of  equity  over  corporate  bodies  has 
been  enlarged  to  the  extent  of  authorizing  the  appointment  of 
receivers  upon  the  insolvency  of  the  corporation,  for  the  pro- 
tection of  creditors  and  shareholders ;  and  the  statutory  power 
thus  conferred  is  in  some  of  the  states  sufficiently  broad  to  au- 
thorize the  court  to  dissolve  the  corporate  organization,  and  to 
forfeit  its  franchises.^^    Usually  the  power  of  appointing  re- 


SO  In  New  York,  the  appointment 
of  receivers  over  insolvent  insur- 
ance companies,  and  the  functions 
and  duties  of  such  receivers,  are 
largely  regulated  by  legislation.  As 
to  the  power  of  the  court  under 
such  legislation  to  adjudicate  upon 
claims  against  the  company  and  to 
pay  dividends,  and  as  to  the  right 
of  appeal  from  such  orders,  and  the 
right  of  other  creditors  to  intervene 
and  be  heard  concerning  such  mat- 
ters, and  as  to  costs  upon  such  in- 
tervention, see  People  v.  Security 
Life  Insurance  Co.,  71  N.  Y.,  222. 
As  to  the  proper  method  of  distri- 
bution of  the  assets  of  an  insolvent 
insurance  company  among  its  cred- 
itors, when  a  receiver  has  been  ap- 
pointed under  the  New  York  stat- 
ute, the  method  of  computing 
amounts  due  to  policy-holders  as  a 
basis  for  payment  of  dividends, 
priorities  among  different  classes 
of  creditors,  allowances  for  death 
losses,  and  set-offs  of  premium  notes 
due  from  policy-holders,  see  People 
V.  Security  Life  Insurance  Co.,  78 
N.  Y.,  114;  Attorney-General  v. 
North  America  Life  Insurance  Co., 
82  N.  Y.,  172;  Attorney-General  v. 
Guardian  Mutual  Life  Insurance 
Co.,  82  N.  Y.,  336.    As  to  proof  of 


claims  of  creditors  and  policy-hold- 
ers in  such  cases,  and  extension  of 
time  for  such  proofs  and  notice  to 
creditors,  see  People  v.  Security  Life 
Insurance  Co.,  79  N.  Y.,  267.  As  to 
the  right  of  such  a  receiver  to  a 
mandamus  to  compel  the  superin- 
tendent of  the  insurance  department 
to  pay  to  the  receiver  the  proceeds 
of  securities  deposited  by  the  com- 
pany with  the  superintendent,  see 
Attorney-General  v.  North  America 
Life  Insurance  Co.,  80  N.  Y.,  152. 
As  to  the  compensation  of  such  re- 
ceivers, and  the  basis  upon  which  it 
will  be  allowed  upon  receipts  and 
disbursements,  see  Attorney-General 
V.  North  America  Life  Insurance 
Co.,  89  N.  Y.,  94.  As  to  the  right 
of  a  surety  of  an  insolvent  corpora- 
tion to  the  appointment  of  a  receiver 
to  manage  and  dispose  of  its  assets 
and  to  pay  its  indebtedness,  under 
the  statutes  of  Ohio,  see  Barbour  v. 
National  Exchange  Bank,  45  Ohio 
St.,  133,  12  N.  K,  5.  As  to  facts 
held  insufficient  to  justify  the  ap- 
pointment of  a  receiver  over  an  al- 
leged insolvent  corporation  upon  be- 
half of  a  judgment  creditor  under 
the  statute  of  Idaho,  see  Cronan  v. 
District  Court,  15  Idaho,  184,  96 
Pac,  768. 


428  RECEIVERS.  [chap.  X. 

ceivers  over  corporations  is  conferred  by  legislative  enactment 
upon  the  courts  themselves ;  but  in  some  instances  it  is  vested 
in  executive  officers  of  the  government,  as  in  the  case  of  re- 
ceivers of  national  banks,  appointed  by  the  comptroller  of  the 
currency,  under  the  provisions  of  the  national  banking  act  of 
June  3,  1864.^1  And  since  the  appointment  of  a  receiver  in 
limine  is  not  regarded  as  a  strictly  judicial  act,  in  the  sense  of 
being  a  decree  or  judgment  affecting  title  to  property,  or  final- 
ly determining  the  rights  of  the  parties,  it  is  competent  for  the 
legislature  to  authorize  the  executive  department  of  the  govern- 
ment to  appoint  receivers,  with  authority  to  take  charge  of  and 
wind  up  the  affairs  of  insolvent  corporations,  such  as  banking 
institutions.  Nor  does  such  legislation  in  any  manner  impair 
the  obligation  of  the  original  contract  with  the  corporation,  by 
taking  from  it  the  right  secured  by  its  charter  to  sue  and  be 
sued  in  its  corporate  name,  the  appointment  of  the  receiver 
being  for  the  purpose  of  preserving  and  not  destroying 
rights. ^2 

§  344.  Object  to  preserve  assets  for  benefit  of  creditors ; 
when  corporation  allow^ed  to  resume  management;  share- 
holders may  have  relief;  effect  of  assignment.  The  primary 
object,  however,  of  proceedings  in  chancery  against  insolvent 
and  failing  corporations,  when  such  proceedings  are  authorized 
by  statute,  is  not  so  much  a  dissolution  of  the  charter,  which  is 
the  appropriate  duty  of  a  court  of  law,  as  to  protect  and  pre- 
serve the  corporate  assets  for  the  benefit  of  creditors.  And  it 
may,  therefore,  be  regarded  as  discretionary  with  the  court 
whether  to  continue  the  possession  of  the  receiver,  or  to  allow 
the  corporation  to  resume  the  management  of  its  own  affairs, 
if  satisfied  that  the  interest  of  all  parties  will  be  best  subserved 
in  this  way.^2    So  under  a  statute  authorizing  the  appointment 

81  13    U.    S.    Statutes    at    Large,  82  Carey  v.   Giles,  9  Ga.,  253. 

p.  99.    See  §  50;  U.  S.  Revised  Stat-  83  Fay  v.  Erie  &  Kalamazoo  Rail- 

utes,  §  5234;  3  U.   S.   Comp.   Stat.      road  Bank,  Harring.    (Mich.),  194. 
1901,   p.   3507;   5   Fed.   Stat.   Ann., 
p.  170. 


CHAP.  X.]  CORPORATIONS.  429 

of  receivers  over  insolvent  corporations,  the  court  v^ill  decline 
to  appoint,  although  the  corporation  is  insolvent,  if  its  direc- 
tors, who  are  trustworthy  persons,  are  closing  up  its  affairs, 
and  if  all  the  creditors  and  all  stockholders  save  complainant, 
are  satisfied  with  the  management  of  the  directors. ^'^  But  un- 
der a  statute  authorizing  the  appointment  of  a  receiver  over  a 
corporation  when  it  becomes  insolvent,  or  in  immediate  danger 
of  insolvency,  the  relief  is  not  confined  to  cases  instituted  by 
creditors,  but  may  be  granted  upon  a  bill  by  a  shareholder  al- 
leging the  insolvency  of  the  corporation  and  gross  mismanage- 
ment of  its  affairs  by  its  ofiicers.^^  And  upon  a  bill  for  a  re- 
ceiver over  an  insolvent  corporation,  the  court  having  juris- 
diction of  the  subject-matter,  and  jurisdiction  of  the  parties 
by  service  of  process,  the  execution  by  the  corporation  after 
such  service  of  an  assignment  of  its  property  to  a  trustee  for 
the  benefit  of  creditors  will  not  deprive  the  court  of  jurisdic- 
tion, and  it  may  grant  the  relief  notwithstanding  such  assign- 
ment.^^ 

§  S44fl.  Receiver  not  appointed  over  insolvent  corpora- 
tion upon  its  own  petition.  A  court  of  equity  has  no  juris- 
diction to  appoint  a  receiver  over  a  corporation  upon  its  own 
petition  alleging  its  insolvency  and  inability  to  continue  its 
business  and  seeking  a  ratable  distribution  of  its  assets  among 
its  creditors,  no  adverse  parties  being  joined  as  defendants  to 
such  petition  and  no  action  being  pending.^'^  Nor  will  a  re- 
ceiver be  appointed  upon  a  bill  by  a  banking  corporation  against 
its  judgment  creditors,  alleging  its  insolvency  and  that  the  de- 
fendants are  seeking  by  the  enforcement  of  their  judgments  to 
obtain  an  undue  preference  over  its  other  creditors,  since  equity 

84  City   Pottery  Co.  v.  Yates,  37  Colo.,  464,   17  Pac,  272.     And   see 
N.  J.  Eq.,  543.  State  v.  J.,  P.  &  M.  R.  Co.,  15  Fla., 

85  Iron  Hall  v.   Baker,   134  Ind.,  201.      And    see,   ante,    §    39c.      See, 
293,  ZZ  N.  E.,  1128.  contra,    Petition   of   Kittanning   In- 

86  Belmont  Nail  Co.  v.  Columbia  surance    Co.,    146    Pa.    St.,    102,   23 
I.  &  S.  Co.,  46  Fed.,  8.  Atl.,  IZd. 

87  Jones  v.  Bank  of  Leadville,  10 


430  RECEIVERS.  [chap,  X. 

has  no  jurisdiction  to  assume  the  administration  of  a  debtor's 
estate  upon  the  mere  gTound  of  insolvency. ^^ 

§  344^.  Corporation  not  dissolved  by  appointment  of  re- 
ceiver ;  actions  against  the  corporation  do  not  abate ;  other- 
wise on  dissolution.  It  is  important  to  observe  that,  in  the 
absence  of  statute,  the  appointment  of  a  receiver  over  an  in- 
solvent corporation  does  not  work  the  dissolution  of  the  cor- 
poration or  in  any  way  affect  its  corporate  existence.^^  Ex- 
cept so  far  as  the  control  of  its  affairs  is  placed  in  the  hands 
of  the  receiver,  it  continues  to  exist  for  all  purposes,  and  its 
officers,  except  as  enjoined  by  the  court  appointing  the  receiver, 
continue  to  exercise  their  functions  as  if  no  receiver  had  been 
appointed.^^  It  follows  that  actions  which  are  pending  against 
the  corporation  at  the  time  of  the  appointment  of  a  receiver  do 
not  abate  as  the  result  of  the  appointment  but  may  be  continued 
to  final  judgment,  so  long  as  there  is  no  attempt  to  interfere 
with  property  in  the  possession  of  the  receiver,^!  although  it 
is  proper  in  such  case  for  the  receiver  to  intervene  in  the  ac- 
tion, if  necessary,  and  answer  and  defend  upon  behalf  of  the 
corporation. ^2  j^^^id  where  there  has  been  no  dissolution  of 
the  corporation  and  no  injunction  against  the  institution  of  ac- 

88  Hugh  V.  McRae,  Chase's  Deci-  Fed.,  693,  47  U.  S.  App.,  339.  And 
sions,  466.  see,  post,  §  358,  for  the  application 

89  Pringle  v.  Woolworth,  90  N.  of  the  same  doctrine  in  receiverships 
Y.,  502 ;  Venner  v.  U.  W.  Co.,  40  of  insolvent  national  banks,  and 
Colo.,  212,  90  Pac,  623,  122  Am.  St.  §  370&  for  its  application  in  railway 
Rep.,   1036 ;   Moseby  v.  Burrow,   52  receiverships. 

Tex.,  396 ;  City  Water  Co.  v.  State,  90  Venner  v.  U.  W.  Co.,  40  Colo., 

88  Tex.,  600,  32  S.  W.,  1033 ;  Pinch-  212.  90  Pac,  623,  122  Am.  St.  Rep., 

back  V.  Mining  Co.,  137  N.  C,  171,  1036. 

49  S.  E.,  106;  Allen  v.  Olympia  L.  91  Kittredge  v.  Osgood,  161  Mass., 

&  P.  Co.,  13  Wash.,  307,  43   Pac,  384,  37  N.  R,  369;  St.  Louis,  C.  G. 

55 ;  Stolze  v.  Manitowoc  T.  Co.,  100  &  F.    S.   Ry.   Co.  v.   Holladay,   131 

Wis.,  208,  75  N.  W.,  987 ;  Johnson  Mo.,  440,  33  S.  W.,  49 ;  Andrews  v. 

V.  Southern  B.  &  L.  Assn.,  99  Fed.,  Steele  City  Bank,  57  Neb.,  173,  77 

646;  Hall  v.  Nieukirk,  12  Idaho,  33,  N.    W.,   342;    Stolze   v.    Manitowoc 

85  Pac,  485 ;  Durward  v.  Jewett,  46  T.  Co.,  100  Wis.,  208,  75  N.  W.,  987. 

La.  An.,  559,  15  So.,  386;  Peirce  v.  92  Andrews  v.   Steele   City  Bank, 

Van  Dusen,   24   C   C.   A.,  280,   78  57  Neb.,  173,  77  N.  W.,  342. 


CHAP.  X.]  CORPORATIONS.  431 

tions  against  it,  persons  having  claims  against  the  corporation 
may  maintain  actions  against  it  for  the  enforcement  of  their 
demands  and  may  prosecute  them  to  final  judgment.^^  And 
in  the  enforcement  of  their  judgments,  resort  may  be  had  to 
all  the  property  of  the  corporation  which  does  not  come  within 
the  scope  of  the  receivership.^^  And  since  the  appointment  of 
a  receiver  over  an  insolvent  corporation  does  not  ordinarily  dis- 
solve or  discontinue  the  existence  of  the  corporation,  it  is  en- 
titled, being  a  party  to  the  receivership  proceeding,  to  be  rep- 
resented by  counsel,  although  this  must  be  at  its  own  expense.^^ 
But  where  a  statutory  proceeding  is  instituted  to  dissolve  an 
insolvent  corporation  and  wind  up  its  business  and  a  judgment 
of  dissolution  is  entered  and  a  receiver  appointed,  it  works  an 
abatement  of  all  actions  pending  against  the  corporation,  and, 
unless  revived  under  some  statutory  provision,  all  subsequent 
proceedings  against  the  corporation  are  void.  Hence,  when  an 
action  is  pending  in  another  state  at  the  time  of  the  appointment 
of  the  receiver,  and  a  judgment  is  subsequently  rendered  therein 
against  the  corporation,  such  judgment  is  not  valid  or  binding 
upon  the  receiver.^^ 

§  345.  In  proceedings  to  forfeit  charter,  appointment  of 
receiver  does  not  revive  corporate  existence.  In  Louisi- 
ana, the  right  of  the  courts  to  appoint  a  receiver  for  the  protec- 
tion of  all  parties  in  interest,  pending  proceedings  for  the  liqui- 
dation and  settlement  of  the  affairs  of  an  insolvent  corporation, 
is  treated  as  too  well  established  to  admit  of  question. ^'^  And 
when  proceedings  are  pending  for  the  forfeiture  of  the  charter 
of  an  insolvent  corporation  and  for  the  settlement  of  its  af- 

93  Weigen  v.  Council  Bluffs  Ins.  94  city   Water    Co.    v.    State,    88 

Co.,  104  Iowa,  410,  IZ  N.  W.,  862;  Tex.,  600,  32  S.  W.,  1033. 

Warner  v.  Imbeau,  63  Kan.,  415,  65  95  Johnson  v.   Southern  B.  &  L. 

Pac,  648;  Allen  v.  Olympia  L.  &  P.  Assn.,  99  Fed.,  646. 

Co.,  13  Wash.,  307,  43  Pac,  55;  City  reinsurance      Commissioner      v. 

Water  Co.  v.  State,  88  Tex.,  600,  32  United  F.  Ins.  Co.,  22  R.  I.,  377,  48 

S.  W.,  1033;   Pinchback  v.   Mining  Atl.,  202.     And  see,  post,  §  349. 

Co.,  137  N.  C,  171,  49  S.  E..  106.  97  Stark  v.  Burke,  5  La.  An.,  740. 
And  see,  ante,  §  258. 


432  RECEIVERS.  [chap.  X. 

fairs,  the  appointment  of  a  receiver  does  not  have  the  effect  of 
reviving  the  corporate  body,  it  being  merely  a  necessary  meas- 
ure for  protecting  the  property  and  preserving  the  rights  of 
creditors.^S 

§  346.  Allegations  as  to  insolvency;  when  affidavit  on 
information  insufficient;  notice  and  rule  to  show  cause. 
W^here  the  statutes  of  a  state  provide  that  a  receiver  may  be 
appointed  when  a  corporation  has  been  dissolved,  or  when  it 
"is  in  imminent  danger  of  insolvency,  or  has  forfeited  its  cor- 
porate rights,"  in  proceedings  against  an  insurance  company 
for  the  appointment  of  a  receiver  under  the  statute,  it  is  suffi- 
cient ground  for  the  relief  to  allege  that  the  company  is  in- 
solvent and  unable  to  meet  its  liabilities,  and  that  its  officers 
have  misapplied  the  funds  and  are  rapidly  wasting  the  only 
means  of  the  company  for  the  payment  of  losses.  Such  a  state 
of  facts,  if  it  does  not  show  an  absolute  condition  of  insolvency, 
shows  at  least  that  there  is  such  "imminent  danger  of  insol- 
vency" as  to  warrant  the  appointment  of  a  receiver  under  the 
statute.  And  the  facts  alleged  being  sufficient  to  give  the  court 
jurisdiction  of  the  subject-matter,  and  authority  to  appoint  a 
receiver,  its  proceedings  in  making  such  appointment,  even  if 
erroneous,  can  not  be  called  in  question  in  a  collateral  action. ^^ 
But  an  affidavit  alleging  the  insolvency  of  a  banking  corpora- 
tion, upon  information  and  belief,  will  not  warrant  the  court 
in  interposing  its  extraordinary  aid  by  appointing  a  receiver, 
when  such  affidavit  is  contradicted  by  the  regular  official  re- 
ports of  the  bank,  made  under  oath  and  published  by  direction 
of  law,  since  such  reports  are  presumed  to  be  entitled  to  at 
least  as  much  weight,  judicially,  as  the  affidavit.^  And  under 
a  statute  making  insolvency  of  a  corporation  ground  for  a  re- 
ceiver, the  fact  of  insolvency  is  regarded  as  jurisdictional,  and 

98  Stark  v.  Burke,  5  La.  An.,  740.  \t  is  otherwise,  however,  when  such 

S9  Howard  v.  Whitman,  29  Ind.,  affidavit    is    not    thus    contradicted. 

557.  Attorney-General    v.    Bank    oi    Co- 

1  Livingston    v.     Bank     of     New  lumbia,  1  Paige,  511. 

York,  26  Barb.,  304,  5  Ab.  Pr.,  338. 


CHAP.  X.]  CORPORATIONS.  433 

the  proof  must  be  clear  and  convincing  before  the  court  will 
interfere.2  And  in  addition  to  the  insolvency  of  the  corpora- 
tion, it  must  appear  that  there  is  no  reasonable  prospect  that 
the  corporation,  if  let  alone,  will  soon  be  placed  by  its  man- 
agers in  a  condition  of  solvency.^  And  the  courts  will  not  ex- 
ercise their  statutory  power  of  appointing  receivers  over  an 
insolvent  corporation,  upon  an  ex  parte  application,  and  with- 
out giving  the  defendant  an  opportunity  to  be  heard.  But  upon 
filing  a  petition  duly  verified,  setting  forth  the  grounds  on 
which  the  application  is  based,  an  order  to  show  cause  should 
issue  and  a  copy  thereof  should  be  served  upon  the  officers  of 
the  corporation,  directing  them  to  show  cause  on  a  future  day 
why  the  application  should  not  be  granted.'*  And  where  a  state 
statute  provides  that  whenever  any  corporation  shall  become 
insolvent,  any  creditor  or  stockholder  may  apply  for  the  issu- 
ance of  an  injunction  and  the  appointment  of  a  receiver,  •« 
federal  court  sitting  in  that  state  may  properly  appoint  a  re- 
ceiver over  the  corporation  upon  a  bill  filed  by  mortgage  bond- 
holders and  stockholders  in  which  the  corporation  is  alleged 
to  be  insolvent  and  its  affairs  are  charged  to  have  been  grossly 
mismanaged  by  its  officers  and  directors.  And  in  such  case  the 
jurisdiction  exists  independently  of  the  statute  and  under  the 
general  chancery  powers  of  the  court.  ^ 

§  346(7.  Shareholders  entitled  to  relief;  fraudulent  trans- 
fers; discretionary  powers  of  court.  Shareholders  are  en- 
titled to  a  receiver  over  a  corporation  upon  a  bill  for  relief 

2  Atlantic  Trust  Co.  v.  ConsoH-  4  Devoe  v.  Ithaca  &  Owego  R. 
dated  E.  S.  Co.,  49  N.  J.  Eq.,  402,  Co.,  5  Paige,  521.  As  to  the  suffi- 
23  Atl.,  934;  Edison  v.  Edison  U.  ciency  of  the  allegations  necessary 
P.  Co.,  52  N.  J.  Eq.,  620,  29  Atl.,  to  procure  a  receiver  of  an  insolvent 
195 ;  Stokes  v.  Knickerbocker  In-  corporation  under  the  statutes  of 
vestment  Co.,  70  N.  J.  Eq.,  518,  61  Wisconsin,  and  as  to  the  functions 
Atl.,  736.  And  see  Parsons  v.  Mon-  and  powers  of  such  a  receiver  when 
roe  Manufacturing  Co.,  3  Green  Ch.,  appointed,  see  Powers  v.  Hamilton 
187.  Paper  Co..  60  Wis.,  23,  18  N.  W.,  20. 

3  Fort  Wayne  Electric  Corpora-  5  United  States  Shipbuilding  Co. 
tion  V.  Franklin  E.  L.  Co.,  57  N.  J.  v.  Conklin,  60  C.  C.  A.,  680,  126 
Eq.,  7,  41  Atl.,  666.  Fed.,  132. 

Receivers — 28. 


434  RECEIVERS.  [chap.  X. 

against  a  note  and  mortgage  executed  by  the  officers  of  the  cor- 
poration fraudulently  and  without  adequate  consideration, 
their  conduct  having  been  such  as  to  render  it  unfit  that  they 
should  retain  control  of  the  affairs  of  the  corporation  pending 
the  litigation.^  But,  after  the  appointment  of  a  receiver  under 
a  statute  for  v^inding  up  insolvent  corporations,  it  is  still  com- 
petent  for  the  court  to  entertain  an  independent  action  by  a 
judgment  creditor  to  set  aside  an  alleged  fraudulent  transfer 
of  the  corporate  property,  the  receiver  having  taken  no  steps  to 
set  aside  such  transfer.  And  such  an  action  is,  in  effect,  an 
application  to  the  court  to  direct  the  receiver  in  the  discharge 
of  his  duty  and  may  be  maintained  as  such.'^  So  when  the 
property  of  an  insolvent  corporation  has  passed  into  the  hands 
of  a  receiver,  and  the  corporation  is  managed  and  its  business 
conducted  through  the  receiver,  questions  pertaining  to  the  ad- 
ministration of  the  business  must  be  left  largely  to  the  discre- 
tion of  the  court  having  the  receivership  in  charge.  And  a 
court  of  appellate  jurisdiction  will  be  reluctant  to  disturb  the 
action  of  the  court  below  upon  such  questions,  unless  in  cases  of 
flagrant  error  and  injustice.^ 

§  347.  Injunction  against  directors  and  officers  in  aid  of 
receivership;  when  management  left  in  hands  of  officers. 
Upon  the  appointment  of  a  receiver  of  all  the  assets  and  effects 
of  a  corporation,  for  the  purpose  of  sequestrating  its  property 
and  closing  up  its  affairs,  it  is  proper  for  the  court,  in  con- 
nection with  such  appointment  and  as  a  part  of  the  order,  to 
enjoin  the  directors  and  officers  of  the  corporation  from  collect- 
ing any  debts  or  demands,  and  from  delivering  or  incumbering 
any  of  the  corporate  property  to  any  other  person,  such  an  in- 
junction being  regarded  as  an  appropriate  adjunct  of  the  re- 
ceivership.9  It  by  no  means  follows,  however,  because  an  in- 
junction has  been  granted  against  a  corporation,  restraining  it 

6  Avery   v.    Blees    Manufacturing  8  Wilmington  Star  Mining  Co.  V. 
Co.,  27  N.  J.  Eq.,  412.  Allen,  95  111.,  288. 

7  Monitor  Furnace  Co.  v.  Peters,  ^  Morj^^an  v.  New  York  &  Albany 
40  Ohio  St.,  575.  R.  Co.,  10  Paige,  290. 


CHAP.  X.]  CORPORATIONS.  435 

from  continuing  in  business  because  of  its  insolvency,  that  a 
receiver  will  necessarily  be  appointed  to  wind  up  its  affairs, 
even  though  by  the  statute  authorizing  the  proceeding  the  court 
is  fully  empowered  to  appoint  a  receiver.  And  when,  in  such 
case,  it  is  apparent  to  the  court  that  a  receiver  is  not  necessary 
for  the  protection  of  the  interests  either  of  creditors  or  of  stock- 
holders, and  that  a  stranger  to  the  affairs  of  the  company  can 
not  wind  up  its  business  as  advantageously  as  its  directors,  a 
receiver  will  be  refused  and  the  management  will  be  left  in  the 
hands  of  the  directors,  who  may  be  required  to  act  under  the 
immediate  control  and  direction  of  the  court. ^^  But  the  court 
will  not  leave  the  management  of  the  affairs  of  a  corporation 
in  the  hands  of  its  directors  or  officers,  after  declaring  the  cor- 
poration itself  insolvent,  unless  it  is  shown  to  be  for  the  in- 
terest of  the  creditors  and  shareholders  that  this  course  should 
be  pursued.  And  when  fraudulent  and  improper  conduct  is 
shown  against  the  officers  of  the  corporation,  in  making  ille- 
gal sales  of  its  property  and  effects  after  its  insolvency,  it  is  the 
clear  duty  of  the  court  to  take  the  management  out  of  the  hands 
of  such  officers,  and  to  place  it  in  the  hands  of  a  receiver,  and 
the  court  has  no  discretion  in  the  premises. ^^ 

§  348.  Appointment  of  receiver  does  not  impair  lien  al- 
ready acquired  by  creditors;  attaching  creditors.  As  re- 
gards the  effect  of  appointing  a  receiver  of  an  insolvent  cor- 
poration upon  the  rights  of  creditors,  the  decisions  are  not  al- 
together harmonious,  owing,  doubtless,  to  the  difference  in  the 
various  statutes  in  force  in  the  several  states,  under  which  the 
courts  are  empowered  to  appoint  receivers  over  corporate  bod- 
ies. It  may,  however,  be  regarded  as  an  established  rule,  that 
such  appointment  does  not  affect  or  impair  a  lien  already  ac- 
quired by  the  creditor  upon  assets  of  the  corporation.  When, 
therefore,  under  the  statutes  of  the  state  for  the  winding  up  of 

10  Rawnsley    v.    Trentofi    Mutual  Nichols  v.   Perry   Patent  Arm  Co., 

Life     &     Fire     Insurance     Co.,     1  3  Stockt.,  126. 

Stockt.,   347.     See,   also,   Oakley  v.  n  Nichols  v.   Perry   Patent   Arm 

Paterson  Bank,   1   Green  Ch.,  173;  Co.,  3  Stockt.,  126. 


436  RECEIVERS.  [chap.  X. 

insolvent  corpotations,  a  receiver  of  such  a  body  is  appointed 
and  an  injunction  is  granted  against  the  corporation,  such  pro- 
ceedings do  not  have  the  effect  of  dissolving  an  attachment  of 
the  assets  of  the  corporation  previously  made  by  a  creditor,  and 
a  creditor  who  has  been  thus  diligent  in  acquiring  a  lien  by  at- 
tachment will  be  allowed  to  retain  it,  notwithstanding  the  sub- 
sequent proceedings. 12  g^t  when  a  receiver  is  appointed  to 
take  charge  of  the  assets  of  a  banking  corporation  for  the  bene- 
fit of  creditors,  and  he  has  filed  his  bond  with  security,  which 
has  been  approved  by  the  court,  the  assets  of  the  corporation, 
although  not  yet  reduced  to  possession  by  the  receiver,  are  re- 
garded as  in  custody  of  the  law,  m  gremio  legis,  and  not  liable 
to  levy  under  an  attachment  in  favor  of  a  creditor  of  the  bank.^^ 
§  349.  Lien  of  judgment  creditors  on  real  estate,  lim- 
ited to  interest  of  corporation  at  time  of  appointment; 
court  not  concluded  by  judgment  in  another  state.  When 
receivers  are  appointed  to  take  charge  of  the  affairs  of  an  in- 
solvent corporation  pendente  lite,  it  is  held  that  such  proceed- 
ing does  not  prevent  the  general  creditors  from  enforcing  their 
demands  by  suit,  when  it  does  not  appear  that  the  appointment 
was  made  with  a  view  to  a  settlement  and  an  equal  distribution 
of  the  corporate  funds  to  all  the  creditors,  but  only  to  provide 
for  the  safety  of  the  assets  pending  the  litigation  And,  in 
such  a  case,  the  lien  acquired  by  a  judgment  creditor  upon  the 
real  estate  of  the  corporation  will  be  upheld,  notwithstanding 
the  appointment  and  possession  of  the  receivers,  and  even 
though  the  judgment  was  obtained  after  such  appointment  and 
possession.  14  But  the  lien  acquired  by  the  judgment  creditor, 
under  such  circumstances,  is  only  a  lien  upon  such  interest  in 
the  real  estate  of  the  corporation  as  was  held  by  it  at  the  time 
of  the  appointment  of  the  receivers,  and  it  will  not  be  extended 

12  Hubbard  v.  Hamilton  Bank,  7  14  EIHcott  v.  United  States  Insur- 
Met,  340.  ance  Co.,  7  Gill,  307.     But  see  At- 

13  Hagedon  v.  Bank  of  Wisconsin,  torney-General   v.   Continental   Life 
1   Pin.    (Wis.),  61.     And  see  com-  Insurance  Co.,  28  Hun,  360. 
ments    upon   this   case   in   Atchison 

V.  Davidson,  2  Pin.  (Wis.),  48. 


CHAP.  X.]  CORPORATIONS.  437 

to  the  increased  value  of  the  property  resulting  from  payments 
of  purchase-money  made  thereon  by  the  receivers.i^  And  a 
court  appointing  a  receiver  over  an  insolvent  corporation  in  a 
proceeding  to  wind  up  its  affairs  and  to  administer  its  assets 
is  not  bound  or  concluded  as  to  the  assets  in  its  possession  by  a 
judgment  recovered  in  another  state  against  the  corporation 
after  the  receivership  and  after  the  dissolution  of  the  corpora- 
tion.^^  Nor,  in  such  case,  does  the  fact  that  the  receiver  has 
employed  counsel  and  has  been  heard  upon  a  writ  of  error  under 
which  a  former  judgment  in  the  same  cause  in  the  foreign  state 
has  been  reversed  alter  the  rule  or  conclude  the  court  appointing 
the  receiver  as  to  the  effect  of  the  final  judgment  in  the  foreign 
state.  1*^ 

§  350.  Creditors  may  be  prohibited  by  statute  from  pro- 
ceeding against  corporation  after  receivership;  creditors 
may  come  in  under  decree.  When  the  statute  of  a  state, 
regulating  the  winding  up  of  banking  corporations  by  receivers, 
provides  that  no  action  shall  be  maintained  against  a  bank  after 
the  appointment  of  a  receiver,  but  that  all  creditors  shall  have 
their  remedy  under  the  provisions  of  the  statute,  the  courts 
will  not  entertain  an  action  brought  against  the  bank  by  one 
of  its  creditors,  such  an  enactment  being  regarded  as  constitu- 
tional and  within  the  power  of  the  legislative  branch  of  the 
government.!^  /^^(^  when,  under  the  laws  of  the  state,  a  re- 
ceiver for  winding  up  the  affairs  of  an  insolvent  corporation, 
upon  the  final  order  for  his  appointment,  becomes  absolutely  en- 
titled to  all  the  property  and  effects  of  the  corporation, 
for  the  purpose  of  distributing  them  among  its  creditors  and 

15  Ellicott  V.  United  States  Insnr-  17  Pendleton  v.  Russell,  144  U.  S., 
ance  Co.,  7  Gill,  307.  640,  12  Sup.  Ct.  Rep.,  743,  36  L.  Ed., 

16  Pendleton  v.  Russell,  144  U.  S.,  574,  affirming  S.  C.  suh  nom.     Peo- 
640,  12  Sup.  Ct.  Rep.,  743,  36  L.  Ed.,  pie  v.  Knickerbocker  Life  Insurance 
574,  affirming  S.  C.  sub  nom.     Peo-  Co.,  106  N.  Y.,  619,  13  N.  E.,  447. 
pie  V.  Knickerbocker  Life  Insurance  18  Leathers  v.  Shipbuilders  Bank, 
Co.,  106  N.  Y.,  619,  13  N.  E.,  447;  40  Me.,  386. 

Rodgers  v.  Adriatic  Fire  Ins.  Co., 
148  N.  Y.,  34,  42  N.  E.,  515.  And 
see,  ante,  §  MAb. 


438  RECEIVERS.  [chap.  X. 

shareholders,  such  final  order  is  in  the  nature  of  a  decree  in  an 
ordinary  creditors'  suit,  against  executors  or  others  who  are 
trustees  of  a  fund  upon  which  several  creditors  have  claims  for 
the  payment  of  their  debts  ratably,  or  according  to  a  specified 
order  of  priorities.  And  in  such  case,  any  creditors,  who  are 
not  nominal  parties  to  the  suit,  may  make  themselves  such  par- 
ties in  fact  by  coming  in  and  presenting  their  claims  under  the 
decree,  and  by  submitting  themselves  to  the  jurisdiction  of  the 
court  for  the  adjustment  of  their  demands;  and  a  creditor  thus 
coming  in  as  a  quasi  party  to  the  action  is  entitled  to  the  full 
benefit  of  the  decree.  ^^ 

§  351.  Appointment  operates  as  transfer  of  corporate 
property  to  receiver ;  right  to  rents  before  and  after  sale  by 
receiver;  legal  services.  It  is  held  in  New  Jersey,  that  the 
appointment  of  a  receiver  over  an  insolvent  corporation,  under 
the  statute  conferring  such  jurisdiction,  operates  as  a  convey- 
ance or  transfer  of  all  the  property  of  the  corporation  to  the 
receiver  for  the  benefit  of  creditors,  to  be  distributed  in  accord- 
ance with  the  statute.20  It  is,  therefore,  held  that  rents  of  the 
corporate  property,  accruing  after  its  sale  by  the  receivers, 
belong  to  the  purchaser  of  the  property,  while  rents  accruing 
after  the  appointment  of  the  receivers,  but  before  a  sale  of  the 
premises  by  them,  belong  to  the  receivers  for  the  benefit  of 
creditors. 21     But  an  action  will  not  lie  against  the  receiver  to 

19 /m  re  City  Bank  of  Buffalo,  10  and  that  such  appointment  did  not 
Paige,  378.  And  see,  as  to  the  time  necessarily  put  an  end  to  the  exist- 
when  plaintiff,  in  an  action  pend-  ence  of  the  corporate  body,  the  re- 
ing  against  an  insolvent  corporation,  ceivers  being  substituted  in  place 
may  prove  up  his  claim  and  share  of  the  managers  and  directors  of 
in  a  dividend  declared  by  the  re-  the  corporation  for  the  purpose  of 
ceiver,  Smith  v.  Manhattan  Insur-  closing  up  its  affairs,  and  that  the 
ance  Co.,  4  Hun,  127.  title  to  its  property  did  not  change, 

20  Corrigan  v.  Trenton  Delaware  the  power  only   being  delegated   to 

Falls  Co.,  3  Halst.  Ch.,  489.     It  was  the  receivers  to  take  charge  of  and 

held,    however,    in    an    earlier    case  sell  it.     Willink  v.   Morris  Canal  & 

in   New  Jersey,  that  the  corporate  Banking  Co.,  3  Green  Ch.,  377. 

property  did  not  vest  in  the  receiv-  21  Corrigan  v.  Trenton  Delaware 

ers  by  virtue  of  their  appointment,  Falls   Co.,  3  Halst.   Ch.,  489.     See, 


CHAP.  X.]  CORPORATIONS.  439 

recover  for  legal  services  rendered  to  the  corporation  after  the 
appointment  of  the  receiver,  although  such  services  rendered 
before  the  receivership  may  be  recovered  against  him.  And 
the  question  of  what  allowance  should  be  made  out  of  the  funds 
of  the  receivership  for  counsel  fees  and  legal  services  rendered 
to  the  corporation  in  resisting  the  appointment  of  a  receiver 
would  seem  to  be  wholly  within  the  discretion  of  the  court. 22 

§  352.  Liability  of  shareholders  for  unpaid  subscriptions 
may  not  be  enforced  by  creditors,  but  only  by  receiver. 
When  the  affairs  of  an  insolvent  corporation  have  passed  into 
the  hands  of  a  receiver,  in  an  action  instituted  in  behalf  of  all 
its  creditors,  and  the  court  is  authorized  and  required  by  the 
statute  conferring  the  jurisdiction  to  cause  the  property  and  as- 
sets of  the  corporation  to  be  distributed  among  its  creditors 
pro  rata,  it  will  not  permit  actions  to  be  prosecuted  against 
shareholders  for  their  unpaid  subscriptions  by  creditors  of  the 
corporation,  whereby  they  might  obtain  a  preference  over  other 
creditors.  The  receiver  being  appointed  for  the  benefit  of  the 
creditors,  and  the  property  and  choses  in  action  of  the  corpora- 
tion being  vested  in  him  for  their  benefit,  by  virtue  of  his  ap- 
pointment, if  the  shareholders  are  liable  to  the  corporation  for 
unpaid  balances  on  account  of  their  subscriptions  to  the  capital 
stock,  such  liability  may  be  enforced  by  the  receiver  only,  and 
not  by  individual  creditors. 23 

§  353.  Statutory  proceedings  by  attorney-general 
against  insolvent  bank.  Under  a  statute  making  it  the 
duty  of  the  attorney-general  of  the  state,  whenever  any  incor- 
porated bank  becomes  insolvent  and  unable  to  pay  its  debts,  to 
apply  to  a  court  of  equity  for  an  injunction  and  a  receiver,  and 
for  the  winding  up  of  the  corporation,  when  the  fact  of  the 
insolvency  of  the  bank  is  satisfactorily  established,  the  court  to 
which  the  application  is  addressed  has  no  discretion  left  as  to 

also,  Fish  V.  Potts,  4  Halst.  Ch.,  277,  Alliance  L.  I.  Co.,  148  N.  Y.,  563, 

aflfirmed  on  appeal  to  the  court  of  42  N.  E.,  1044. 

errors  and  appeals,  id.,  909.  -'^  Rankine   v.    Elliott,    16   N.   Y., 

22  Barnes  v.  Newcomh,  89  N.  Y.,  Z77.    And  see,  ante,  §  324. 
108.    And  see  People  v.  Commercial 


440  RECEIVERS.  [chap.  X. 

the  appointment,  and  a  receiver  will  be  granted  as  of  course.24 
And  it  is  not  necessary  that  the  information  filed  by  the  attor- 
ney-general should  be  verified  by  a  positive  affidavit  as  t©  the 
insolvency  of  the  bank,  but  it  is  sufficient  that  it  is  alleged  on 
information  and  belief,  since  no  person  but  the  officers  of  the 
bank  may  swear  positively  as  to  its  insolvency.^^ 

§  354.  Eligibility  of  corporate  officers  as  receivers.  Up- 
on compulsory  proceedings,  under  a  statute,  for  the  appoint- 
ment of  a  receiver  to  wind  up  an  insolvent  banking  corpora- 
tion, it  is  regarded  as  improper  to  appoint  an  officer  of  the 
bank  as  receiver,  since  if  the  officers  as  such  are  unfit  for  the 
management  of  the  bank  in  that  capacity,  the  court  will  not  in- 
trust its  management  to  them  as  receivers,  the  rule  of  exclu- 
sion, in  such  case,  being  based  upon  principles  of  sound  public 
policy.26  It  is  otherwise,  however,  when  the  proceedings  are 
instituted  voluntarily  by  the  corporation  for  a  dissolution,  and 
when  the  statute  regulating  them  authorizes  the  appointment 
of  officers  or  shareholders  as  receivers.  And  under  such  cir- 
cumstances, it  is  proper  to  appoint  the  president  and  book-keep- 
er, when  it  is  not  shown  that  their  conduct  or  management  of 
the  business  has  in  any  manner  tended  to  produce  the  insolvency 
of  the  corporation. 2"^ 

§  355.  Answer  of  corporation  can  not  determine  litiga- 
tion between  claimant  and  receiver.  When,  under  the  laws 
of  a  state,  the  appointment  of  a  receiver  over  an  insolvent  cor- 
poration operates  as  a  virtual  dissolution  of  the  corporate  body, 
substituting  the  receiver  in  lieu  thereof  as  to  all  its  property 
and  effects,  in  a  contest  concerning  the  right  to  certain  property 

24  Attorney-General  v.  Bank  of  be  appointed.  Livingston  v.  Bank 
Columbia,  1  Paige,  511.  of  New  York,  26  Barb.,  304,  5  Ab. 

25  Attorney-General    v.    Bank    of      Pr.,  338. 

Columbia,    1     Paige,    511.      When,  26  Attorney-General    v.    Bank    of 

however,   the   allegations   as   to   in-  Columbia,   1    Paige,   511.     And   see, 

solvency    rest    on    information    and  ante,  §  72. 

belief,  and  are  contradicted  by  the  27 /n    re    Eagle    Iron    Works,    8 

regular  official  reports  of  the  bank,  Paige,  385,  affirming  S.  C,  3  Edw. 

made  under  oath  and  published  ac-  Ch.,  385. 

cording  to  law,  a  receiver  will  not 


CHAP.  X,]  CORPORATIONS.  441 

of  the  corporation  in  the  hands  of  its  receiver,  the  answer  of  the 
corporation  itself  under  the  corporate  seal  can  have  no  effect  in 
determining  the  controversy,  since  the  litigation  is  between  the 
claimant  and  the  receiver  alone. ^8 

§  356.  Purchaser  at  receiver's  sale  acquires  no  right  of 
action  against  former  officer;  when  shareholder  estopped 
from  questioning  order  of  sale.  While  a  purchaser  of  the 
assets  of  an  insolvent  corporation,  sold  at  a  receiver's  sale,  ob- 
tains by  his  purchase  such  title  as  the  receiver  himself  had,  he 
can  not  by  such  purchase  from  the  receiver  acquire  any  right  of 
action  against  a  former  officer  of  the  corporation  to  compel 
him  to  account  for  assets  and  effects  of  the  corporation  in  his 
hands  in  the  capacity  of  trustee. ^^  But  a  shareholder  who  has 
joined  in  proceedings  for  the  dissolution  of  an  insolvent  cor- 
poration and  for  a  receiver  is  estopped  from  questioning  the 
appointment,  and  from  questioning  an  order  of  court  directing 
the  receiver  to  sell  the  corporate  assets.^^ 

§  357.  When  receiver  may  be  discharged.  When  a  re- 
ceiver has  been  appointed  of  the  effects  of  a  corporation,  under 
a  statute  authorizing  receivers  in  cases  of  insolvency,  it  is 
proper  for  the  court  to  discharge  him  upon  motion  of  the  de- 
fendant corporation,  upon  its  satisfying  the  court  that  it  is  in 
solvent  circumstances  and  able  to  resume  business,  and  that  the 
best  interests  of  its  creditors  will  thereby  be  secured. ^^  The 
interests  of  the  creditors  are  in  all  cases  to  be  kept  in  view  in 
determining  whether  the  receiver  shall  be  continued  or  dis- 
charged. And  a  creditor  who  has,  upon  his  own  bill,  obtained 
the  appointment  of  a  receiver,  is  not  entitled  as  of  right,  upon 
the  settlement  of  his  own  debt,  to  have  the  receiver  discharged, 
when  the  rights  of  other  creditors  have  intervened.  In  such  a 
case,  it  is  the  right  and  duty  of  the  court  to  protect  the  interests 
of  all  the  creditors  who  may  have  presented  their  demands. ^^ 

28  Davenport  t;.  City  Bank  of  Buf-  31  Ferry  v.  Bank  of  Central  New 
falo,  9  Paige,  12.                                       York,  IS  How.  Pr.,  445. 

29  Mann  v.  Fairchild,  2  Keyes,  106.  32  Pay  v.  Erie  &  Kalamazoo  Rail- 
30Battershall  v.  Davis,  31  Barb.,      road  Bank,  Harring.    (Mich.),  194. 

323. 


442  RECEIVERS.  [chap.    X. 


IV.  Receivers  of  National  Banks. 

§  35S.     Appointment  under  National  Banking  Act;  effect  of  appointment; 
corporation  still  exists  and  may  be  sued. 

359.  Receiver   holds    only    such    title   as   bank   had;    can    not   avoid 

pledge  of  assets  as  collateral  made  by  bank;  exemption  from 
taxation. 

360.  Receiver  the  agent  of  the  comptroller;  his  functions  and  rights 

of  action;  claim  allowed  against  bank  should  be  certified  to 

comptroller  for  payment. 
360a.  May  enforce  individual  liability  of  shareholders. 
360b.  Receiver's    right    of    action   against  directors  for  mismanaging 

affairs  of  bank. 

361.  Allegations   and  proof  of  his  appointment  in   suits  by  the  re- 

ceiver, 

362.  Power  of  comptroller  not  exclusive  of  jurisdiction  of  equity; 

when  courts   may  appoint  receiver. 

363.  Jurisdiction    of    state    and    federal      courts     in     actions    by    or 

against  the  receiver. 

364.  Property  of  bank  can   not  be   sold  by  creditor  as  against  re- 

ceiver. 
364a.   Receiver  subject  to  same  set-offs  as  bank. 

§  358.  Appointment  under  National  Banking  Act;  effect 
of  appointment;  corporation  still  exists  and  may  be  sued. 

The  subject  of  the  appointment  of  receivers  over  national  banks 
incorporated  under  the  act  of  congress  of  June  3,  1864,  and  of 
the  functions  and  powers  of  such  receivers,  is  one  of  consider- 
able importance,  and  has  been  presented  to  the  courts  in  sev- 
eral different  aspects.  Under  the  fiftieth  section  of  the  act  in 
question,  commonly  known  as  the  National  Banking  Act,  au- 
thority is  conferred  upon  the  comptroller  of  the  currency  to 
appoint  receivers  over  national  banks,  upon  their  refusal  to 
pay  their  circulating  notes,  and  the  general  duties  of  receivers 
thus  appointed  are  defined  by  the  statute.^^     It  would  seem 

33  Act  of  June  3,  1864,  c.  106,  13  lating  notes   as   therein  mentioned, 

Statutes   at   Large,   99.      Section   50  and   is   in   default,   the   Comptroller 

contains    the    following    provision :  of  the  Currency  may  forthwith  ap- 

"That  on  becoming  satisfied,  as  spe-  point  a  receiver,  and  require  of  him 

cified  in  this  act,  that  any  associa-  such  bond  and  security  as  he  shall 

tion   has   refused   to   pay   its   circu-  deem  proper,  who,  under  the  direc- 


CHAP.   X.] 


CORPORATIONS. 


443 


that  the  appointment  of  a  receiver  under  this  section  has  the 
effect  of  superseding  the  authority  of  the  directors  to  exercise 
the  incidental  powers  necessary  to  carry  on  the  business  of 
banking,  although  the  corporate  franchise  is  not  destroyed,  and 
the  bank  as  a  legal  entity  still  continues  to  exist.^'*  And  since 
the  bank  still  has  an  existence,  it  is  proper  to  institute  an  action 
against  it  in  its  corporate  capacity,  in  which  capacity  it  should 


tion  of  the  Comptroller,  shall  take 
possession  of  the  books,  records  and 
assets  of  every  description  of  such 
association,  collect  all  debts,  dues 
and  claims  belonging  to  such  asso- 
ciation, and  upon  the  order  of  a 
court  of  record  of  competent  juris- 
diction, may  sell  or  compound  all 
bad  or  doubtful  debts,  and  on  a 
like  order,  sell  all  the  real  and  per- 
sonal property  of  such  association, 
on  such  terms  as  the  court  shall  di- 
rect; and  may,  if  necessary  to  pay 
the  debts  of  such  association,  en- 
force the  individual  liability  of  the 
stockholders  provided  for  by  the 
twelfth  section  of  this  act;  and  such 
receiver  shall  pay  over  all  money 
so  made  to  the  Treasurer  of  the 
United  States,  subject  to  the  order 
of  the  Comptroller  of  the  Currency, 
and  also  make  report  to  the  Comp- 
troller of  all  his  acts  and  proceed- 
ings." Section  50  of  the  original 
act,  as  above  quoted,  is  substan- 
tially re-enacted  in  section  5234  of 
the  Revised  Statutes  of  the  United 
States,  as  follows :  "On  becoming 
satisfied,  as  specified  in  sections 
5226  and  5227,  that  any  association 
has  refused  to  pay  its  circulating 
notes  as  therein  mentioned,  and  is 
in  default,  the  Comptroller  of  the 
Currency  may  forthwith  appoint  a 
receiver,  and  require  of  him  such 
bond    and    security    as    he    deems 


proper.  Such  receiver,  under  the 
direction  of  the  Comptroller,  shall 
take  possession  of  the  books,  rec- 
ords, and  assets  of  every  descrip- 
tion of  such  association,  collect  all 
debts,  dues,  and  claims  belonging 
to  it,  and,  upon  the  order  of  a  court 
of  record  of  competent  jurisdiction, 
may  sell  or  compound  all  bad  or 
doubtful  debts,  and,  on  a  like  order, 
may  sell  all  the  real  and  personal 
property  of  such  association,  on 
such  terms  as  the  court  shall  di- 
rect; and  may,  if  necessary  to  pay 
the  debts  of  such  association,  en- 
force the  individual  liability  of  the 
stockholders.  Such  receiver,  shall 
pay  over  all  money  so  made  to  the 
Treasurer  of  the  United  States,  sub- 
ject to  the  order  of  the  Comptroller, 
and  also  make  report  to  the  Comp- 
troller of  all  his  acts  and  proceed- 
ings." 3  U.  S.  Comp.  Stat.  1901, 
p.  3507;  5  Fed.  Stat.  Ann.,  p.  170. 
Under  the  provisions  of  the  statute 
quoted  it  is  held  that  the  receiver 
of  a  national  bank  appointed  by  the 
Comptroller  of  the  Currency  may 
apply  to  a  court  of  competent  juris- 
diction for  leave  to  sell  the  assets 
of  the  insolvent  bank,  without  ob- 
taining the  formal  consent  of  the 
Comptroller  to  make  such  applica- 
tion. Richardson  v.  Turner,  52  La. 
An.,  1613,  28  So.,  158. 
34  Bank  of  Bethel  v.  Pahquioque 


444  RECEIVERS.  [CIIAP.    X. 

be  defended. "^^  And  where  a  judgment  is  obtained  against  the 
bank  in  such  a  case,  it  is  binding  upon  the  receiver  unless  ren- 
dered void  by  reason  of  fraud  or  collusion. ^^^ 

§  359.  Receiver  holds  only  such  title  as  bank  had;  can 
not  avoid  pledge  of  assets  as  collateral  made  by  bank ;  ex- 
emption from  taxation.  As  regards  the  title  acquired  by  a 
receiver  of  a  national  bank  thus  appointed,  the  rule  is  that  he 
holds  only  such  estate  and  title  as  the  bank  itself  had  in  its  as- 
sets, his  title  being  similar  in  this  respect  to  that  of  an  assignee 
in  bankruptcy.  He  is  not  a  third  person  in  the  sense  of  com- 
mercial transactions,  and  can  not  avoid  a  pledge  of  assets  of 
the  bank  which  could  not  be  avoided  by  the  corporation  itself. 
When,  therefore,  the  bank  has  deposited  notes  constituting  a 
part  of  its  assets  with  a  creditor  as  security  for  advances,  the 
bank  itself  being  concluded  by  the  deposit  or  pledge,  the  re- 
ceiver is  not  entitled  to  such  notes,  and  can  not  maintain  an 
action  therefor  until  the  creditor  or  pledgee  is  made  whole  for 
his  advances.^"^  Nor  does  he  acquire  title  to  property  of  which 
the  bank  is  merely  custodian,  and  the  owner  of  such  property 
may  recover  it  in  an  action  against  the  receiver.^^  And  the 
personal  property  and  assets  of  the  bank  are  still  exempt  from 
taxation  under  state  laws,  notwithstanding  the  appointment  of 

Bank,  14  Wal.,  383 ;  Chemical  Na-  recover  from  the  directors  because 
tional  Bank  v.  Hartford  Deposit  of  fraudulent  and  negligent  man- 
Co.,  156  111.,  522,  41  N.  E.,  225;  agement  of  the  bank,  see  Brincker- 
Hutchinson  v.  Crutcher,  98  Tenn.,  hoff  v.  Bostwick,  88  N.  Y.,  52.  As 
421,  39  S.  W.,  725,  37  L.  R.  A.,  89.  to  the  liability  of  the  receiver  of  a 
See,  also,  Security  Bank  v.  National  state  or  national  bank  for  taxes,  see 
Bank  of  the  Commonwealth,  2  Hun,  Baker  v.  County  of  King,  17  Wash., 
287 ;  Green  v.  Walkill  National  622,  50  Pac,  481 ;  Hewitt  v.  Traders' 
Bank,  7  Hun,  63.  And  see,  ante,  Bank,  18  Wash.,  326,  51  Pac,  468. 
§  344&,  and,  post,  §  370^.  36  Denton  v.  Baker,  24  C.  C.  A., 
35  Security  Bank  v.  National  Bank  476,  79  Fed.,  189,  48  U.  S.  App.,  235. 
of  the  Commonwealth,  2  Hun,  287.  37  Casey  v.  La  Societe  de  Credit 
See,  also,  Green  v.  Walkill  National  Mobilier,  7  Chicago  Legal  News, 
Bank,  7  Hun,  63.  As  to  the  effect  313;  S.  C,  2  Woods,  77. 
of  appointing  a  receiver  upon  the  38  Corn  Exchange  Bank  v.  Blye, 
right  of  action  of  shareholders  to  101  N.  Y.,  303,  4  N.  E.,  635. 


CHAP.  X.]  CORPORATIONS.  445 

a  receiver,  being  regarded  in  legal  contemplation  as  still  be- 
longing to  the  bank,  to  be  administered  according  to  law.^'^ 

§  360.  Receiver  the  agent  of  the  comptroller;  his  func- 
tions and  rights  of  actions;  claim  allowed  against  bank 
should  be  certified  to  comptroller  for  payment.  A  receiver 
of  a  national  bank  appointed  by  the  comptroller,  under  this 
section  of  the  act,  is  limited  as  to  his  functions  by  the  object  of 
the  receivership  and  the  duties  which  it  involves.'*^  Practically 
such  a  receiver  is  the  mere  agent  of  the  comptroller  of  the  cur- 
rency, for  the  purpose  of  bringing  the  residue  of  the  assets  in- 
to the  United  States  treasury."*!  And  while,  for  the  full  accom- 
plishment of  the  object  of  the  statute,  and  the  due  performance 
of  his  duties,  all  necessary  authority  is  conferred  upon  him,  yet 
this  authority  does  not  extend  to  the  control  of  bonds  deposited 
by  the  bank  with  the  treasurer  of  the  United  States  to  secure 
the  currency  of  the  bank.  The  receiver,  therefore,  has  no  con- 
cern with  and  is  not  a  proper  party  defendant  to  a  suit 
brought  to  establish  title  to  such  bonds  by  one  claiming  them 
by  assignment  from  the  bank.^2  ^^d  being  the  mere  agent  of 
the  comptroller  or  of  the  government,  the  fact  that  the  receiver 
applies  to  a  court  for  leave  to  sell  assets  of  the  bank  which  are  in 
his  possession  does  not  have  the  effect  of  making  him  an  officer 
of  the  court  or  of  placing  such  assets  within  the  control  of  the 
court  in  the  sense  in  which  control  is  acquired  where  the  re- 
ceiver is  appointed  by  the  court."*^  And  for  the  same  reason, 
a  decree  establishing  the  claim  of  a  creditor  of  the  bank  should 
not  require  the  receiver  to  declare  a  dividend  to  pay  the  amount 

39  Rosenblatt  v.  Johnston,  104  U.  Blatchf.,  282.  As  to  the  status  of  an 
S.,  462.  agent  appointed  by  the  shareholders 

40  Van  Antwerp  v.  Hulburd,  8  of  an  insolvent  national  bank  to  suc- 
Blatchf.,  282;  Ellis  v.  Little,  27  ceed  the  receiver  appointed  by  the 
Kan.,  707.  Comptroller    of   the    Currency,    see 

41  In  re  Chetwood,  165  U.  S.,  443,  Chetwood    v.     California     National 
17   Sup.   Ct.   Rep.,   385,  41   L.   Ed.,  Bank,  113  Cal.,  649,  45  Pac,  854. 
782;   Van    Antwerp   v.    Hulburd,   8  43 /^  re  Chetwood,  165  U.  S.,  443, 
Blatchf.,  282.  17  Sup.  Ct.  Rep.,  385,  41  L.  Ed.,  782. 

42  Van    Antwerp    v.    Hulburd,    8 


446  RECEIVERS.  [chap.    X. 

of  the  claim,  but  it  should  merely  direct  him  to  certify  the 
amount  of  the  claim  to  the  comptroller  of  the  currency  to  be 
paid  by  him  in  due  course  of  administration.'**  He  has,  how- 
ever, undoubted  authority  to  bring  suits  to  enforce  demands 
due  to  the  bank,"*^  and  such  actions  may  be  instituted,  either  in 
his  own  name  or  in  the  name  of  the  bank.*^  And  it  is  not 
necessary  that  he  should  first  obtain  the  consent  of  the  comp- 
troller, before  beginning  such  an  action,  the  case  being  clearly 
distinguishable  from  that  of  an  action  against  shareholders  to 
enforce  their  personal  liability.*'^  Thus,  the  receiver  may  main- 
tain an  action  in  equity  against  the  shareholders  of  the  bank  for 
the  purpose  of  recovering  dividends  which  had  been  unlawfully 
paid  to  them  out  of  the  capital  of  the  bank  at  a  time  when  the 
institution  had  earned  no  profits  and  was  in  fact  insolvent.*^ 
The  authority  to  bring  such  actions  for  the  enforcement  of  de- 
mands due  to  the  bank,  in  addition  to  being  expressed  by  the 
act  of  congress,  is  regarded  as  a  necessary  incident  to  the  prop- 
er discharge  of  the  receiver's  functions.'*^  But  the  receiver 
can  not  render  himself  liable,  or  charge  the  estate  in  his  hands 

44  Merrill  v.  First  National  Bank,  47  Bank  v.  Kennedy,  17  Wal.,  19; 
21  C.  C.  A.,  282,  75  Fed.,  148,  41  Hayden  v.  Thompson,  17  C.  C.  A., 
U.  S.  App.,  529,  affirmed  in  173  U.  592,  71  Fed.,  60,  36  U.  S.  App.,  361, 
S.,  131,  19  Sup.  Ct.  Rep.,  360,  43  reversing  S.  C,  67  Fed.,  273.  In 
L.  Ed.,  640;  Wolf  v.  National  Bank  Bank  v.  Kennedy,  supra,  the  court, 
of  Illinois,  178  111.,  85,  52  N.  E.,  896.  Bradley,  J.,  say,  p.  22:     "His  very 

45  Bank  v.  Kennedy,  17  Wal.,  19;  appointment  makes  it  his  duty  to 
Piatt  V.  Crawford,  8  Ab.  Fr.,  N.  S.,  collect  the  assets  and  debts  of  the 
297.  See,  also,  Kennedy  v.  Gibson,  association.  With  regard  to  ordi- 
8  Wal.,  498;  Bank  of  Bethel  v.  nary  assets  and  debts  no  special  di- 
Pahquioque  Bank,  14  Wal.,  383.  rection  is   needed ;   no   unusual   ex- 

46  Bank  v.  Kennedy,  17  Wal.,  19.  ercise  of  judgment  is  required. 
See,  also,  Kennedy  v.  G'\hson,  supra;  They  are  to  be  collected  of  course; 
Bank  of  Bethel  v.  Pahquioque  Bank,  that  is  what  the  receiver  is  ap- 
14  Wal.,   383.     But  the  bank  may  pointed  to  do." 

bring   an   action   in   its    own    name  48  Hayden  v.  Thompson.  17  C.  C. 

upon   a   promissory   note    and   may  A.,  592,  71  Fed.,  60,  36  U.  S.  App., 

recover   judgment,    notwithstanding  361,  reversing  S.  C,  67  Fed.,  273. 

the  appointment  of  a  receiver.     Chi-  49  piatt   v.   Crawford,  8  Ab.   Pr., 

cago   F.    P.    Co..  V.    Park   National  N.  S.,  297. 
Bank,  145  111.,  481,  32  N.  E.,  534. 


CHAP.  X.]  CORPORATIONS.  '         447 

by  any  executory  contract,  unless  authorized  so  to  do  by  the 
provisions  of  the  national  banking  act  and  by  the  order  of  a 
court  of  competent  jurisdiction  obtained  under  the  terms  of  that 
act.  So  under  an  order  authorizing  him  to  sell  the  property  of 
the  bank,  he  can  not  make  a  binding  contract  to  exchange  or 
barter  it  for  other  property,  and  can  not  be  held  liable  in  an  ac- 
tion for  damages  resulting  from  his  refusal  or  inability  to  com- 
ply with  such  a  contract,  which  he  is  without  power  to  make. 
And  his  powers  being  limited,  one  who  deals  with  him  in  his 
official  capacity  is  chargeable  with  knowledge  of  his  authority 
and  contracts  at  his  own  peril. ^0  And  he  has  no  power  to  con- 
tract with  an  attorney  to  give  him  a  contingent  interest  in  the 
proceeds  to  be  recovered  under  a  mortgage  held  by  the  bank  as 
a  part  of  its  assets.^i  Nor  can  he  maintain  a  bill  in  equity 
against  the  bank's  lessor  to  impeach  a  lease  made  by  the  lat- 
ter to  the  bank  under  the  provisions  of  which  the  bank  had 
undertaken  and  completed  the  construction  of  a  bank  build- 
ing, upon  the  alleged  ground  that  the  lease  was  ultra  vires 
and  that  the  construction  of  the  building  would  result  in  an 
excessive  expenditure  of  the  funds  of  the  bank.^^  B^t  t|-ie 
receiver  has  authority  to  grant  an  extension  of  time  for  the 
payment  of  demands  due  the  bank,  where  it  appears  that  he 
may  thereby  gain  additional  security  which,  in  his  judgment, 
strengthens  the  claim. ^^ 

§  360a.  May  enforce  individual  liability  of  shareholders. 
The  receiver  may  maintain  an  action  in  his  own  name  to  en- 
force the  individual  liability  of  shareholders,  such  power  being 
expressly  conferred  by  the  statute.     And  he  is  not  required 

50  Ellis    V.    Little,    27    Kan.,    707.  ices  in  his  official  and  not  in  his  per- 

51  Barrett  v.  Henrietta  National  sonal  capacity.  Gibson  v.  Peters, 
Bank,  78  Tex.,  222,  14  S.  W.,  569.  150  U.  S..  342,  14  Sup.  Ct.  Rep., 
For  services  rendered  by  a  United  134,  affirming  S.  C,  36  Fed.,  487, 
States  district  attorney  to  a  re-  and  overruling  S.  C,  35  Fed.,  721. 
ceiver  of  a  national  bank  appointed  52  Brown  v.  Schleier,  55  C.  C.  A., 
by  the  Comptroller  of  the  Currency,  475,  118  Fed.,  981,  affirming  S.  C, 
he  is  not  entitled  to  any  compensa-  112  Fed..  577. 

tion  beyond  that  expressly  allowed  53  People's  State  Bank  v.  Francis, 

by  law,  since  he  performs  such  serv-      8  N.  Dak.,  369,  79  N.  W.,  853. 


44S  RECEIVERS.  [chap.    X. 

to  proceed  by  bill  in  equity  against  all  the  shareholders  to  col- 
lect an  assessment  made  by  the  comptroller  of  the  currency,  but 
may  proceed  by  separate  actions  at  law  against  individual  share- 
holders.^^ And  such  an  action  may  be  maintained  by  the  re- 
ceiver in  a  state  court.^^  He  may  also  maintain  a  bill  in  equity 
to  set  aside  a  transfer  of  his  stock  made  by  a  shareholder  for 
the  purpose  of  evading  his  individual  liability.^^  And  a  letter 
from  the  comptroller  of  the  currency,  directing  the  receiver 
to  institute  legal  proceedings  to  enforce  the  liability  of  share- 
holders under  the  act  of  congress,  is  sufficient  evidence  that 
the  comptroller  has  determined  it  to  be  necessary  to  enforce 
such  liability.^'^  Being  regarded,  however,  merely  as  the  in- 
strument of  the  comptroller,  he  may  not  institute  proceedings 
against  the  stockholders  of  the  bank  to  enforce  their  personal 
liability,  without  the  consent  and  direction  of  the  comptroller ; 
since  it  is  for  the  latter  to  decide  when  it  is  necessary  to  insti- 
tute such  proceedings,  and  whether  the  whole  or  a  part,  and 
if  only  a  part  how  much,  shall  be  collected. ^^  And  the  deter- 
mination of  the  comptroller  as  to  the  necessity  for  and  the 
amount  of  the  assessment  is  conclusive  in  an  action  by  the  re- 
ceiver against  a  shareholder  to  recover  such  assessment. ^^  And 
where  the  full  amount  of  the  liability  is  sought  to  be  enforced, 
it  must  be  by  an  action  at  law.'^o  If,  however,  the  individual 
liability  of  shareholders  is  sought  to  be  enforced  by  a  general 

54  U.  S.  Revised  Statutes,  §  5234;  402,  36  U.  S.  App.,  462,  affirmed  in 

3  U.  S.  Comp.  Stat.  1901,  p.  3507;  169  U.  S.,  1,  18  Sup.  Ct.  Rep.,  274, 

5  Fed.  Stat.  Ann.,  p.  170.    See  King  42  L.   Ed.,   639,   which   is  modified 

V.  Armstrong,  50  Ohio  St.,  222,  34  on  rehearing  in  42  L.  Ed.,  1204. 

N.  E.,  163.     And  in  such  an  action  57  Bowden  v.  Johnson,  107  U.  S., 

it   is   no   defense   that  the   receiver  251,  2  Sup.  Ct.  Rep.,  246. 

may  make  an  improper  disposition  5S  Kennedy    v.    Gibson,    8    Wal., 

of  the   funds  after  collecting  them.  498. 

Schaberg    v.    McDonald,    60    Neb.,  59  Kennedy    v.    Gibson,    8    WaU 

493.  83  N.  W..  737.  498;  Casey  v.  Galli,  94  U.  S.,  673; 

53  Fish  V.    Olin,   76  Vt.,    120,   56  Strong  v.  Southworth,  8  Ben.,  331; 

Atl.,  533.  Young  v.  Wempe,  46  Fed.,  354. 

56  Bowden  v.  Johnson,  107  U.  S.,  60  Kennedy    v.    Gibson,    8    Wal., 

251,  2  Sup.  Ct.  Rep.,  246;  Stuart  v.  498;  Casey  v.  Galli,  94  U.  S.,  673; 

Hayden,  18  C.  C.  A.,  618,  72  Fed.,  Young  v.  Wempe,  46  Fed.,  354. 


CHAP.  X.]  CORPORATIONS.  449 

creditors'  bill,  pursuant  to  the  act  of  congress  of  June  30, 
1876,^^  amendatory  of  the  national  banking  act,  the  pendency 
of  such  suit  constitutes  a  good  plea  in  abatement  to  an  action 
brought  by  a  receiver  of  the  bank  subsequently  appointed  by 
the  comptroller  to  enforce  the  same  liability.^^  ^nd  the  ex- 
penses of  a  receivership  over  an  insolvent  national  bank  insti- 
tuted upon  a  judgment  creditors'  bill  will  not  be  charged  against 
the  shareholders  in  a  proceeding  by  the  creditors  in  the  same 
cause  to  enforce  the  individual  liability  of  the  shareholders. 
The  receivership  being  unnecessary  for  the  purpose  of  enforcing 
such  liability,  which  is  being  enforced  by  the  creditors  them- 
selves, such  expenses  should  be  borne  by  the  creditors  in  whose 
behalf  the  receiver  is  appointed. ^^  And  since  the  liability  of 
the  officers  and  directors  of  a  national  bank  for  a  violation  of 
the  act^4  is  an  asset  of  the  bank  belonging  to  all  creditors  in 
proportion  to  their  claims,  a  single  creditor  can  not  maintain  an 
action  to  enforce  such  liability,  but  the  proceeding  must  be 
brought  by  the  receiver  for  the  benefit  of  all  creditors.^^ 

§  360b.  Receiver's  right  of  action  against  directors  for 
mismanaging  affairs  of  bank.  As  to  the  right  of  the  re- 
ceiver of  an  insolvent  national  bank  to  enforce  the  liability  of 
the  directors,  it  is  held  that  the  receiver  may  maintain  an  action 
in  equity  in  his  own  name  against  the  directors  to  hold  them 
liable  for  losses  which  have  occurred  as  the  result  of  an  unlaw- 
ful and  fraudulent  increase  in  the  capital  stock  of  the  bank  made 
by  the  directors. ^^  So  the  receiver  may  maintain  an  action  in 
equity  to  hold  the  directors  liable  for  negligence  in  the  manage- 
ment of  the  affairs  of  the  bank.^"^    And  such  a  procedure  has 

61  Act  of  June  30,   1876,  c.   156,  Stat.,  116;  3  U.  S.  Comp.  Stat.  1901, 
§  2,  19  Stat.,  63 ;  3  U.  S.  Comp.  Stat.  p.  3515,  5  Fed.  Stat.  Ann.,  p.  180. 
1901,  p.  3509,  5  Fed.  Stat.  Ann.,  p.  65  Bailey  v.  Mosher,  11  C.  C.  A., 
106.  304,  63   Fed.,  488,  27  U.   S.   App., 

62  Harvey  v.  Lord,  11  Biss.,  144.  339. 

63  Richmond  v.  Irons,  121  U.  S.,  66  Cockrill  v.  Abeles,  30  C.  C.  A., 
27,  7  Sup.  Ct.  Rep.,  788,  30  L.  Ed.,  223,  86  Fed.,  505,  58  U.  S.  App., 
864.  648. 

WU.  S.  Revised  Statutes,  §  5239;  67  Emerson  v.   Gailher,   103   Md., 

act  of  June  3,  1864,  c.  106,  §  53,  13      564,  64  Atl.,  26. 
Receivers — 29. 


450  RECEIVERS.  [CIIAP.    X. 

beeii  held  proper  in  the  case  of  a  receivership  of  a  state  bank.^^ 
But  the  opposite  view  has  been  taken  in  New  York,  where  it  is 
held  that  the  action  is  one  at  law  and  that  something  more  is 
required  to  warrant  the  intervention  of  a  court  of  equity  than 
mere  allegations  showing  that  the  acts  complained  of  are  nu- 
merous and  complicated  and  that  they  are  difficult  of  ascertain- 
ment without  discovery  and  that  a  multiplicity  of  suits  would 
result.^^ 

§  361.  Allegations  and  proof  of  his  appointment  in  suits 
by  the  receiver.  In  an  action  brought  by  such  a  receiver  to 
recover  an  indebtedness  due  to  the  bank,  the  debtor  can  not  in- 
quire into  the  legality  of  the  receiver's  appointment,  and  it  is 
sufficient  for  the  purposes  of  such  suit  that  he  is  appointed  and 
is  receiver  in  fact ;  since  the  action  of  the  comptroller  in  making 
the  appointment  is  conclusive,  until  set  aside  upon  the  applica- 
tion of  the  bank  itself.  It  is  not,  therefore,  necessary  in  such 
action  that  the  receiver  should  specifically  aver  the  existence 
of  all  the  conditions  necessary  to  satisfy  the  comptroller  that  a 
receiver  should  be  appointed.*^^  And  a  general  allegation  of  the 
receiver's  appointment  by  the  comptroller,  and  of  his  taking 
possession  of  the  assets,  is  sufficient,  without  setting  forth  in 
detail  the  circumstances  leading  to  such  action. "^^  As  regards 
the  proof  required  upon  the  trial  as  to  the  receiver's  appoint- 
ment and  authority  to  sue,  it  would  seem  to  be  sufficient  to  pro- 
duce a  certificate  from  the  comptroller  of  the  currency,  ap- 
proved and  concurred  in  by  the  secretary  of  the  treasury,  re- 
citing the  existence  of  all  the  facts  necessary  to  authorize  the 
appointment,  and  the  fact  of  the  appointment  with  the  concur- 
rence of  the  secretary  of  the  treasury.'^^ 

§  362.  Power  of  comptroller  not  exclusive  of  jurisdic- 
tion of  equity ;  when  courts  may  appoint  receiver.  It  is  im- 
portant to  observe  that  the  power  exercised  by  the  comptroller 

68  Murphy  v.  Penniman,  105  Md.,  70  Cadle  v.   Baker,  20  Wal.,  650. 
452,  66  Atl.,  282.                                            71  pjatt  v.   Crawford,  8  Ab.   Pr., 

69  Dykman  v.  Keeney,  154  N.  Y.,      N.  S.,  297. 

483,  48  N.  E.,  894.  72  pjatt  v.  Beebe,  57  N.  Y.,  339. 


CHAP.  X.] 


CORPORATIONS. 


451 


of  the  currency,  in  appointing  receivers  over  national  banks, 
under  section  50  of  the  act  of  congress  of  June  3,  1864,  is  not 
exclusive  of  the  jurisdiction  of  equity  to  appoint  receivers  over 
such  banks,  in  cases  where  the  courts  would  otherwise  be  au- 
thorized to  interfere  against  insolvent  corporations.'^^  And  a 
judgment  creditor  oi  a  national  bank,  who  has  exhausted  his 
remedy  at  law,  and  who  is  entitled  to  a  receiver  under  the  law 
and  practice  of  the  state,  may  have  a  receiver  of  such  a  bank, 
upon  a  bill  in  the  federal  court  charging  that  its  officers  have 
made  fraudulent  payments  and  preferences,  and  that  there  is 
no  property  of  the  corporation  subject  to  seizure  or  execution, 
which  plaintiff  can  obtain  by  any  proceeding  at  law,  the  comp- 
troller having  declined  to  appoint  a  receiver  for  want  of  author- 
ity.*^^   And  in  the  absence  of  any  action  by  the  comptroller  of 


73  Irons  V.  Manufacturers  Na- 
tional Bank,  6  Biss.,  301;  Wright 
V.  Merchants  National  Bank,  1 
Flippin,  568;  Elwood  v.  First  Na- 
tional Bank,  41  Kan.,  475,  21  Pac, 
673 ;  Cogswell  v.  Second  National 
Bank,  76  Conn.,  252,  56  Atl.,  574. 

"^^  Irons  V.  Manufacturers  Na- 
tional Bank,  6  Biss.,  301.  This  was 
an  ordinary  creditors'  bill,  alleging 
the  recovery  of  judgment  against 
defendant,  the  return  of  execution 
unsatisfied,  and  also  charging  the 
officers  of  the  defendant  corporation 
with  having  made  fraudulent  pref- 
erences and  payments.  It  appeared 
from  an  exhibit  annexed  to  the  bill, 
that  certain  creditors  of  the  bank 
had  previously  applied  to  the  comp- 
troller of  the  currency  to  appoint  a 
receiver,  which  he  declined  to  do  on 
the  ground  that  the  relations  be- 
tween the  bank  and  his  department 
having  ceased,  he  had  no  authority 
to  interfere.  Upon  demurrer  to  the 
bill,  it  was  held  that  the  court  had 
full  jurisdiction  in  the  premises,  and 
a  receiver  was  accordingly  appoint- 


ed. Blodgett,  J.,  held  as  follows: 
"...  It  would  seem  from  an  ex- 
amination of  the  banking  law,  that 
the  comptroller  of  the  currency 
has  no  authority  to  appoint  a  receiv- 
er except  in  certain  contingencies, 
such  as  the  failure  to  make  good  a 
reserve,  the  failure  to  reduce  cir- 
culating notes  on  demand,  the  fail- 
ure to  make  good  the  capital  stock 
whenever  the  same  becomes  im- 
paired, and  the  failure  to  meet  cer- 
tain other  requirements  of  the  bank- 
ing law.  Now,  neither  of  these  con- 
tingencies is  charged  in  this  bill  to 
have  occurred,  and  it  is  only  in  the 
case  of  such  contingencies  that  the 
comptroller  acquires  the  right  to 
appoint  a  receiver.  It  is  claimed 
on  the  part  of  the  defendant,  and 
has  been  very  strenuously  and  in- 
geniously argued,  that  there  is  no 
power  in  any  court  to  appoint  a 
receiver  for  this  bank,  because  the 
delegation  of  the  power  \o  the 
comptroller  of  the  currency  to  ap- 
point a  receiver  in  certain  contin- 
gencies  to   wind   up   the   affairs   of 


452 


RECEIVERS. 


[chap.  X. 


the  currency  toward  the  appointment  of  a  receiver,  a  court  of 
equity  may  grant  the  rehef  upon  an  ordinary  judgment  credit- 
ors' Liil,  notwithstanding  the  remedy  provided  by  the  act  of  con- 


the  bank,  excludes  the  authority 
of  any  tribunal  or  person  to  ap- 
point a  receiver.  I  have  carefully 
examined  the  banking  law,  and  the 
decisions  of  the  supreme  court,  and 
those  of  various  states  made  since 
this  banking  law  took  effect,  upon 
the  various  questions  which  have 
arisen,  and  do  not  find  that  this 
precise  question  has  ever  been 
made.  But  I  can  see  nothing  in 
the  law  itself,  nor  in  the  decisions 
of  the  courts  upon  the  law,  so  far 
as  they  have  gone,  to  exclude  the 
idea  that  a  corporation  created  as 
this  is  under  an  act  of  congress  for 
certain  specific  purposes,  does  not 
come  within  the  general  provision 
of  the  law  regulating  the  remedies 
of  creditors  as  against  this  corpora- 
tion, as  much  as  against  any  other 
corporation,  except  where  there  are 
specific  provisions  to  meet  those 
cases.  For  instance,  a  holder  of 
the  circulating  notes  of  the  bank, 
who  had  presented  them  for  pay- 
ment, and  payment  had  been  re- 
fused, would  undoubtedly  find  this 
remedy  within  the  special  provi- 
sions of  the  banking  law  itself,  be- 
cause there  is  a  specific  provision 
meeting  that  case,  and  his  remedy 
would  undoubtedly  be  found  in  the 
action  of  the  comptroller  of  the 
currency.  But,  in  a  large  class  of 
cases,  when  the  defendant  corpora- 
tion may  not  have  infringed  any  of 
the  specific  provisions  of  the  bank- 
ing law,  which  authorizes  the  comp- 
troller to  appoint  a  receiver,  there 
may  be  cases  where  they  have 
at   some   time    rendered   themselves 


liable  to  be  proceeded  against  as 
any  other  debtor  for  the  failure  to 
pay  their  debts.  The  allegations 
in  this  bill  are  very  full  that  this 
bank  was  insolvent  at  the  time  it 
closed  its  doors,  and  has  been  ever 
since;  that  it  failed  to  pay  its  debts; 
that  a  large  amount  of  its  debts  are 
still  unpaid ;  and  the  question  is, 
what  remedy  have  the  creditors  of 
this  bank  if  a  court  of  equity  can 
not  take  on  itself  the  administra- 
tion of  its  affairs  where  the  bank- 
ing law  does  not  provide  that  it 
shall  be  done  by  the  comptroller  of 
the  currency?  It  is  true  that  in 
the  case  of  Kennedy  v.  Gibson,  8 
Wallace,  the  supreme  court  state 
that  the  provision  of  the  banking  law 
making  the  stockholders  liable  for 
the  debts  of  the  corporation  to  the 
amount  of  the  stock  held  by  them 
respectively,  could  not  be  enforced 
except  under  the  action  of  the 
comptroller  through  a  receiver  ap- 
pointed by  him.  Whether  that 
opinion  will  be  found  to  entirely 
express  the  full  meaning  and  inten- 
tion of  the  supreme  court  whenever 
they  come  to  examine  it  in  the 
light  of  future  cases  and  facts 
which  might  be  brought  before  it, 
is  doubted  by  myself,  at  least.  I 
do  not  feel  sure  that  the  supreme 
court  will  adhere  to  quite  as  broad 
a  statement  as  is  made  in  that  case; 
but  still  they  may.  But  even  that 
does  not  oust  the  jurisdiction  of  a 
court  of  equity  to  take  hold  of 
whatever  assets  the  bank  may  have, 
aside  from  the  personal  liability  of 
the     stockholders,     and    administer 


CHAP.  X.] 


CORPORATIONS. 


453 


75 


gress.'*'  So  when  a  national  bank  has  become  insolvent  and  is 
in  process  of  voluntary  liquidation,  mismanagement  of  its  af- 
fairs by  its  officers  and  the  giving  of  preferences  to  some  of  its 


those  as  it  would  the  affairs  of  any 
insolvent  corporation.  The  law  is 
well  settled  in  this  state,  and  the 
courts  of  the  United  States,  that  the 
proper  remedy  of  a  creditor  against 
a  corporation,  when  the  assets  are 
of  such  a  nature  that  they  can  not 
be  levied  upon  and  sold  on  execu- 
tion, is  by  a  proceeding  in  equity 
to  marshal  and  distribute  the  assets. 
It  is  unnecessary  to  cite  authorities 
upon  that  question.  The  law,  I 
think,  is  as  well  settled  as  any 
branch  of  the  law  can  be  consid- 
ered as  settled  in  this  country." 

75  Wright  v.  Merchants  National 
Bank,  1  Flippin,  568.  In  King  v. 
Pomeroy,  58  C.  C.  A.,  209,  121  Fed., 
287,  it  appeared  that  a  national  bank 
doing  business  in  the  state  of  Kan- 
sas had  gone  into  voluntary  liquida- 
tion under  §  5220  et  seq.  of  the  Re- 
vised Statutes.  (  Act  of  June  3, 
1864,  c.  106,  13  Stat.,  112;  3  U.  S. 
Comp.  Stat.  1901,  p.  3503;  5  Fed. 
Stat.  Ann.,  p.  166).  The  bank  was 
insolvent  and  the  comptroller  of  the 
currency  had  been  requested  to  ap- 
point a  receiver  but  had  declined  to 
do  so  upon  the  ground  that  he  had 
no  jurisdiction  over  the  affairs  of 
a  bank  in  voluntary  liquidation. 
Thereupon  a  creditor  of  the  bank, 
a  citizen  of  the  state  of  Missouri, 
filed  a  bill  against  it  in  the  United 
States  circuit  court  for  the  District 
of  Kansas,  praying  for  the  appoint- 
ment of  a  receiver  to  collect  its  as- 
sets and  pay  its  debts.  The  bank 
appeared  and  consented  to  the  ap- 
pointment of  a  receiver  and  one  was 


thereupon  appointed  and  entered 
upon  the  discharge  of  his  duties. 
After  collecting  and  distributing 
certain  assets,  he  sought  directions 
regarding  the  enforcement  of  the 
liability  of  the  shareholders.  There- 
upon another  creditor  who  had 
proven  his  claim  against  the  bank 
intervened  in  the  suit,  set  forth 
his  claim,  the  indebtedness  of  the 
bank  and  the  names  and  addresses 
of  the  shareholders,  and  prayed 
that  the  court  would  ascertain  the 
necessity  of  the  enforcement  of  the 
liability  of  the  shareholders,  and 
that  it  would  make  an  assessment 
upon  them  and  appoint  a  receiver 
to  enforce  such  assessment.  There- 
upon the  court  made  an  interlocu- 
tory order  finding  the  facts  set 
forth  in  the  intervening  petition  to 
be  true;  that  the  amount  of  the  as- 
sessment necessary  to  pay  the  debts 
of  the  bank  was  38.84  per  cent,  of 
the  par  value  of  the  shares,  and  that 
an  assessment  of  this  amount  should 
be  made  and  should  be  paid  by  the 
shareholders  to  the  receiver  al- 
ready appointed  within  sixty  days 
from  the  date  of  the  order.  Upon 
this  state  of  facts  the  receiver  thus 
appointed  had  brought  this  action 
against  an  individual  shareholder 
for  the  purpose  of  collecting  the 
assessment  made  against  him.  The 
court  held  that  the  receiver  was 
properly  appointed  by  the  circuit 
court  under  its  general  equity  pow- 
ers and  that  such  receiver  had  power 
to  maintain  this  action  against  the 
individual  shareholder  to  enforce 
his   individual  liability.     The  court. 


454 


RECEIVERS. 


[CIIAP.    X. 


creditors  over  others  will  justify  the  appointment  of  a  receiver 
by  a  state  court,  at  the  suit  of  a  shareholder."^  But  a  receiver 
will  be  refused  when  the  bank  is  in  process  of  voluntary  liqui- 
dation and  when  its  affairs  are  being  properly  administered  by 
its  directors  and  officers,  no  fraud  or  misconduct  being 
shown."'' 


Sanborn,  J.,  say:  "Conceding  now 
that  in  all  these  cases  in  which  the 
power  to  appoint  a  receiver  and  to 
enforce  the  liability  of  the  share- 
holders was  vested  in  the  comp- 
troller by  the  act  of  1864,  that  au- 
thority was  thereby  withdrawn 
from  the  courts  under  the  familiar 
rule  that,  where  the  same  act 
creates  the  right  and  prescribes  the 
remedy  for  its  enforcement,  that 
remedy  is  exclusive,  still  the  fact 
remains  that  in  all  the  cases  in 
which  no  such  power  was  vested 
in  the  comptroller  the  jurisdiction 
and  authority  of  the  courts  re- 
mained unimpaired  and  plenary. 
Thus,  full  jurisdiction  still  remained 
in  the  courts  of  equity  to  appoint  a 
receiver  to  liquidate  the  debts  of  an 
insolvent  bank  and  to  enforce  the 
liability  of  its  shareholders  where 
the  transfers  of  notes  or  other  evi- 
dences of  debt,  assignments  of 
mortgages  or  other  securities,  de- 
posits of  money,  bullion,  or  other 
valuable  things,  and  payments  of 
money  were  made  by  the  national 
banks  with  a  view  to  give  pref- 
erences in  contemplation  of  insol- 
vency in  violation  of  section  5242, 
Rev.  St.  (Act  of  June  3,  1864,  c. 
106,  §  52,  13  Stat,  115;  3  U.  S. 
Comp.  Stat.  1901,  p.  3517;  5  Fed. 
Stat.  Ann.,  p.  188),  as  well  as  where 
a  bank  had  gone  into  voluntary 
liquidation  under  sections  5220  and 
5221,     and     its     funds     were    being 


fraudulently  diverted  from  the  ces- 
tiiis  que  tnistent.  .  .  .  The  con- 
clusion is  irresistible  that,  if  it  did 
go  into  liquidation,  and  if  it  did 
not  fall  into  any  of  the  other  classes 
of  cases  in  which  the  comptroller 
was  authorized  to  appoint  a  re- 
ceiver, he  was  without  such  author- 
ity, and  the  jurisdiction  of  the 
courts  over  national  banks  in  volun- 
tary liquidation  remained  as  com- 
plete as  it  was  over  the  ordinary 
insolvent  corporation.  The  argu- 
ment that,  although  a  court  of  equi- 
ty might  have  had  the  authority  to 
appoint  a  receiver  to  liquidate  the 
debts  of  this  bank,  yet  it  had  no 
power  to  enforce  the  liability  of  the 
shareholders,  is  not  persuasive. 
.  .  .  The  conclusion  is  that,  because 
there  was  no  other  adequate  remedy 
to  enforce  the  liability  of  share- 
holders of  an  insolvent  national 
bank  in  voluntary  liquidation  under 
the  act  of  1864,  and  because  that 
liability  was  a  trust  fund,  or  the 
pledge  of  a  trust  fund  for  the  bene- 
fit of  the  creditors  of  the  bank,  a 
court  of  equity  had  plenary  power 
to  appoint  a  receiver,  and  to  author- 
ize him  to  enforce  that  liability  by 
actions  at  law." 

76  Elwood  V.  First  National  Bank, 
41  Kan.,  475,  21   Pac,  673. 

77  Watkins  v.  National  Bank  of 
Lawrence,  51  Kan.,  254,  32  Fac., 
914. 


CHAP.  X.] 


CORPORATIONS. 


455 


§  363.  Jurisdiction  of  state  and  federal  courts  in  actions 
by  or  against  the  receiver.  A  receiver  of  a  national  bank 
appointed  by  the  comptroller  of  the  currency  is  regarded  as  an 
officer  of  the  United  States,  in  the  sense  that  he  is  entitled  to 
maintain  an  action  to  recover  an  indebtedness  due  to  the  bank, 
or  to  recover  assessments  made  by  the  comptroller  of  the  cur- 
rency upon  shareholders  in  the  federal  court  of  the  district  in 
which  the  bank  vi^as  located,'^^  and  such  actions  may  be  main- 
tained, either  in  the  district  court  of  the  place  where  the  bank 
was  located,  or  in  a  federal  court  in  another  state,  and  this  re- 
gardless of  the  citizenship  of  the  receiver  or  of  the  amount  in 
controversy. "^^  So  an  action  brought  against  the  receiver  of  a 
national  bank  appointed  by  the  comptroller  under  the  act  of 
congress  is  one  arising  under  the  laws  of  the  United  States 
and  may  therefore  properly  be  instituted  in  the  federal  courts. ^0 


78  Frelinghuysen  v.  Baldwin,  12 
Fed.,  395;  Price  v.  Abbott,  17  Fed., 
506;  Piatt  V.  Beach,  2  Ben.,  303; 
Murrey  v.  Chambers,  151  Fed.,  142. 
Section  1001  of  the  Revised  Stat- 
utes provides  that :  "Whenever  a 
writ  of  error,  appeal,  or  other  pro- 
cess in  law,  admiralty,  or  equity, 
issues  from  or  is  brought  up  to  the 
Supreme  Court,  or  a  circuit  court, 
either  by  the  United  States  or  by  di- 
rection of  any  Department  of  the 
Government,  no  bond,  obligation,  or 
security  shall  be  required  from  the 
United  States,  or  from  any  party 
acting  under  the  direction  aforesaid, 
either  to  prosecute  said  suit,  or  to 
answer  in  damages  or  costs.  In  case 
of  an  adverse  decision,  such  costs 
as  by  law  are  taxable  against  the 
United  States,  or  against  the  party 
acting  by  direction  as  aforesaid, 
shall  be  paid  oat  of  the  contingent 
fund  of  the  Department  under 
whose  directions  the  proceedings 
were  iristituted."  1  U.  S.  Comp.  Stat. 


1901,  p.  713;  4  Fed.  Stat.  Ann.,  p. 
615.  Under  this  statute  it  is  held 
that  where  an  action  is  brought  by 
a  non-resident  receiver  of  a  nation- 
al bank  appointed  by  the  comptroller 
of  the  currency,  he  should  give  the 
proper  undertaking  for  costs,  unless 
he  files,  within  a  time  fixed  by  the 
court,  a  certificate  of  the  comptrol- 
ler to  the  effect  that  process  in  the 
action  is  taken  out  by  express  direc- 
tion of  the  treasury  department. 
Piatt  V.  Adriance,  90  Fed.,  772; 
Schofield  V.  Palmer,  134  Fed.,  753. 
But  see  Pepper  v.  Fidelity  &  C.  Co., 
125  Fed.,  822. 

79  Armstrong  v.  Troutman,  36 
Fed.,  275;  Armstrong  v.  Ettlesohn, 
36  Fed.,  209;  Schofield  v.  Palmer, 
134  Fed.,  753;  Murray  v.  Chambers, 
151  Fed.,  142. 

80  McDonald  v.  State,  41  C.  C.  A., 
278,  101  Fed.,  171,  and  cases  cited. 
But  in  Hallam  v.  Tillinghast,  75 
Fed.,  849,  it  was  held  that  when  an 
action  was  brought  in  a  state  court 


456  RECEIVERS.  [chap.    X. 

And  where  one  of  the  parties  defendant  to  an  action  is  the  re- 
ceiver of  a  national  bank  appointed  by  the  comptroller,  such  re- 
ceiver being  an  officer  of  the  United  States,  the  action  is  one 
arising  under  the  laws  of  the  United  States  as  distinguished 
from  one  dependent  upon  diversity  of  citizenship,  and  an  ap- 
peal will  accordingly  lie  from  the  court  of  appeals  to  the  su- 
preme court.^^  So  the  jurisdiction  which  the  district  courts  of 
the  United  States  formerly  exercised  under  the  act  of  congress 
over  all  suits  by  or  against  national  banks,^^  -^^s  held  suffi- 
cient to  authorize  such  courts  to  appoint  a  receiver  over  a  rail- 
way company  at  the  suit  of  a  national  bank.^^  The  receiver 
may  also  maintain  an  action  in  a  circuit  court  of  the  United 
States,  against  a  defendant  residing  within  the  district,  to  en- 
join such  defendant  from  prosecuting  a  suit  in  a  foreign  juris- 
diction to  deprive  the  receiver  of  property  of  the  bank,  since 
in  such  case  he  sues  as  an  officer  of  the  United  States,  and  as 
such  may  properly  bring  his  action  in  the  federal  court.^*  But 
while  such  receivers  are  thus  regarded  as  officers  of  the  United 
States  to  the  extent  of  permitting  them  to  sue  in  the  federal 
court  of  the  district  where  the  bank  is  located,  the  jurisdiction 
of  the  federal  courts  in  such  cases  is  not  exclusive  of,  but  con- 
current with  that  of  the  state  courts.  Such  a  receiver  may, 
therefore,  maintain  an  action  in  his  official  capacity  in  a  state 
court.^^ 

against   the   receiver   of  a  national  84  Hendee  v.  Connecticut  &  P.  R. 

bank  appointed  by  the  comptroller  R.  Co.,  23  Blatchf.,  453. 

of  the   currency  upon  a  claim   for  85  Thompson   v.    Schaetzel,   2    S. 

less  than  two  thousand  dollars,  the  Dak.,  395,  50  N.  W.,  631.     But  see, 

receiver  could  not  remove  the  cause  contra,  Cadle  v.  Tracy,  11  Blatchf., 

to  the  federal  court.  101,    where    it    was    held    that    the 

81  Auten  f.  United  States  Nation-  jurisdiction    of    the    federal    courts 

al  Bank,  174  U.  S.,  125,  19  Sup.  Ct.  over  actions  against  national  banks 

Rep.,  628,  43  L.  Ed.,  920,  affirming  under  the  then  existing  legislation 

Cockrill  V.  United  States  National  of  congress  was  exclusive  of  that  of 

Bank,   27    C.    C.   A.,   678,   82    Fed.,  the  state  courts.    And  a  receiver  of 

1000,  49  U.  S.  App.,  774.  a    national     bank     was,     therefore, 

^- U.  S.  Revised  Statutes,  §  563.  granted    an    injunction    to    restrain 

83  Fifth  National  Bank  v.  P.  &  C.  the  enforcement   of  a  judgment  in 

S.  R.  Co.,  1  Fed.,  190.  attachment    recovered    in    a    state 


CHAP.  X.] 


CORPORATIONS. 


457 


§  364.  Property  of  bank  can  not  be  sold  by  creditor  a& 
against  receiver.  Although,  as  has  been  already  shown,  an 
action  may  be  instituted  against  a  national  bank  in  its  corporate 
capacity,  notwithstanding  the  appointment  of  a  receiver  by  the 
comptroller  of  the  currency,^^  yet  the  property  of  the  bank, 
which  is  attached  at  the  suit  of  an  individual  creditor,  can  not 
be  subjected  to  sale  in  satisfaction  of  his  demand  as  against  the 
receiver.  And  it  is  the  receiver's  duty,  in  such  a  case,  to  apply 
to  the  court  to  dissolve  the  attachments'^    So  the  object  of  the 


court  against  the  assets  of  the  bank, 
the  action  in  the  state  court  having 
been  brought  after  the  appointment 
of  the  receiver.  The  jurisdiction 
of  the  courts  of  the  United  States 
under  existing  legislation  over  ac- 
tions by  or  against  national  banks, 
is  as  follows :  By  section  4  of  the 
act  of  congress  of  July  12,  1882,  it 
is  enacted.  .  .  .  "that  the  juris- 
diction for  suits  hereafter  brought 
by  or  against  any  association  es- 
tablished under  any  law  providing 
for  national-banking  associations, 
except  suits  between  them  and  the 
United  States,  or  its  officers  and 
agents,  shall  be  the  same  as,  and 
not  other  than,  the  jurisdiction  for 
suits  by  or  against  banks  not  organ- 
ized under  any  law  of  the  United 
States  which  do  or  might  do  bank- 
ing business  where  such  national- 
banking  association  may  be  doing 
business  when  such  suits  may  be  be- 
gun: And  all  laws  and  parts  of 
laws  of  the  United  States  incon- 
sistent with  this  proviso  be,  and 
the  same  are  hereby,  repealed."  Act 
of  July  12,  1882,  c.  290,  §  4,  22  Stat., 
163;  3  U.  S.  Comp.  Stat.  1901,  p. 
3458;  5  Fed.  Stat.  Ann.,  p.  194.  And 
section  4  of  the  act  of  congress  de- 
fining the  jurisdiction  of  the  circuit 
courts    of    the    United    States,    ap- 


proved March  3,  1887,  as  revised 
and  corrected  by  the  act  of  Au- 
gust 13,  1888,  provides  as  follows : 
"Sec.  4.  That  all  national  banking 
associations  established  under  the 
laws  of  the  United  States  shall,  for 
the  purposes  of  all  actions  by  or 
against  them,  real,  personal,  or 
mixed,  and  all  suits  in  equity,  be 
deemed  citizens  of  the  States  in 
which  they  are  respectively  located ; 
and  in  such  cases  the  circuit  and 
district  courts  shall  not  have  juris- 
diction other  than  such  as  they 
would  have  in  cases  between  in- 
dividual citizens  of  the  same  State. 
The  provisions  of  this  section  shall 
not  be  held  to  affect  the  jurisdic- 
tion of  the  courts  of  the  United 
States  in  cases  commenced  by  the 
United  States  or  by  direction  of  any 
officer  thereof,  or  cases  for  winding 
up  the  affairs  of  any  such  bank." 
Act  of  March  3,  1887,  c.  373,  24 
Stat.,  554,  as  amended  by  act  of 
August  13,  1888,  c.  866,  25  Stat.,  436; 
1  U.  S.  Comp.  Stat.  1901,  p.  514;  5 
Fed.  Stat.  Ann.,  p.  193. 

86  Security  Bank  v.  National 
Bank  of  the  Commonwealth,  2  Hun, 
287. 

87  National  Bank  v.  Colby,  21 
Wal.,  609. 


458  RECEIVERS.  [CIIAP.    X. 

national  banking  act  being  to  secure  to  the  United  States  a 
preference  or  priority  of  lien  upon  the  assets  of  the  bank,  for 
any  deficiency  in  redeeming-  its  notes,  and  then  to  secure  the  as- 
sets for  ratable  distribution  among  its  general  creditors,  this 
object  will  not  be  allowed  to  be  defeated  by  attachment  suits 
against  the  bank  after  its  insolvency.88  And  if  the  receiver 
promptly  brings  suit  to  recover  funds  of  the  bank  which  have 
been  attached  after  its  insolvency,  joining  all  parties  in  interest 
as  defendants,  he  is  entitled  to  recover  such  assets,  notwith- 
standing a  judgment  in  the  state  court  in  favor  of  the  attach- 
ing creditors,  under  which  the  money  is  actually  received  by 
them  before  judgment  in  the  receiver's  suit.^^  Sq  when  the 
property  of  a  bank  is  levied  upon  by  state  authorities  in  satis- 
faction of  a  tax  levied  after  the  bank  became  insolvent,  it  is 
proper  to  enjoin  a  sale  of  such  property  upon  the  application 
of  the  receiver.9^ 

§  364a.  Receiver  subject  to  same  set-offs  as  bank.  A 
receiver  of  a  national  bank,  appointed  by  the  comptroller  of  the 
currency  in  accordance  with  the  act  of  congress,  acquires  its 
assets  and  choses  in  action  subject  to  all  defenses  which  might 
have  been  interposed  in  an  action  brought  by  the  corporation 
itself.  And  when  there  are  mutual  obligations  between  the 
bank  and  a  debtor  which  would  have  justified  a  set-of¥  in  behalf 
of  the  debtor  as  against  the  demand  of  the  bank  in  the  event  of 
its  insolvency,  or  which  the  debtor  might  have  enforced  against 
the  bank  prior  to  the  receivership,  such  set-off  will  be  sustained 
in  behalf  of  the  debtor  as  against  the  receiver.^l  Thus,  when  a 
bank  becomes  insolvent,  holding  a  note  against  a  customer  who 
has  also  a  deposit  in  the  bank  to  his  credit,  such  deposit  may  be 

88  National  Bank  v.  Colby,  21  91  Scott  v.  Armstrong,  146  U.  S., 
Wal.,  609;  Harvey  v.  Allen,  16  499,  13  Sup.  Ct.  Rep.,  148,  revers- 
Blatchf.,  29.  ing  S.  C,  36  Fed.,  63 ;  Armstrong  v. 

89  Harvey  v.  Allen,  16  Blatchf.,  Warner,  49  Ohio  Sl,  376,  31  N.  E., 
29.  877. 

90  Woodward     v.  Ellsworth,     4 
Colo.,  580. 


CHAP.  X.] 


CORPORATIONS. 


459 


set  off  in  an  action  brought  by  the  receiver  upon  the  note, 
even  though  it  does  not  mature  until  after  the  receiver's  ap- 
pointment.^^ 


92  Scott  V.  Armstrong,  146  U.  S., 
499,  13  Sup.  Ct.  Rep.,  148,  reversing 
S.  C,  Zd  Fed.,  63.  And  see 
this  case  for  a  discussion  as  to  the 
jurisdiction  of  the  circuit  courts  of 
the  United  States  in  equity  in  such 
cases.    See  as  to  the  right  of  set-off 


or  counter-claim  by  a  defendant  in 
an  action  brought  by  a  receiver  of 
a  national  bank  to  recover  an  as- 
sessment levied  by  the  comptroller 
of  the  currency  upon  shareholders, 
Welles  V.  Stout,  38  Fed.,  807. 


CHAPTER  XI. 

OF  RECEIVERS  OVER  RAILWAYS. 

I.  Principles  Governing  the  Jurisdiction   §  365 

II.  Receivers  in  Aid  of  Mortgagees  and  Bondholders 376 

III.  Functions  and  Duties  of  the  Receiver  390 

IV.  Preferred   Debts    394o 

V.  Actions  Against  the  Receiver 395 

VI.  Receivers'   Certificates    398c 

I.  Principles  Governing  the  Jurisdiction. 

§  365.     Courts  of  equity  averse  to  placing  railways  in  the  hands  of  re- 
ceivers; relief  refused  when  ordinary  remedies  are  available. 

366.  Receiver   appointed   on   bill   by   shareholder  to   set   aside   un- 

authorized lease. 

367.  Granted  for  protection  of  vendor's  lien  upon  insolvency  of  the 

company. 

368.  Granted  for  protection  of  common  easement;  right  of  passage 

through  a  tunnel;  injunction  refused. 

369.  When  receiver  refused  on  bill  to  recover  back  money  paid  for 

stock  illegally  issued. 

370.  When  United  States  court  in  bankruptcy  will  refuse  to  inter- 

fere with  receiver  previously  appointed  in  state  court;  juris- 
diction as  between  state  and  federal  courts. 

370a.  Two  receivers  not  desirable;  contract  made  by  one  binding  on 
other. 

3706.  Receivership  does  not  dissolve  corporation;  injunction;  taxes; 
condemnation  suit. 

371.  When  appointed  before  default;  failure  of  company  to  operate 

road;  receiver  not  relieved  until  exigency  ceases;  receiver 
to  prevent  forfeiture  of  franchise. 

372.  Vendor's   right   to   distrain   notwithstanding   rent   charge;   can 

not  distrain  upon  trust  property  or  locomotives. 

373.  Receiver    may    enjoin    state    officers    from    disposing    of    land 

grant;  stockholders'  meeting. 

374.  United  States  court  will  not  entertain  bill  for  account  against 

receiver  of  railway  appointed  by  state  court;  mandamus  re- 
fused. 

460 


CHAP.    XI.]  RAILWAYS.  461 

§  375.     On    vacating    appointment    receiver    should    restore    management 
and  control  of  road  to  owners;  application  of  surplus  funds. 
375a.  Ancillary  receiverships. 

§  365.  Courts  of  equity  averse  to  placing  railways  in 
the  hands  of  receivers ;  relief  refused  when  ordinary  reme- 
dies are  available.  While  the  jurisdiction  of  equity  over 
raihvay  corporations,  as  enlarged  by  the  statutes  and  practice 
of  the  various  states,  is  based  upon  and  exercised  in  accord- 
ance with  substantially  the  same  principles  which  govern  its 
jurisdiction  over  other  corporations,  the  courts  are  more  re- 
luctant to  lend  their  extraordinary  aid  by  the  appointment  of 
receivers  over  railways  than  over  other  corporate  bodies.  The 
importance  of  these  corporations,  as  being  quasi  public  bodies, 
and  the  peculiar  nature  of  their  property  and  franchises,  suffi- 
ciently explain  the  reluctance  with  which  equity  interferes 
with  their  management,  and  in  general  the  courts  proceed  with 
extreme  caution  in  placing  them  in  the  hands  of  receivers.^ 
And  whenever  the  ordinary  remedies  provided  by  law  are  open 

1  Milwaukee  &  Minnesota  R.  Co.  being  embraced  in  the  errors  as- 
V.  Soutter,  2  Wall.,  510;  S.  C,  signed.  As  to  the  constitutionality 
Woolworth's  C.  C,  49;  Stevens  v.  of  acts  of  the  legislature  of  Texas 
Davison,  '  18  Grat.,  819 ;  Ruggles  v.  authorizing  the  appointment  of  re- 
Southern  Minnesota  Railroad,  U.  S.  ceivers  over  corporations  upon  their 
Circuit  Court,  District  of  Minne-  dissolution  or  insolvency,  and  as  to 
sota,  5  Chicago  Legal  News,  110;  the  circumstances  which  will  jus- 
Overton  v.  M.  &  L.  R.  Co.,  10  Fed.,  tify  a  receivership  over  a  railway 
866 ;  S.  C,  3  McCrary,  436 ;  Meyer  in  such  cases,  see  East  Line  &  R.  R. 
V.  Johnston,  53  Ala.,  237;  Kelly  v.  R.  Co.  v.  Texas,  75  Tex.,  434,  12 
Trustees,  58  Ala.,  489;  State  v.  J.,  S.  W.,  690;  Texas  Trunk  R.  Co.  v. 
P.  &  M.  R.  Co.,  15  Fla.,  201 ;  Wabash  State,  83  Tex.,  1,  18  S.  W.,  199.  As 
R.  Co.  V.  Dykeman,  133  Ind.,  56,  32  to  the  jurisdiction  of  the  courts  of 
N.  E.,  823.  And  see  American  Loan  New  York,  under  the  statutes  and 
&  Trust  Co.  V.  Toledo,  C.  &  S.  R.  code  of  procedure  of  that  state,  to 
Co.,  29  Fed.,  416;  Merriam  v.  St.  appoint  temporary  and  final  receiv- 
Louis,  C.  G.  &  F.  S.  Ry.  Co.,  136  ers  over  railway  companies,  as  to 
Mo.,  145,  36  S.  W.,  630.  In  Mcll-  the  powers  and  functions  of  such 
henny  v.  Binz,  80  Tex.,  1,  the  pro-  receivers,  and  as  to  the  conclusive 
priety  of  appointing  a  receiver  at  effect  of  such  proceedings  as  re- 
the  suit  of  a  railway  company  al-  gards  the  title  to  property  of  a  rail- 
Icging  its  insolvency  is  criticised  way  company  sold  in  such  proceed- 
but   not    decided,   the   question   not  ings,  when  questioned  by  creditors 


4oJ  RECEIVERS.  [CHAP.  XI. 

to  the  creditors  of  such  corporations  for  the  enforcement  of 
their  demands,  the  appointment  and  continuance  of  a  receiver 
in  office  for  a  long  period  of  years  is  the  exercise  of  a  judicial 
power  which  can  only  be  justified  by  the  pressure  of  an  ab- 
solute necessity.  Thus,  when  a  judgment  creditor  of  a  rail- 
way company,  which  is  in  the  receipt  of  large  earnings  and  op- 
erating an  extended  line  of  railway,  has  the  ordinary  means 
open  to  him  of  enforcing  his  judgment,  the  court  will  not  coun- 
tenance the  taking  of  the  railroad  property  from  its  rightful 
possession,  and  placing  it  in  the  hands  of  a  receiver ;  especially 
when  the  judgment  is  for  a  small  amount,  as  compared  with 
the  receipts  of  the  company,  and  when  its  lien  is  seriously  con- 
troverted. ^  Nor  does  the  alleged  violation  by  stockholders  of 
a  railway  company  of  an  injunction  restraining  the  consolida- 
tion of  two  companies  warrant  the  appointment  of  a  receiver, 
when  it  is  not  shown  that  the  company  or  any  of  its  directors 
intend  to  surrender  or  transfer  its  property  in  violation  of  such 
injunction.  Nor  should  a  receiver  be  appointed  over  a  railway 
without  notice  to  the  company,  when  neither  fraud  nor  insol- 
vency is  charged  against  the  defendants,  end  when  it  does  not 
appear  that  the  property  of  the  company  is  in  danger  of  re- 
moval beyond  the  jurisdiction  of  the  court,  the  controversy  be- 
ing solely  as  to  the  effect  of  an  alleged  illegal  consolidation 
with  another  railway  company.^     And  the  relief  will  not  be 

of  the  company,  not  parties  thereto,  ing    the    appointment    of    receivers 

who  seek  to  recover  such  property,  and  the  sale  of  its  property  for  the 

see  Herring  v.  New  York,  L.  E.  &  benefit    of    all    concerned.      In    this 

W.  R.  Co.,  105  N.  Y.,  340,  12  N.  E.,  case,  the  railway  system  in  question 

763.  was  made  up  by  the  consolidation 

2  Milwaukee  &  Minnesota  Rail-  of  numerous  lines  of  road,  which 
road  Co.  v.  Soutter,  2  Wall.,  510.  had     been     separately     mortgaged 

3  Railway  Company  v.  Jewett,  37  prior  to  such  consolidation,  the  bill 
Ohio  St.,  649.  But  receivers  have  averring  that  if  the  system  was 
been  appointed  over  a  railway  upon  broken  up  as  an  entirety,  and  if 
the  application  of  the  company  it-  separate  receivers  were  appointed 
self,  the  bill  averring  its  insolvency  over  the  several  lines  thus  sepa- 
and  inability  to  meet  its  mortgage  rately  mortgaged,  irreparable  in- 
and  floating  indebtedness,  and  pray-  jury  would  result  to  all  persons  in 


CHAP.    XI.]  RAILWAYS.  463 

granted  upon  an  ex  parte  application  unless  jn  cases  of  the 
gravest  emergency,  and  the  mere  apprehensions  and  fears  of 
the  plaintiff,  which  are  not  shown  to  be  supported  by  actual 
facts  as  to  the  danger  apprehended,  will  not  justify  the  court 
in  acting  without  notice  to  the  defendant.^  So  it  is  not  the 
province  of  a  court  of  equity  to  conduct  the  business  of  a  rail- 
way for  the  mere  convenience  of  the  parties,  or  except  where 
the  exercise  of  its  extraordinary  jurisdiction  is  indispensable 
for  the  protection  of  some  clear  right  of  the  suitor.  And  when 
a  receiver  has  been  appointed  by  collusion  between  the  parties, 
in  order  to  protect  the  road  from  adverse  proceedings  by  credi- 
tors, and  to  enable  the  parties,  through  the  receiver,  to  apply 
the  entire  income  to  the  improvement  of  the  property  and  not 
to  the  payment  of  its  debts,  the  court,  upon  being  apprised  of 
the  facts,  may  of  its  own  motion  discharge  the  receiver.^ 

§  366.  Receiver  appointed  on  bill  by  shareholder  to  set 
aside  unauthorized  lease.  While,  as  is  thus  seen,  courts  of 
equity  are  extremely  averse  to  the  appointment  of  receivers  to 
take  charge  of  and  manage  railway  corporations,  yet  the  relief 
will  be  granted  when  the  aid  of  equity  is  indispensable  to  se- 
cure the  rights  of  the  legitimate  shareholders,  and  to  prevent 
a  failure  of  justice.  For  example,  when  the  board  of  directors 
of  a  railway  company,  without  authority  of  law  and  without 
the  sanction  of  a  lawful  meeting  of  the  shareholders,  by  whom 
alone  such  action  could  be  authorized,  have  made  a  lease  for 
years  of  the  road  and  property  of  the  corporation,  the  lease 
being  absolutely  null  and  void,  upon  a  bill  filed  by  a  share- 
holder, in  behalf  of  himself  and  such  other  shareholders  as 
may  elect  to  join  in  the  proceedings,  to  set  aside  the  lease,  the 
court  may  appoint  a  receiver  to  take  charge  of  and  manage  the 
road,  until  it  can  be  ascertained  by  proper  inquiry  who  are  the 

interest.     Wabash,   St.  L.  &   P.  R.  Southeastern  R.   Co.  v.   Cason,  133 

Co.  V.   Central  Trust  Co.,  22  Fed.,  Ind.,  49,  32  N.  E.,  827. 

272.  5  Sage  v.  M.  &  L.  R.  Co.,  5  Mc- 

4  Wabash  R.  Co.  v.  Dykeman,  133  Crary,  643. 
Ind.,  56,  32  N.  K,  823;  Chicago  & 


464  RECEIVERS.  [chap.   XI. 

legitimate  shareholders,  and  to  whom  the  custody  and  man- 
agement of  the  road  shall  be  committed.'^ 

§  367.  Granted  for  protection  of  vendor's  lien  upon  in- 
solvency of  the  company.  In  England,  a  receiver  may  be 
allowed  for  the  protection  of  a  vendor's  lien  for  real  estate 
sold  to  a  railway,  upon  failure  to  pay  the  purchase-money  and 
insolvency  of  the  company.  Thus,  when  a  land-owner  con- 
tracts with  a  railway  company  to  convey  to  it  certain  lands  for 
the  construction  of  its  road,  and  upon  its  failure  to  complete  the 
purchase,  he  obtains  a  decree  for  the  specific  performance  of 
the  contract,  and  declaring  his  vendor's  lien  upon  the  premises 
for  the  balance  of  unpaid  purchase-money,  upon  the  insolvency 
of  the  company,  the  vendor  may  have  a  receiver,  although  not 
entitled  to  an  injunction  to  restrain  the  company  from  operat- 
ing its  cars  over  and  using  the  land.  In  such  case,  the  railway 
corporation  is  treated  precisely  as  any  other  insolvent  purchas- 
er, and  the  receiver  is  appointed  for  the  preservation  of  the 
property,  and  to  render  it  profitable  for  all  parties  in  interest."^ 
But  in  such  case,  a  receiver  will  not  be  appointed  before  a  final 
decree  for  the  specific  performance  of  the  contract.^ 

6  Stevens  v.  Davison,  18  Grat.,  a  receiver  over  a  railway,  Lord 
819.  Justice  Cairns  says,  p.  212:     "But 

7  Munns  v.  Isle  of  Wight  R.  Co.,  in  addition  to  the  general  principle 
L.  R.,  5  Ch.,  414.  that  the  Court  of  Chancery  will  not 

8  Latimer  v.  A.  &  B.  R.  Co.,  9  Ch.  in  any  case  assume  the  permanent 
D.,  385.  It  is  worthy  of  note  that  management  of  a  business  or  un- 
the  English  Court  of  Chancery  was  dertaking,  there  is  that  peculiarity 
extremely  averse  to  appointing  a  in  the  undertaking  of  a  railway 
receiver  over  a  railway  with  power  which  would,  in  my  opinion,  make 
to  manage  and  operate  the  road,  it  improper  for  the  Court  of  Chan- 
upon  the  ground  that  it  would  not  eery  to  assume  the  management  of 
assume  the  permanent  manage-  it  at  all.  When  parliament,  acting 
ment  of  a  business  or  undertaking,  for  the  public  interest,  authorizes 
especially  when,  as  in  the  case  of  the  construction  and  maintenance 
a  railway,  such  management  had  of  a  railway,  both  as  a  highway  for 
been  delegated  by  parliament  to  the  public,  and  as  a  road  on  which 
the  company  itself.  Thus,  in  Gard-  the  company  may  themselves  be- 
ner  v.  London,  C.  &  D.  R.  Co.,  L.  come  carriers  of  passengers  and 
R.,  2  Ch.,  201,  which  was  an  ap-  goods,  it  confers  powers  and  im- 
plication  by   debenture   holders    for  poses  duties  and   responsibilities  of 


CHAP,   XI.] 


RAILWAYS. 


465 


§  368.  Granted  for  protection  of  common  easement; 
right  of  passage  through  a  tunnel ;  injunction  refused.  The 

jurisdiction  of  equity  over  railway  corporations,  in  the  manage- 
ment of  a  common  easement  or  right  to  which  different  com- 
panies are  entitled,  is  regarded  as  well  settled  to  the  extent,  if 
necessary,  of  appointing  a  receiver  to  hold  and  manage  the 


the  largest  and  most  important 
kind,  and  it  confers  and  imposes 
them  upon  the  company  which  par- 
liament has  before  it,  and  upon  no 
other  body  of  persons.  These  pow- 
ers must  be  executed  and  these  du- 
ties discharged  by  the  company. 
They  can  not  be  delegated  or  trans- 
ferred. The  company  will,  of  course, 
act  by  its  servants,  for  a  corpora- 
tion can  not  act  otherwise,  but  the 
responsibility  will  be  that  of  the 
company.  The  company  can  not, 
by  agreement,  hand  over  the  man- 
agement of  the  road  to  the  debent- 
ure holders.  It  is  impossible  to  sup- 
pose that  the  Court  of  Chancery 
can  make  itself,  or  its  officer,  with- 
out any  parliamentary  authority, 
the  hand  to  execute  these  powers, 
and  all  the  more  impossible  when 
it  is  obvious  that  there  can  be  no 
real  and  correlative  responsibility 
for  the  consequences  of  any  imper- 
fect management.  It  is  said  that 
the  railway  company  do  not  object 
to  the  order  for  the  manager.  This 
may  well  be  so.  But  in  the  view  I 
take  of  the  case,  the  order  would  be 
improper,  even  if  made  on  the  ex- 
press agreement  and  request  of  the 
company." 

But  by  the  Railway  Companies 
Act  of  1867,  30th  and  31st  Victoria, 
chapter  127,  section  4,  it  was  pro- 
vided as  follows :  "The  engines, 
tenders,  carriages,  trucks,  machin- 
ery,   tools,    fittings,    materials    and 

Receivers — 30. 


effects,  constituting  the  rolling  stock 
and  plant  used  or  provided  by  a 
company  for  the  purposes  of  the 
traffic  on  their  railway,  or  of  their 
stations  or  workshops,  shall  not, 
after  their  railway  or  any  part 
thereof  is  open  for  public  traffic,  be 
liable  to  be  taken  in  execution  at 
law  or  in  equity  at  any  time  after 
the  passing  of  this  act,  and  before 
the  1st  day  of  September,  1868, 
where  the  judgment  on  which  ex- 
ecution issues  is  recovered  in  an 
action  on  a  contract  entered  into 
after  the  passing  of  this  act,  or  in 
an  action  not  on  a  contract  com- 
menced after  the  passing  of  this 
act ;  but  the  person  who  has  recov- 
ered any  such  judgment  may  ob- 
tain the  appointment  of  a  receiver, 
and,  if  necessary,  a  manager,  of  the 
undertaking  of  the  company,  on 
application  by  petition  in  a  sum- 
mary way  to  the  Court  of  Chan- 
cery in  England  or  in  Ireland,  ac- 
cording to  the  situation  of  the  rail- 
way of  the  company;  and  all 
money  received  by  such  receiver  or 
manager  shall,  after  due  provision 
for  the  working  expenses  of  the 
railway  and  other  proper  outgoings 
in  respect  to  the  undertaking,  be 
applied  and  distributed  under  the 
direction  of  the  court  in  payment  of 
the  debts  of  the  company  or  other- 
wise, according  to  the  rights  and 
priorities  of  the  persons  for  the  time 
being    interested    therein ;    and    on 


466  RECEIVERS.  [chap.  XI. 

easement  should  occasion  require.  And  where  several  rail- 
way companies  are  tenants  in  common  of  an  easement,  or  right 
of  passage  through  a  tunnel,  a  court  of  equity  will  entertain 
a  bill  for  an  injunction  and  a  receiver,  upon  a  question  of  con- 
flict between  two  of  the  companies  as  to  their  relative  rights  in 
the  tunnel ;  but  the  court  will  not  appoint  a  receiver  of  the  tun- 
nel, if,  from  all  the  circumstances  of  the  case,  it  \s  satisfied 
that  the  rights  of  the  parties  may  be  preserved  and  protected 
without  such  appointment.^ 

§  369.  When  receiver  refused  on  bill  to  recover  back 
money  paid  for  stock  illegally  issued.  Upon  a  bill  filed 
against  a  railway  company  by  the  holder  of  certain  shares  of 
stock,  which  are  alleged  to  have  been  issued  in  violation  of  the 
charter  and  contrary  to  law,  the  bill  praying  an  injunction  and 
a  receiver,  and  that  the  company  may  be  decreed  to  pay  to  the 
receiver  a  sufficient  sum  to  enable  him  to  repay  to  plaintiff  the 
amount  advanced  for  the  stock,  no  sufficient  cause  is  present- 
ed to  justify  the  appointment  of  a  receiver,  when  the  moneys  re- 
ceived for  the  stock  have  passed  into  the  general  funds  of  the 
corporation,  and  can  no  longer  be  traced  or  identified.^^ 

§  370.  When  United  States  court  in  bankruptcy  will  re- 
fuse to  interfere  with  receiver  previously  appointed  in  state 
court;  jurisdiction  as  between  state  and  federal  courts. 
It  is  held,  when  receivers  over  a  railroad  have  been  appointed 
under  proceedings  in  the  state  courts,  and  have  taken  posses- 
tion  of  the  property  of  the  road  and  entered  upon  their  duties, 

payment  of  the  amount  due  to  every  officers    of    the    company    as    such 

such   judgment  creditor  as  aforesaid,  manager    and    receiver,    see    In    re 

the  court   may,   if  it  think  fit,   dis-  Manchester   &    Milford    R.    Co.,    14 

charge  such  receiver  or  such  receiv-  Ch.  D.,  645.     See,  also,  In  re  Birm- 

er  and  manager."    And  this  section  ingham  &  L.  J.  R.  Co.,  18  Ch.  D., 

was   made   perpetual   in    1875,   38th  155;   In  re   Southern   Railway  Co., 

and  39th  Victoria,  chapter  31.     For  5  L.  R.,  Jr.,  165. 

a    full    discussion   of   the   effect   of  ^  Delaware,  Lackawanna  &  West- 

this  act,  and  of  the  circumstances  ern  R.  Co.  v.  Erie  R.  Co.,  6  C.  E. 

justifying    the    appointment     of    a  Green,  298. 

manager  as  well  as  receiver,  and  of  10  Whelpley  v.  Erie  Railway  Co., 

the    eligibility    of    the    directors    or  6  Blatchf.,  271. 


CHAP.   XI.]  RAILWAYS.  467 

before  the  instituting  of  proceedings  in  bankruptcy  in  the 
United  States  courts  against  the  company,  that  the  bankrupt 
court  will  not  interfere  with  the  possession  and  control  of  the 
receivers  under  the  state  courts,  unless  for  some  cause  for  which 
the  title  of  the  receivers  might  be  impeached  under  the  bank- 
rupt act.  And  until  their  title  is  thus  impeached,  the  manage- 
ment and  control  of  the  road  and  of  the  property  in  the  hands 
of  the  receivers  will  be  left  to  the  state  courts. ^^  So  when  a 
railway  company  is  in  the  hands  of  a  receiver  appointed  by  a 
federal  court,  no  rights  can  be  acquired  under  condemnation 
proceedings  instituted  in  a  state  court  by  a  telegraph  company 
against  the  railway  company  to  obtain  a  right  of  way  over  the 
property  of  the  latter,  if  such  proceedings  are  brought  without 
leave  of  the  court  appointing  the  receiver, ^2 

§  370(3.  Two  receivers  not  desirable;  contract  made  by 
one  binding  on  other.  The  practice  has  been  adopted  in 
some  instances  of  appointing  two  receivers  over  a  railway,  but 
this  course  is  ordinarily  regarded  as  unnecessary  and  embar- 
rassing, a  single  receiver  being  preferred,  both  upon  considera- 
tions of  economy  and  of  harmonious  action.  And  when  two 
receivers  have  been  appointed  in  the  first  instance,  by  consent 
of  the  parties,  as  the  representatives  of  different  interests,  and 
they  prove  unable  to  harmonize  in  the  management  of  the  re- 
ceivership, it  is  proper  to  remove  them  and  to  appoint  a  single 
receiver;  and  such  receiver  should  be  wholly  uninterested  in 
the  affairs  of  the  company,  and  a  resident  within  the  jurisdic- 
tion of  the  court  appointing  him  and  in  which  the  affairs  of 
the  road  are  to  be  administered. ^^  And  where  two  receivers 
have  been  appointed  over  a  railway  company  and  work  has 
been  done  under  a  contract  made  with  one  of  them  and  has  re- 
ceived the  approval  and  sanction  of  the  court,  it  is  immaterial 

11  Alden  v.  B.,  H.  &  E.  R.  Co.,  5  13  Meier  v.  Kansas  Pacific  R.  Co., 
Bank.  Reg.,  230.                                         5  Dill.,  476. 

12  Western  Union  Telegraph  Co. 
V.  Atlantic  &  Pacific  Telegraph  Co., 
7  Biss.,  367. 


468  RECEIVERS.  [chap.  XI. 

that  the  other  receiver  did  not  join  in  the  making  of  the  con- 
tract. Indeed,  where  there  are  two  or  more  receivers  of  a 
railway  system  residing  at  considerable  distance  from  each 
other,  it  may  frequently  happen  that  a  contract  must  be  made 
by  one  receiver  without  the  assent  of  the  other  which  will 
be  binding  upon  the  estate.^'* 

§  370/\  Receivership  does  not  dissolve  corporation;  in- 
junction; taxes;  condemnation  suit.  It  is  to  be  observed 
that  the  appointment  of  a  receiver  over  a  railway  does  not  op- 
erate as  a  dissolution  of  the  corporation  itself.^^  Such  appoint- 
ment, therefore,  and  the  sale  of  the  entire  property  of  the  com- 
pany do  not  afford  ground  for  judgment  of  ouster  against  the 
directors  of  the  company  elected  after  the  appointment  of  the 
receivers.^^  And  the  fact  that  a  railway  has  passed  into  the 
hands  of  receivers,  pending  proceedings  by  the  company  for 
mandamus  to  compel  the  delivery  of  municipal-aid  bonds,  af- 
fords no  ground  for  abating  the  mandamus  proceedings,  or 
for  refusing  to  comply  with  the  mandamus,  since  the  corpora- 
tion still  remains  in  being  and  capable  of  suing  and  of  being 
sued.^'^  So  an  injunction,  granted  by  a  state  court,  restrain- 
ing a  railway  company  from  obstructing  certain  streets  in 
a  city,  is  held  to  be  operative  upon  receivers  of  the  company 
afterward  appointed  by  a  federal  court,  and  they  may  be  pun- 
ished as  for  contempt  in  disregarding  such  injunction,  al- 
though they  have  been  removed  from  their  receivership  when 
proceedings  for  contempt  are  instituted  against  them.  Nor 
can  one  of  the  two  receivers,  in  such  case,  escape  liability  by 
having  remained  inactive  in  the  matter,  since  it  was  his  duty 
to  prevent  disobedience  of  the  injunction,  and  he  can  not  avoid 

!•*  Girard  Insurance  &  Trust  Co.  ers  of  both   receivers  in  the  other 

V.  Cooper,  162  U.  S.,  529,  16  Sup.  during  the  time  named. 

Ct.  Rep.,  879,  40  L.  Ed.,  1062.  affirm-  15  State  v.  Merchant,  37  Ohio  St., 

ing  S.  C,  2  C.  C.  A.,  245,  51  Fed.,  251 ;  People  v.  Barnett,  91  111.,  422. 

332,  4  U.  S.  App.,  631.    In  this  case  And  see,  ante,  §§  344&  and  358. 

an  order  had   been   entered   giving  16  State  v.  Merchant,  37  Ohio  St., 

one  of  the  receivers  leave  of  absence  251. 

for  a  year  and  vesting  all  the  pow-  17  People  v.  Barnett,  91  111.,  422 


CHAP.   XI.]  RAILWAYS.  469 

liability  by  mere  inaction. ^^  So  the  fact  that  a  railway  has 
passed  into  the  hands  of  receivers,  who  are  operating  the  road 
and  receiving  its  earnings,  constitutes  no  bar  to  a  judgment 
in  favor  of  the  state  against  the  company  for  taxes  due  to  the 
state  upon  the  gross  earnings  of  the  road  while  operated  by 
the  receivers.^^  And  the  appointment  of  a  receiver  over  a  rail- 
way company  does  not  divest  it  of  its  power  to  maintain  con- 
demnation proceedings  or  have  the  effect  of  suspending  the 
exercise  of  that  power  while  the  property  of  the  company  is 
in  the  custody  of  the  court. ^0 

§  371.  When  appointed  before  default;  failure  of  com- 
pany to  operate  road ;  receiver  not  relieved  until  exigency 
ceases ;  receiver  to  prevent  forfeiture  of  franchise.  While 
receivers  over  railways  are  usually  appointed  in  aid  of  fore- 
closure proceedings,  after  default  in  paym.ent  of  the  mortgage 
indebtedness,  the  relief  has  been  allowed  before  default  when 
the  company  was  insolvent  and  unable  to  pay  either  mortgage 
or  floating  indebtedness,  and  unable  to  pay  amounts  due  to  con- 
necting lines,  and  in  danger  of  the  absolute  destruction  of  its 
business  and  about  to  default  in  payment  of  interest  upon  its 
mortgages.2l  And  where  a  statute  of  a  state  authorizes  and 
provides  for  the  appointment  of  receivers,  to  take  charge  of  and 
operate  any  railway  which  shall  discontinue  its  operations  for 
a  given  length  of  time,  the  object  of  the  statute  being  the  re- 
lief of  citizens  residing  along  the  line  of  the  suspended  road, 
and  a  receiver  is  accordingly  appointed  over  a  railway  com- 
pany which  has  failed  to  operate  its  road  for  the  prescribed 

18  Safford  v.  People,  85  III,  558.  v.  Campbell,  140  Mich.,  384,  103  N. 

19  Philadelphia  &  Reading  R.  Co.      W.,  856. 

V.   Commonwealth,   104  Pa.   St.,  80.  21  Brassey  v.   N.  Y.  &  N.  E.   R. 

As  to  the   right  to  levy   upon  and  Co.,  19  Fed.,  663,  22  Blatch.,  72,  fol- 

sell  the  property  of  a  railway  which  lowed   by   Farmers'   Loan   &   Trnst 

is  in  the  hands  of  a  receiver  of  a  Co.    v.    Meridian   Waterworks,    139 

federal  court,  to  satisfy  unpaid  taxes  Fed.,  661,  where  a  receiver  was  ap- 

due  to  the  state  under  the  laws  of  pointed  over  the  property  of  a  water 

Georgia,  see  State  v.  A.  &  G.  R.  Co.,  company  although  there  was  no  de- 

3  Woods,  434.  fault  either  in  the  interest  or  prin- 

20  Detroit  &  Toledo  S.  L.  R.  Co.  cipal  of  its  bonds. 


470  RECEIVERS.  [chap.  XI. 

time,  while  the  courts  may  and  will  restore  the  property  to  the 
company  or  to  its  rightful  owners,  upon  being  satisfied  of 
their  ability  and  willingness  to  operate  and  manage  the  road, 
it  will  not  stay  the  operation  of  the  receivership  for  the  pur- 
pose of  inquiring  as  to  the  causes  which  have  led  to  the  fail- 
ure to  operate  the  road.  In  such  a  case,  the  public  necessity 
will  be  regarded  as  of  paramount  importance,  and  the  receiver 
will  not  be  relieved  until  the  court  is  satisfied  that  the  exigency 
has  ceased  which  called  for  the  appointment. ^2  And  where  a 
city  is  about  to  enforce  a  forfeiture  of  the  franchise  of  a  street 
railway  company  because  of  its  failure  to  comply  with  the 
conditions  of  the  ordinance  under  which  it  is  operating  and 
the  appointment  of  a  receiver  will  prevent  such  forfeiture,  a. 
receiver  is  properly  appointed. ^3 

§  372.  Vendor's  right  to  distrain  notwithstanding  rent 
charge;  can  not  distrain  upon  trust  property  or  locomo- 
tives. When  the  owner  of  lands  has  conveyed  them  to  a 
railway,  in  consideration  of  an  annual  rent  charge,  reserving 
by  his  conveyance  the  right  to  enter  upon  the  lands  conveyed, 
and  to  distrain  for  rent  whenever  it  may  be  in  arrear,  the 
subsequent  appointment  of  a  receiver  over  the  railway  will 
not  be  allowed  to  disturb  the  vendor's  rights.  And  upon  ap- 
plication to  the  court  he  will  be  given  leave  to  distrain,  not- 
withstanding the  receiver's  possession,  such  a  case  being  sim- 
ilar to  that  of  an  application  by  a  stranger  for  leave  to  bring 
an  action  of  ejectment.24  But  the  court  will  not,  under  such 
circumstances,  grant  permission  to  distrain  upon  property  of 
the  railway  company  which  had  been  conveyed  to  trustees  for 

22  In  re  Long  Branch  &  Sea  Shore  holders,  see  Ex  parte  Dunn,  8  S.  C, 

R.  Co.,  9  C.  E.  Green,  398.     As  to  207. 

the  right  of  a  state  to  take  posses-  23  Union  Street-Ry.  Co.  v.  City  of 

sion  of  a  railway,  under  an  act  of  Saginaw,  115  Mich.,  300,  7i  N.  W., 

legislature,  in  the  event  of  the  in-  243. 

solvency    of    the    company    and    its  24  Eyton    v.    Denbigh,    Ruthin    & 

failure  to  pay  its  bonds  guaranteed  Corwen   R.   Co.,   L.   R.,  6   Eq.,    14. 

by  the  state,  after  the  appointment  See,  also,  S.  C,  id.,  488. 
of  a  receiver  in  behalf  of  its  bond- 


CHAP.   XI.]  RAILWAYS.  471 

the  benefit  of  creditors,  nor  upon  locomotives  passing  over 
the  land  for  the  purpose  of  working  the  line. 25 

§  373.  Receiver  may  enjoin  state  ofEcers  from  dispos- 
ing of  land  grant;  stockholders'  meeting.  A  receiver  over 
a  railway  company,  who  is  authorized  by  the  order  of  his  ap- 
pointment to  secure  and  protect  the  assets,  franchises  and 
rights  of  the  company,  as  well  as  a  land  grant  and  reservation 
due  the  company  from  the  state,  may  maintain  a  bill  in  equity 
for  an  injunction  against  officers  of  the  state  to  prevent  them 
from  granting  to  other  persons  the  same  lands  which  have 
been  previously  granted  to  the  railway,  and  which  the  state 
has  attempted  to  forfeit.  Such  a  suit  by  the  receiver  is  re- 
garded as  auxiliary  to  the  original  action,  and  is  analogous  to 
a  petition  by  a  receiver  to  the  court  to  protect  his  possession 
from  disturbance,  or  the  property  in  his  charge  from  destruc- 
tion.26  But  the  primary  object  of  the  receivership  being  to 
preserve  the  railway  for  the  benefit  of  its  creditors,  the  court 
will  not  extend  its  jurisdiction  beyond  the  necessity  for  such 
preservation.  It  will  not,  therefore,  upon  the  petition  of  the 
company,  assume  jurisdiction  over  the  question  of  postponing 
a  stockholders'  meeting  called  for  the  election  of  officers,  the 
exercise  of  such  jurisdiction  not  being  pertinent  to  the  pur- 
poses of  the  receivership.27 

§  374.  United  States  court  will  not  entertain  bill  for  ac- 
count against  receiver  of  railway  appointed  by  state  court ; 
mandamus  refused.  When  a  receiver  has  been  appointed 
in  a  state  court  over  a  railway  company,  and  its  franchises  are 
declared  forfeited,  and  its  property  is  placed  in  the  receiver's 
hands,  a  United  States  court  will  not  entertain  a  bill  for  an  ac- 
counting against  the  receiver  and  the  corporation,  but  will 
leave  the  party  aggrieved  to  pursue  his  remedy  by  applying  to 
the  court  which  appointed  the  receiver,  and  under  whose  con- 

25Eyton    V.    Denbigh,    Ruthin    Sz  27  Taylor  v.    P.  &   R.   R.   Co.,  7 

Corwen  R.  Co.,  L.  R.,  6  Eq.,  488.  Fed.,  381. 

26  Davis  V.   Gray.   16  Wall.,   203, 
affirming  S.  C,  1  Woods,  420. 


472  RECEIVERS.  [chap.  XI. 

trol  he  acts.28  So  when  a  railway  is  being  operated  by  a  re- 
ceiver, appointed  by  a  court  of  competent  jurisdiction,  man- 
damus will  not  lie  against  the  company  and  its  receiver  to 
direct  or  control  the  operations  of  the  road,  the  court  appoint- 
ing the  receiver  being  fully  empowered  to  determine  all  ques- 
tions in  controversy.^^ 

§  375.  On  vacating  appointment  receiver  should  restore 
management  and  control  of  road  to  owners ;  application  of 
surplus  funds.  When  a  receiver  is  appointed  over  a  rail- 
way company,  and  defendant  afterward  moves  and  plaintiff 
consents  that  the  order  of  his  appointment  be  vacated,  the  mo- 
tion, being  concurred  in  by  all  parties  in  interest,  should  be 
granted  so  far  as  to  restore  the  possession,  management  and 
control  of  the  road  to  the  owner;  and  such  control  should 
manifestly  include  the  receipt  and  disbursement  of  its  future 
earnings.  It  is,  therefore,  error  for  the  court  to  require  the 
receiver  to  restore  the  railroad  and  its  appurtenances  and 
management  to  the  company,  but  to  still  require  him  to  receive 
and  disburse  its  earnings  and  income. ^^  And  a  receiver  of  a 
railway,  who  enters  into  a  fraudulent  combination  with  third 
parties  for  the  purchase  of  the  road  at  a  foreclosure  sale,  fur- 
nishing information  for  this  purpose  in  violation  of  his  trust, 
can  not  maintain  a  bill  against  such  purchasers  for  an  acount- 
ing  and  for  the  recovery  of  a  share  of  the  profits  arising  from 
such  fraudulent  transaction.^^  And  when  a  receiver  is  ap- 
pointed over  a  railway  upon  a  bill  by  a  judgment  creditor,  and 
the  court  afterward  directs  the  receiver  to  surrender  the  prop- 
erty to  the  company,  the  surplus  earnings  remaining  in  his 
hands,  after  payment  of  all  expenditures,  should  be  paid  to 
such  creditor  to  be  applied  in  satisfaction  of  his  judgment, 
rather  than  to  trustees  for  mortgage  bondholders  who  have 

28Conkling  v.  Butler,  4  Biss.,  22.  31  Farley  v.   St.  P.,  M.  &  M.  R. 

29  State  V.   M.  &  C.   R.   Co.,  35      Co.,  4  McCrary,  138. 
Ohio  St.,  154. 

SOL'Engle  v.  Florida  Central  R. 
Co.,  14  Fla.,  266. 


CHAP.    XI.]  RAILWAYS.  473 

• 

neglected,  during  the  receivership,  to  intervene  in  the  cause 
and  claim  such  earnings,  their  only  claim  thereto  being  as 
mortgage  trustees  not  in  possession. ^2 

§  375a.  Ancillary  receiverships.  In  cases  where  a  line 
of  railway  extends  through  several  states,  it  has  been  a  com- 
mon practice  to  institute  the  receivership  by  an  original  bill, 
usually  for  foreclosure,  in  the  federal  court  in  one  of  such 
states,  and  by  ancillary  proceedings  in  the  federal  courts  of 
the  other  states  to  extend  the  receivership  to  the  remaining 
portions  of  the  road.  This  practice  has,  however,  been  dis- 
approved in  a  vigorous  and  well-considered  opinion,  in  which 
it  is  held  that  such  an  ancillary  proceeding  will  not  be  main- 
tained, or  a  receiver  be  appointed,  in  another  federal  court 
when  the  sole  purpose  of  such  action  is  to  procure  an  ancillary 
receivership  as  an  adjunct  of  the  principal  receivership  in  an- 
other jurisdiction,  the  bill  seeking  no  other  independent  or 
affirmative  relief.^^  Substantially  the  same  result  is,  however, 
obtained  by  filing  original  and  independent  bills  for  foreclosure 
in  the  federal  courts  of  the  various  states  through  which  the 
line  of  railway  extends,  procuring  the  appointment  of  a  re- 
ceiver upon  such  a  bill  in  one  district  and  having  the  same  re- 
ceiver appointed  under  the  various  original  bills  filed  in  the 
other  districts.  In  such  cases,  by  comity  among  the  several 
courts  which  have  thus  appointed  the  same  receiver,  the  gen- 
eral administration  of  the  estate  is  had  in  the  court  in  which 
the  receiver  was  first  appointed.  And  in  such  cases,  one  who 
claims  a  lien  upon  the  fund  in  the  receiver's  hands  growing 
out  of  a  judgment  for  personal  injuries  prior  to  the  receiver- 
ship, like  any  other  claimant,  may  be  required  to  present  his 
application  to  the  court  in  which  the  receiver  was  originally 

32  Sage  V.  Memphis  &  L.  R.  R.  Co.,  54  Fed.,  569;  Clyde  v.  Rich- 
Co.,  125  U.  S.,  361,  8  Sup.  Ct.  Rep.,  mond  &  D.  R.  Co.,  56  Fed.,  539; 
887.  Parsons  v.  Charter  Oak  L.  I.  Co., 

33  Mercantile  Trust  Co.  v.  Kana-  31  Fed.,  305;  Williams  v.  Hinter- 
wha  &  O.  R.  Co.,  39  Fed.,  337.    But  meister,  26  Fed.,  889. 

see   Piatt  v.   Philadelphia   &  K   R. 


474 


RECEIVERS.  [CHAP.  XI. 


appointed,  and  under  whose  orders  the  fund  is  being  adminis- 
tered.*^"^ 

34  Central  Trust  Co.  v.  East  T.,  general  direction  and  control  of  the 

V.  &  G.  R.  Co.,  30  Fed.,  895.     See,  court  in  which  the  receivership  was 

further,  as  to  the  administration  of  initiated,  Ames  v.  Union  Pacific  R. 

the  assets  in  such  cases  under  the  Co.,  60  Fed.,  966. 


CHAP.    XI.]  RAILWAYS.  475 


11.  Receivers  in  aid  of  Mortgagees  and  Bondholders. 

§  376.  Relief  granted  upon  principles  governing  applications  for  re- 
ceivers in  foreclosure  suits;  insolvency  of  company  and  in- 
adequacy of  security. 

377.  When  receiver  refused,  although  railway  company  in  default 

in  payment  of  interest. 

378.  Proceedings  regarded  as  in  rem;  receiver's  right  extends  only 

to  mortgaged  property;  may  lease  other  lines. 

379.  Right  to  take  possession  upon  default. 

380.  Mortgagee  of  tolls  of  railway  entitled  to  receiver. 

381.  The  same;  judgment  at  law  not  necessary;  judgment  creditor 

not  entitled  to  priority  over  mortgages  of  earlier  date. 

382.  Relative  rights  as  between  different  mortgagees  of  tolls. 

383.  As  between  different  mortgagees  of  railway  without  priority, 

equity  will  not  permit  a  preference. 

384.  When   state   entitled   to   receiver  over   railway;   road   running 

through  different  states. 

385.  Receiver  of  tolls  of  turnpike  company  in  behalf  of  mortgagee. 

386.  Receiver  in  behalf  of  bondholders  to  prevent  land  grant  from 

lapsing. 

387.  On  application  for  receiver  in  aid  of  bondholders,  court  will 

not  determine  validity  of  bonds. 

388.  Relative  jurisdiction  of  state  and  federal  courts  on  applications 

for  receivers  over  railways. 
388a.  Jurisdiction  of  United  States  court  over  consolidated  road  in 

different  states. 
388&.  When   president  and  directors  regarded   as   receivers. 

389.  Right  of  company  to  discharge  receiver  on  payment  of  debt. 
389a.  Liability  of  plaintiff  in  foreclosure  for  wages  of  receiver's  em- 
ployees. 

§  376.  Relief  granted  upon  principles  governing  appli- 
cations for  receivers  in  foreclosure  suits;  insolvency  of 
company  and  inadequacy  of  security.  The  most  frequent 
ground  for  invoking  the  extraordinary  aid  of  equity  by 
the  appointment  of  receivers  over  railway  corporations 
is  for  the  protection  of  mortgagees  and  bondholders, 
whose  securities  are  a  Hen  upon  the  road,  upon  the  faihu-e 
of  the  corporation  to  pay  the  principal  or  interest  upon  its  ob- 
ligations thus  secured.  And  in  actions  for  the  foreclosure  of 
railway  mortgages,  given  to  secure  bonds  issued  by  railway 
companies  for  purposes  of  construction  and  equipment,  the 


476  RECEIVERS  [chap.  XI. 

courts,  upon  an  application  for  a  receiver  in  behalf  of  the  mort- 
gagees, proceed  upon  the  usual  principles  governing  applica- 
tions for  receivers  in  aid  of  the  foreclosure  of  mortgages;  and 
in  conformity  with  such  principles,  inadequacy  of  the  mortgage 
security,  coupled  with  insolvency  of  the  mortgagor,  may  be  re- 
garded as  sufficient  ground  for  the  relief.^^  And  while  the 
courts  are  reluctant  to  exercise  their  jurisdiction  in  this  class  of 
cases,  except  upon  a  strong  showing,  yet  if  the  road  and  its  ap- 
purtenances are  manifestly  an  inadequate  security  for  the  mort- 
gage indebtedness,  and  the  corporation  is  shown  to  be  insolv- 
ent, a  receiver  will  be  appointed  and  the  company  and  its 
agents  will  be  enjoined  from  any  interference  with  him  or 
with  the  property.2^  And  when,  upon  a  bill  to  foreclose 
mortgages  given  by  a  railway  company  to  secure  its  bonds,  the 
insolvency  of  the  company  and  inadequacy  of  the  security  are 
shown,  and  the  company  has  neglected  to  apply  its  earnings, 
which  are  the  only  fund  for  that  purpose,  in  payment  of  the 
bonded  indebtedness  secured  by  the  mortgages,  such  neglect, 
in  connection  with  the  other  circumstances  shown,  constitutes 
sufficient  ground  to  justify  the  interference  of  equity  by  a  re- 
ceiver.^"^     So  it  is  proper  to  appoint  a  receiver  over  a  railway 

35  Ruggles  V.  Southern  Minnesota  the   same   railway   in  a   foreclosure 

Railroad,  U.  S.  Circuit  Court,  Dis-  suit,  see  Whitney  v.  N.  Y,  &  A.  R. 

trict  of  Minnesota,  5  Chicago  Legal  Co.,  32  Hun,  164. 

News,  110;  Keep  v.  Michigan  Lake  36  Ruggles  v.  Southern  Minnesota 

Shore  R.  Co.,  U.  S.  Circuit  Court,  Railroad,  U.  S.  Circuit  Court,  Dis- 

Western    District    of    Michigan,    6  trict  of  Minnesota,  5  Chicago  Legal 

Chicago  Legal  News,  101;  Kelly  v.  News,  110. 

Trustees,  58  Ala.,  489 ;  Pennsylvania  37  Keep  v.  Michigan  Lake  Shore 

Co.  V.  American  Construction  Co.,  R.  Co.,  U.  S.  Circuit  Court,  Western 

5  C.  C.  A.,  53,  55  Fed.,  131,  2  U.  S.  District    of    Michigan,    6    Chicago 

App.,  606.     As  to  the  appointment  Legal  News,   101.     This  was  a  bill 

of  a  receiver  in  behalf  of  judgment  for   foreclosure   by   trustees    named 

creditors  of  a  railway  in  an  action  in  certain   railway  mortgages,    exe- 

to  sequestrate  its  property  under  the  cuted  to  secure  the  bonded  indebt- 

statutes    of    New   York,   as   to   the  edness    of   the    road,    the    bill    also 

practice    in    such    cases,    as    to    the  praying   that    a    receiver    might    be 

powers  and  duties  of  such  a  receiver,  appointed.     The  court,   Withey,  J., 

and  as  to  his  relative  rights  com-  say,  p.  402 :     "The  rule  asserted  is 

pared  with  those  of  a  receiver  over  that  a  receiver  will  not  be  appointed 


CHAP.   XI.] 


RAILWAYS. 


477 


company  in  behalf  of  mortgage  bondholders,  when  the  inter- 
est upon  the  mortgages  has  been  long  unpaid,  and  when  it  is 
apparent  that  the  mortgaged  property  will  not  bring  sufficient 
to  satisfy  the  indebtedness. ^8  And  the  fact  that  large  amounts 
of  interest  upon  mortgage  bonds  are  in  default,  that  the  in- 
come of  the  road  can  be  secured  only  through  a  receivership, 
its  diminishing  business  and  decreasing  revenues  and  serious 
disagreement  among  the  various  parties  in  interest  in  its  man- 
agement, coupled  with  its  insolvency  and  inadequacy  of  the 
security,  afford  sufficient  ground  for  the  relief.^^     So  a  re- 


unless  there  has  been  abuse,  or  is 
danger  of  abuse,  on  the  part  of  the 
mortgagor  or  party  in  possession. 
Receivers  are  not  appointed  as  a 
matter  of  course,  but  it  rests  in 
the  sound  discretion  of  the  court. 
Whether  the  power  will  be  exercised 
depends  always  upon  the  facts  and 
rights  as  they  appear  before  the 
court.  There  is  a  multitude  of  cases 
showing  where  the  power  has  and 
where  it  has  not  been  exercised, 
each  case  depending  on  its  particu- 
lar facts  and  circumstances.  From 
the  decided  cases,  the  general  rule 
which  should  govern  is  abundantly 
illustrated.  One  ingredient  to  jus- 
tify the  appointment  of  a  receiver, 
in  a  case  of  foreclosure  of  mort- 
gaged premises,  is  that  the  security 
is  inadequate.  This  the  bill  avers; 
another,  that  the  party  to  the  suit 
is  in  possession  by  himself  or  his 
tenant,  and  the  proper  parties  are 
before  the  court;  such  is  this  case; 
again,  the  mortgagor,  or  party  per- 
sonally liable  for  the  debt,  must  be 
shown  to  be  irresponsible  for  any 
deficiency  on  sale  of  the  mortgaged 
premises ;  this  the  bill  shows.  A 
large  amount  of  interest  is  overdue 
and  unpaid.  From  the  case  before 
the  court  it  would  seem  that  the  in- 


terest must  be  met  from  the  earn- 
ings of  the  road,  and  yet  the  net 
earnings  are  not  applied.  Is  it  not 
an  abuse  on  the  part  of  the  mort- 
gagors, if  insolvent,  that  the  net 
earnings  are  not  applied  to  the  in- 
terest? What  excuse  exists  for  the 
omission?  The  obligation  of  the 
mortgagor  is  common  to  all  mort- 
gagors, viz. :  to  meet  its  accrued  in- 
debtedness, and  if  its  only  means 
with  which  to  meet  the  interest  are 
not  thus  applied,  such  neglect  of  a 
paramount  obligation  is  little  less 
than  an  abuse  which  will  justify  the 
appointment  of  a  receiver,  in  con- 
nection with  all  the  facts  in  this 
case.  The  mortgage  provides  that 
in  case  of  default  in  payment  of  any 
interest  or  principal  of  the  secured 
debt,  the  trustees  may  take  posses- 
sion of  the  road  and  property  in 
person,  or  by  a  receiver,  and  operate 
the  road.  The  court  is  of  opinion 
that  a  receiver  should  be  appointed 
with  the  usual  powers  in  such  cases. 
The  order  may  be  drawn  and  sub- 
mitted to  the  court  for  approval." 

38  Pullan  V.  Cincinnati  &  Chicago 
R.  Co.,  4  Biss.,  35. 

39  Mercantile   Trust   Co.   v.    Mis- 
souri, K.  &  T.  R.  Co.,  Z6  Fed.^  221. 


478  RECEIVERS.  [chap.  XI. 

ceiver  is  properly  appointed  over  the  property  of  a  street  rail- 
way company,  where  it  appears  that  the  atTairs  of  the  com- 
pany are  in  extremely  chaotic  condition  and  that  it  is  without 
a  president,  vice-president  or  treasurer  to  carry  on  its  affairs 
and  that  the  interest  upon  its  bonds  is  past  due  and  unpaid. ^^ 
§  377.  When  receiver  refused,  although  railway  com- 
pany in  default  in  payment  of  interest.  But  the  appoint- 
ment of  a  receiver  is  not  a  matter  of  course  in  aid  of 
the  foreclosure  of  a  mortgage  given  by  a  railway  cor- 
poration, upon  default  in  the  payment  of  any  portion 
of  the  interest  of  the  indebtedness.'^^  And  when,  by  the 
terms  of  a  mortgage  or  deed  of  trust  executed  by  a 
railway  company  to  secure  its  bonds,  it  is  provided  that 
the  trustee,  on  default  of  payment  either  of  principal  or 
interest,  may  take  possession  of  the  mortgaged  property,  but 
the  trustee  upon  default  does  not  elect  to  take  possession,  and 
institutes  an  action  for  the  appointment  of  a  receiver,  in  the 
absence  of  any  facts  showing  an  abuse  in  the  management  of 
the  company  the  court  will  exercise  an  equitable  discretion  in 
the  matter,  and  will  refuse  to  allow  a  receiver  when  it  would 
cause  irreparable  injury  to  the  company. '*2  And  in  the  exer- 
cise of  the  discretion  vested  in  courts  of  equity  touching  the 
appointment  of  receivers,  a  receiver  will  not  be  appointed  in 
aid  of  the  foreclosure  of  a  railroad  mortgage  when  much  great- 
er injury  would  result  to  all  parties  in  interest  by  such  ap- 
pointment than  by  permitting  the  road  to  be  operated  by  the 
company  pending  the  foreclosure  proceedings.^^  Nor  should 
a  receiver  be  appointed  over  an  entire  railway  system  upon 
behalf  of  bondholders  whose  mortgage  covers  but  a  part  of 
the  road.44 


40  Ralph    V.    Wisner,    100   Mich.,  v.  St.  L.,  I.  M.  &  S.  R.  Co.,  4  Dill., 
164,  58  N.  W.,  837.  114. 

41  Williamson  v.  New  Albany  R.  43  Tysen    v.    Wabash    R.    Co.,    8 
Co..  1  Biss.,  198:  Tysen  v.  Wabash  Biss.,  247. 

R.  Co.,  8  Biss.,  247.  44  Merriam  v.  St.  Louis,  C.  G.  & 

42  Williamson  v.  New  Albany  R.  F.  S-.  Ry.  Co.,  136  Mo.,  145,  36  S. 
Co.,  1  Biss.,  198;  Union  Trust  Co.  W.,  630. 


CHAP,    XI.]  RAILWAYS.  479 

§  378.  Proceedings  regarded  as  in  rem;  receiver's  right 
extends  only  to  mortgaged  property;  may  lease  other 
lines.  Proceedings  for  the  appointment  of  receivers,  in 
actions  for  the  foreclosure  of  railway  mortgages,  are  regarded 
as  in  rem,  to  the  extent  that  they  seek  to  reach  such  property 
of  the  corporation  as  was  mortgaged  to  secure  the  bondholders. 
And  the  right  of  the  receiver  to  the  possession  of  the  corporate 
property,  being  subject  to  the  same  limitations  governing  the 
rights  of  the  mortgage  bondholders  in  whose  behalf  he  was 
appointed,  extends  only  to  the  specific  property  which  is  the 
subject  of  the  litigation  and  covered  by  the  mortgage.^^  But 
a  court  of  equity,  having  appointed  a  receiver  over  a  railway 
in  an  action  for  the  foreclosure  of  a  mortgage,  may  exercise 
all  necessary  powers  with  reference  to  the  protection  and  pres- 
ervation of  the  property  for  the  benefit  of  its  creditors  which 
are  not  in  excess  of  the  powers  of  the  corporation  itself.  It 
may,  therefore,  authorize  the  receiver  to  lease  other  lines  of 
railway  to  be  operated  in  connection  with,  and  as  a  part  of,  the 
road  over  which  he  is  appointed,  when  such  course  is  neces- 
sary for  the  interests  of  the  creditors.^^ 

§  379.  Right  to  take  possession  upon  default.  Railway 
mortgages,  or  deeds  of  trust  in  the  nature  of  mortgages,  fre- 
quently contain  a  provision  authorizing  the  trustee  or  mort- 
gagee, in  case  of  default,  to  take  possession  of  and  manage  the 
railway  and  to  receive  and  apply  its  income.  In  such  cases,  if 
the  trustees  have  a  complete  remedy  at  law  to  recover  posses- 
sion, the  court  may  properly  refuse  to  appoint  a  receiver  when 
it  does  not  appear  that  the  trustees  have  made  any  efifort  to  ob- 
tain possession,  or  that  the  mortgaged  premises  are  an  inade- 
quate security.'*'^  If,  however,  the  trustees  neglect  and  refuse 
to  take  possession  after  default  and  a  request  from  the  bond- 
holders, upon  a  bill  by  the  bondholders  to  enforce  the  trust, 

45Noyes  v.  Rich,  52  Me.,  115.  47  Rice  v.   St.  Paul  &  Pacific  R. 

46  Gibert  v.  W.  C,  V.  M.  &  G.  S.  Co.,  24  Minn.,  464.  But  see  Allen 
R.  Co.,  33  Grat.,  586,  v.  D.  &  W.  R.  Co.,  3  Woods,  316. 


480  RECEIVERS.  [chap.  XI. 

a  receiver  may  be  appointed,  the  right  to  the  rehef,  in  such 
case,  not  being  dependent  upon  inadequacy  of  the  mortgage 
security.^^  Nor  is  the  right  to  rehef,  in  such  cases,  confined  to 
actions  for  the  foreclosure  of  the  mortgage,  since  a  receiver 
may  be  appointed  upon  a  bill  seeking  to  obtain  possession  after 
default,  the  railway  company  being  insolvent  and  the  security 
inadequate.^^  So  a  receiver  may  be  appointed,  after  default, 
in  an  action  brought  by  a  surviving  trustee  in  the  deed  of  trust 
to  enforce  the  trust  and  to  obtain  possession  of  the  property.^^ 
In  such  case  it  is  proper  to  appoint  the  surviving  trustee  as  re- 
ceivers^ And  it  has  been  held,  when  the  deed  of  trust  author- 
ized the  trustees  to  take  possession  upon  default,  that  the  de- 
fault itself  constituted  sufficient  ground  for  a  receiver,  without 
showing  the  inadequacy  of  the  mortgage  security.  ^^  And  a 
receiver  has  been  appointed  after  a  decree  of  foreclosure,  in 
behalf  of  bondholders  entitled  to  the  net  income  of  the  road, 
when,  under  the  laws  of  the  state,  no  sale  could  be  had  until 
the  expiration  of  six  months  from  the  date  of  the  decree.^^ 

48  Wilmer  v.   A.  &  R.   A.  L.  R.  50  Sacramento  &  P.  R.  Co.  v.  Su- 
Co.,  2  Woods,  409.  perior  Court,  55  Cal.,  453;  McLane 

49  Dow  V.    M.   &   L.    R.    Co.,   20  v.    Placerville  &   S.   V.   R.   Co.,  66 
Fed.,  260.     In  this  case,  the  court  Cal.,  606.  6  Pac,  748. 

required  plaintiffs,  as  a  condition  51  McLane  v.  Placerville  &  S.  V. 
to  the  appointment  of  a  receiver,  R.  Co.,  66  Cal.,  606,  6  Pac,  748. 
to  consent  that  all  debts  due  to  52  Allen  v.  D.  &  W.  R.  Co.,  3 
other  companies  for  freight  and  Woods,  316.  But  in  this  case,  ad- 
ticket  balances,  all  debts  for  labor,  ditional  grounds  for  the  relief  were 
supplies  and  materials  used  in  found  in  the  fact  that  the  com- 
equipping,  repairing  or  operating  pany  was  actually  insolvent,  that 
the  road,  and  all  obligations  in-  the  contractor  for  building  the 
curred  in  transporting  freight  or  road  had  failed  and  abandoned  his 
passengers,  or  for  injuries  to  per-  contract,  and  that  the  charter  and 
sons  or  property,  which  had  ac-  a  valuable  land  grant  were  about 
crued  within  six  months  prior  to  to  lapse  by  the  non-completion  of 
the  appointment,  should  be  paid  by  a  small  remaining  portion  of  the 
the  receiver  out  of  the  earnings  of  road  within  the  time  required  by 
the  road,  or,  if  not  so  paid,  should  law. 

constitute    a    lien    upon    the    road  5.3  Benedict  v.  St,  J.  &  W.  R.  Co., 

paramount  to  that  of  the  mortgage  19  Fed.,  173. 
indebtedness. 


CHAP.    XI.]  RAILWAYS.  481 

§  380.  Mortgagee  of  tolls  of  railway  entitled  to  receiv- 
er. It  was  the  doctrine  of  the  English  Court  of  Chancery, 
that  when  a  company,  incorporated  by  act  of  parhament  as  a 
common  carrier,  is  authorized  by  its  act  of  incorporation  to 
borrow  money  by  mortgaging  its  tolls,  and  in  pursuance  of 
such  authority  has  mortgaged  its  tolls  to  secure  advances  and 
loans  obtained  for  carrying  on  the  undertaking,  the  mortgagee 
is  entitled  to  the  aid  of  equity  by  a  receiver  upon  non-payment 
of  his  principal  when  due.^^  And  the  receiver  thus  appointed 
will  be  ordered  to  pay  the  costs  of  the  proceeding,  and  then 
to  keep  down  the  interest  on  the  mortgages  and  pay  the  balance 
into  court.^^  It  is  held,  in  such  cases,  that  the  power  of  mort- 
gaging the  corporate  tolls  and  rents  necessarily  carries  with  it 
as  an  incident  all  the  appropriate  and  necessary  remedies  to 
compel  payment.  Equity  may,  therefore,  appoint  a  receiver  of 
the  tolls  in  an  action  to  foreclose  the  mortgage,  even  though 
the  power  is  not  conferred  in  express  terms  by  the  act  of  par- 
liament, the  remedy  being  a  necessary  incident  of  the  powers 
expressly  granted. ^^  And  it  is  no  objection  to  the  appointment 
of  a  receiver  of  the  tolls,  rates,  duties  and  other  property  of  a 
railway,  upon  the  application  of  a  mortgagee,  that  the  court 
can  not  prescribe  everything  which  is  necessary  to  be  done  for 
the  proper  management  of  the  affairs  of  the  corporation,  and 
that  it  is  liable  to  indictment  in  case  the  receiver  does  not  per- 
form the  duties  required  of  the  company  by  its  act  of  incor- 
poration.^''' 

§  381.  The  same;  judgment  at  law  not  necessary;  judg- 
ment creditor  not  entitled  to  priority  over  mortgages  of 
earlier  date.  It  is  held,  in  the  Irish  Chancery,  that  railway 
bondholders  are  entitled  to  a  receiver  over  the  tolls  and  traffic 

54  Hopkins  v.  Worcester  &  Birm-  56  De  Winton  v.  Mayor  of  Brecon, 
ingham  Canal  Proprietors,  L.  R.,  6      26  Beav.,  533. 

Eq.,  437;  De  Winton  v.  Mayor  of  "'7  Fripp  v.  The  Chard  R.  Co.,  11 

Brecon,  26  Beav.,  533.  Hare,  241 ;  S.  C.  17  Jur.,  887;  S.  C, 

55  Hopkins  V.  Worcester  &  Birm-  22  L.  J.,  N.  S.,  1084. 
ingham  Canal  Proprietors,  L.  R.,  6 

Eq.,  437. 

Receivers — 31. 


482  RECEIVERS.  [chap,  XI. 

of  the  road,  when  their  bonds  are  an  equitable  charge  upon  such 
tolls,  and  when  the  inconvenience  of  proceeding  at  law  for  the 
enforcement  of  their  demands  is  so  great  as  to  render  the  legal 
remedy  practically  useless.  And  it  is  not  necessary,  to  entitle 
them  to  the  relief,  that  the  bondholders  should  have  first  re- 
covered judgment  at  law  and  issued  execution,  when  the  right 
to  be  paid  out  of  the  tolls  is  attached  to  the  bonds  themselves, 
and  a  receiver  previously  appointed  over  the  tolls  of  the  com- 
pany will  be  extended  to  the  payment  of  the  demands  of  such 
bondholders.^^  But  a  judgment  creditor  of  a  railway  com- 
pany, whose  judgment  is  only  a  lien  or  charge  upon  its  lands, 
to  the  extent  of  such  estate  or  interest  as  the  corporation  it- 
self has  in  them,  is  not  entitled,  upon  obtaining  a  receiver  of 
the  railway,  to  be  paid  the  profits  received  by  the  receiver  in 
priority  to  interest  due  on  mortgages  of  the  company  which 
antedate  his  judgment. ^^ 

§  382.  Relative  rights  as  between  different  mortgagees 
of  tolls.  The  jurisdiction  of  the  English  Court  of  Chan- 
cery, in  this  class  of  cases,  was  sometimes  invoked  when  there 
were  different  mortgagees  of  the  tolls,  who  were  entitled  to 
have  them  applied  for  the  payment  of  their  advances.  And 
when  the  trustees  of  an  incorporated  turnpike  company  are 
authorized  by  the  act  of  incorporation  to  mortgage  its  tolls, 
the  mortgagee  may  have  a  receiver  of  the  tolls  if  there  are  other 
mortgages  thereon,  and  he  will  not  be  required  to  take  pro- 
ceedings at  law  to  obtain  possession  under  his  mortgage.  In- 
deed, such  a  case  would  seem  to  be  a  stronger  one  for  the  in- 
terposition of  equity  by  a  receiver  than  the  case  of  an  ordinary 
mortgage  of  lands.^^     And  when  a  railway  company,  incor- 

58  Imperial  Mercantile  Credit  As-  "that  the  rights  under  a  mortgage 
sociation  v.  Newry  &  Armagh  R.  of  this  description  differ  materially 
Co..  Ir.  Rep.,  2  Eq.,  1.  from  the  rights  under  an  ordinary 

59  Holland  v.  Cork  &  Kinsale  R.  mortgage  of  land.  Under  an  ordi- 
Co..  Ir.  Rep.,  2  Eq.,  417.  nary  mortgage  the  mortgagee,  when 

60  Crewe  v.  Edleston,  1  De  G.  &  he  enters  into  possession,  holds  for 
J.,  93.  "It  is  to  be  observed,  too,"  his  own  benefit.  Under  a  mortgage 
says   Lord   Justice  Turner,   p.   109,  of    this     description     he    becomes, 


CHAP.    XI.]  RAILWAYS.  483 

porated  by  act  of  parliament,  is  authorized  to  obtain  loans 
by  mortgaging  its  rates,  tolls,  duties  and  other  property,  a 
second  mortgagee,  who  has  advanced  money  to  the  company 
upon  this  security,  is  entitled  to  a  receiver  in  an  action  to  es- 
tablish his  mortgage,  when  it  is  shown  that  the  property  is  un- 
productive as  to  the  second  mortgagees,  and  their  interest  has 
been  unpaid  for  a  series  of  years.  And  the  relief  may  be  al- 
lowed in  such  a  case,  even  though,  by  the  act  of  incorporation, 
special  provision  is  made  for  the  appointment  of  a  receiver  in 
behalf  of  a  mortgagee  on  application  to  justices  of  the  peace  for 
that  purpose,  the  act  providing  that  this  special  remedy  shall 
be  without  prejudice  to  any  remedies,  either  at  law  or  in  equity, 
which  the  mortgagee  may  have.  In  such  a  case,  it  constitutes 
no  sufficient  objection  to  granting  the  relief  sought  that  the 
mortgagee  has  not  joined  as  defendants  to  the  action  other 
mortgagees  secured  by  the  same  mortgage  with  himself.^^ 

§  383.  As  between  different  mortgagees  of  railway  with- 
out priority,  equity  will  not  permit  a  preference.  As  be- 
between  different  mortgage  creditors  of  a  railway  company, 
whose  mortgages  are  a  charge  upon  the  property  of  the  com- 
pany, to  be  paid  pari  passu,  and  without  priority  or  preference, 
equity  will  not  permit  one  of  the  mortgagees  to  obtain  a  prefer- 
ence over  others.  And  where  some  of  the  mortgagees  have  filed 
a  bill  for  an  account  of  the  principal  and  interest  due  upon  their 
mortgages,  and  have  obtained  a  receiver  of  the  railway  and 
its  tolls,  the  court  will  not  allow  another  of  the  mortgagees, 
who  has  obtained  judgment  upon  his  demand,  to  issue  execu- 
tion against  the  property  of  the  company,  otherwise  than  as 

when  he  enters  into  possession,  lia-  the  tolls,  and  if  this  court  can  be 

ble  to  the  other  mortgagees,  to  the  called    upon   to   appoint   a    receiver 

extent  of  their  interests.     This  lia-  immediately  after  the  possession  re- 

bility,    I    apprehend,    would    entitle  covered    at    law,    it    can    hardly   be 

him,    immediately    upon    possession  necessary    that   the    proceedings    at 

taken,  to  come  to  this  court  to  have  law  should  first  be  taken." 

it  ascertained  what  is  due  upon  the  61  Fripp  v.  The  Chard  R.  Co.,  11 

other  mortgages,  and  for  a  receiver  Hare,  241;   S.  C,  17  Jur.,  887;  22 

to  aid  him  in  the  due  application  of  L.  J.,  N.  S.,  1084. 


484  RECEIVERS.  [chap.   XI. 

trustee  for  himself  and  all  other  mortgage  creditors  of  the 
company.  But  the  court  may,  in  such  case,  direct  an  inquiry 
as  to  whether  it  will  be  for  the  benefit  of  the  mortgage  cred- 
itors generally  that  any  proceedings  should  be  taken  for  the 
purpose  of  making  the  judgment  available  for  their  benefit.^" 

§  384.  When  state  entitled  to  receiver  over  railway; 
road  running  through  different  states.  Where  a  railway 
company,  chartered  by  two  different  states,  and  whose  line  of 
road  lies  in  both  of  the  states,  executes  a  mortgage  of  the  en- 
tire line  of  its  road  to  one  of  the  states  to  secure  the  payment 
of  an  annuity  due  from  the  company,  and  the  state  occupies  the 
relation  of  a  second  and  third  incumbrancer,  it  is  entitled  to 
the  aid  of  a  receiver,  upon  a  bill  showing  that  the  tolls  and 
revenues  of  the  road  are  being  diverted  to  the  payment  of 
junior  obligations  and  liens,  in  violation  of  the  duty  incum- 
bent upon  the  corporation.  And  although  the  courts  of  the 
state  in  which  the  relief  is  granted  have  jurisdiction  of  the 
matter  only  within  the  limits  of  that  state,  they  will  yet  inter- 
fere to  the  extent  of  their  jurisdiction;  and  the  fact  that  their 
authority  does  not  extend  beyond  the  territorial  limits  of  the 
state  will  not  deter  them  from  acting,  in  a  proper  case,  to  the 
extent  of  such  limits.  In  such  a  case  the  defendant,  as  to  that 
portion  of  its  property  and  franchises  within  the  limits  of  the 
state  where  the  relief  is  sought,  will  be  treated  as  a  domestic 
corporation  and  will  be  dealt  with  accordingly.^^ 

§  385.  Receiver  of  tolls  of  turnpike  company  in  behalf 
of  mortgagee.  When  the  mortgagee  of  the  tolls  of  a  turn- 
pike company,  under  an  act  of  parliament  providing  that  none 
of  the  mortgagees  of  such  tolls  should  have  preference  over 
others,  had  taken  possession  of  the  turnpike  gates  without  any 
legal  proceedings,  and  was  in  receipt  of  the  tolls  and  retained 
the  entire  amount  in  discharge  of  his  own  demand,  instead  of 
applying  it  for  the  benefit  of  all  the  mortgagees  pari  passu,  as 
required  by  the  act  of  parliament,  an  injunction  was  granted 

62  Bowen  v.  Brecon  R.  Co.,  L.  R.,  63  State  of  Maryland  v.  Northern 

3  Eq.,  541.  Central  R.  Co.,  18  Md^  193. 


CHAP.    XI.]  RAILWAYS.  485 

against  him  and  a  receiver  of  the  tolls  was  appointed,  upon  the 
appHcation  of  another  mortgagee.^* 

§  386.  Receiver  in  behalf  of  bondholders  to  prevent  land 
grant  from  lapsing.  When  a  railway  company  is  endowed 
with  a  valuable  land  grant,  which  constitutes  the  principal  se- 
curity of  its  bondholders,  and  there  is  danger  of  the  grant 
lapsing  before  the  completion  of  the  road,  which  is  required 
to  be  completed  within  a  specified  time,  a  receiver  may  be 
appointed  on  application  of  the  bondholders,  the  exigencies  of 
the  case  being  regarded  as  sufficient  to  warrant  a  court  of 
equity  in  interfering.  And  such  receiver  may  be  authorized 
to  borrow  money  sufficient  to  complete  the  line  within  the  time 
specified,  and  to  issue  his  obligations  for  that  purpose,  which 
may  be  made  a  lien  upon  the  road.^^ 

§  387.  On  application  for  receiver  in  aid  of  bondholders, 
court  will  not  determine  validity  of  bonds.  In  an  action 
for  the  foreclosure  of  a  mortgage  given  by  a  railway  company 
to  secure  its  bonds,  it  affords  no  sufficient  objection  to  appoint- 
ing a  receiver  in  behalf  of  the  bondholders,  that  the  proceed- 
ings of  the  corporation  in  issuing  the  bonds  and  mortgage  are 
impeached  by  mere  negative  testimony,  as  by  an  affidavit  of 
the  secretary  of  the  company  stating  that  he  is  not  able  to  find 
any  record  of  authority,  given  by  the  stockholders  to  the  di- 
rectors or  officers  of  the  company,  to  execute  the  bonds  and 
mortgage  in  question ;  since,  upon  a  preliminary  application 
for  the  appointment  of  a  receiver,  the  court  will  not  pass  upon 
or  determine  the  validity  of  the  bonds,  but  will  leave  that  ques- 
tion to  the  final  hearing.^*^ 

§  388.  Relative  jurisdiction  of  state  and  federal  courts 
on  applications  for  receivers  over  railways.  Questions  of 
difficulty  have  occurred  in  determining  the  relative  jurisdiction 

64  Dumville  v.  Ashbrooke,  3  Rnss.,  receiver  under  such  circumstances. 
99  note  c.  ^^^'  ^'^°'  ^-  ^■'  ^  Dill.,  519. 

66  Keep  v.  Michigan  Lake  Shore 

65  Kennedy  v.  St.  Paul  &  Pacific  j._  q^  ^  ^  g.  Circuit  Court,  West- 
R.  Co.,  2  Dill.,  448.  And  see  this  ern  District  of  Michigan,  6  Chicago 
case  for  form  of  order  appointing  a      Legal  News,  101. 


486  RECEIVERS.  [chap.   XI. 

of  the  state  and  federal  courts,  upon  applications  for  receivers 
in  aid  of  the  foreclosure  of  railway  mortgages.  The  true  rule 
upiMi  this  subject  undoubtedly  is,  that  the  court  first  acquiring 
jurisdiction  of  the  subject-matter,  or  of  the  res,  will  retain  ju- 
risdiction to  the  end  of  the  litigation,  and  will,  if  necessary, 
take  possession  or  control  of  the  property  by  a  receiver,  to  the 
exclusion  of  all  interference  from  other  courts  of  concurrent 
jurisdiction.67  Accordingly,  when  a  trustee  in  a  deed  of  trust, 
given  by  a  railway  company  to  secure  its  bonds,  files  his  bill 
in  the  United  States  court  for  a  foreclosure,  which  thus  ob- 
tains jurisdiction  of  the  subject-matter,  and  pending  this  ac- 
tion, and  without  leave  of  the  federal  court,  the  trustee  insti- 
tutes proceedings  in  a  state  court  to  foreclose  the  same  trust 
deed,  upon  which  a  receiver  is  appointed,  a  foreclosure  ordered 
and  the  property  sold,  the  United  States  court  retains  its  juris- 
diction. It  may,  therefore,  upon  a  proper  showing  of  the  ne- 
cessity for  a  receiver,  make  such  appointment  on  the  applica- 
tion of  one  of  the  bondholders  secured  by  the  mortgage,  and 
the  interference  of  the  state  court  will  be  treated  as  unauthor- 
ized, and  as  not  affecting  the  previously  acquired  jurisdiction 
of  the  federal  tribunal. ^^     Nor  is  it  necessary,  in  the  applica- 

67  Bill  V.  New  Albany  R.  Co.,  2  they  seem  to  have  had  the  opinion 
Biss.,  390;  Union  Trust  Co.  v.  The  of  a  state  court  to  justify  their  ac- 
Rockford,  Rock  Island  &  St.  Louis  tion,  but  as  this  court  was  the  one 
R.  Co.,  6  Biss.,  197 ;  S.  C,  7  Chicago  in  which  the  controversy  was  orig- 
Legal  News,  33.  See,  also,  to  the  inally  commenced,  and  in  which, 
same  effect,  Gaylord  v.  The  Fort  for  certain  purposes,  it  was  yet 
Wayne.  M.  &  C.  R.  Co..  6  Biss.,  286.  pending,    it    is    the    only    tribunal 

68  Bill  V.  New  Albany  R.  Co.,  2  whose  decision  was  binding  upon 
Biss.,  390.  The  principles  govern-  the  parties  in  this  court.  Before 
ing  in  such  case  are  well  stated  by  he  adopted  so  grave  a  measure, 
Drummond,  J.,  p.  400,  as  follows:  therefore,  and  one  calculated  so 
"It  could  hardly  be  said  then  to  be  much  to  complicate  and  embarrass 
fair  dealing,  while  the  case  was  matters  in  dispute,  he  should  have 
thus  proceeding  here,  for  the  trustee  come  to  this  court  for  directions 
and  some  of  the  bondholders  to  and  relief.  One  litigation  should 
turn  over  to  another  jurisdiction  have  been  disposed  of  before  an- 
rights  which  had  been  partially  ad-  other  on  the  same  subject-matter 
judicated,  thus  ignoring  everything  was  begun.  The  fact  appears  to  be, 
that  occurred  here.     It  is  true  that  that  the  trustee  and  the  first  bond- 


CHAP.    XI.] 


RAILWAYS. 


487 


tion  of  the  general  rule  as  above  stated,  that  the  court  which 
first  acquires  jurisdiction  of  the  case  shall  also  first  take  by  its 
officers  possession  of  the  property  in  controversy,  since  this 
would  only  lead  to  unseemly  haste  on  the  part  of  receivers  to 
reduce  the  property  to  manual  possession ;  and  while  the  court 
first  appealed  to  was  investigating  the  rights  of  the  respective 
parties,  another  court,  acting  with  greater  haste,  might,  by 
seizing  the  property,  render  the  first  suit  wholly  unavailing. 
And  when  a  bill  in  the  United  States  court,  in  behalf  of  hold- 
ers of  railway  bonds,  seeking  the  aid  of  a  receiver  for  the  pro- 
tection of  their  security,  was  dismissed  upon  demurrer,  but 
afterward,  and  at  the  same  term,  this  judgment  was  set  aside 
and  the  bill  reinstated,  and  plaintiffs  were  allowed  to  amend, 


holders  thought  that  the  last  bond- 
holders had  ceased  to  have  any 
interest  in  the  road,  because  of  the 
inadequacy  of  the  property  to  re- 
spond to  inferior  liens,  and  acted 
accordingly  —  a  conclusion  which 
could  only  be  reached  under  ihe 
authority  of  this  court.  Inasmuch, 
therefore,  as  the  case  was  still  here, 
as  for  certain  purposes  the  property 
was  subject  to  the  control  of  the 
court,  in  the  interests  of  the  parties 
before  it,  to  appeal  to  another  court 
to  foreclose  the  mortgages  and  sell 
the  road  was  unwarranted,  and  not 
consistent  with  the  obligations  due 
to  all.  The  trustee  was  responsible 
just  as  much  to  others  as  he  was 
to  those  who  demanded  he  should 
foreclose,  and  whose  instructions  he 
obeyed.  If,  then,  it  was  a  bren'-h 
of  duty  for  Williamson  to  proceed 
in  the  court  of  common  pleas  of 
White  county,  as  I  think  it  was, 
what  is  the  effect  upon  the  right  of 
this  court  to  retain  jurisdiction  of 
the  cause  and  of  the  subject-mat- 
ter? There  can  be  no  doubt  it  has 
created  great  confusion  in  the  posi- 


tion of  those  claiming  under  the 
mortgages,  and  embarrassment  in 
the  court  to  deal  properly  with 
their  interests.  It  has  thus  brought 
about  an  apparent  conflict  between 
courts,  state  and  federal,  which 
should  always  be  avoided.  But  the 
conflict  arises  from  acts  done  after 
this  court  had  obtained  jurisdiction 
of  the  cause,  and  for  which,  there- 
fore, it  can  not  be  justly  held 
accountable;  and  when  a  party 
affected  by  an  order  or  decree  en- 
tered in  a  pending  cause  asks  for 
relief,  it  is  no  answer  to  say  that 
another  jurisdiction  has  attempted 
to  seize  the  property,  and  thus 
place  it  beyond  the  power  of  the 
court  to  give  relief.  The  question 
always  must  be,  is  it  competent  for 
the  court  to  act?  If  so,  its  duty  is 
plain,  and  it  necessarily  follows 
from  what  has  been  said,  that,  in 
my  opinion,  the  property  is  still 
within  the  control  of  this  court  to 
adjudicate  upon  the  equitable 
rights  of  all  who  have  ever  been 
before  it." 


488  RECEIVERS.  [chap.  XI. 

a  receiver  was  appointed  to  take  charge  of  the  railway  for  the 
protection  of  the  bondholders,  notwithstanding  another  cred- 
itor of  the  company,  in  the  interval  between  the  dismissal  of 
the  bill  and  its  reinstatement  in  the  federal  court,  had  filed  a 
bill  in  the  state  court  and  procured  a  receiver  thereon. "^^ 

§  388a.  Jurisdiction  of  United  States  court  over  consoli- 
dated road  in  different  states.  When  two  different  rail- 
ways, incorporated  in  different  states,  have  been  legally  con- 
solidated into  one  corporation,  which  is  operating  the  road  as 
an  entire  and  indivisible  property  through  both  such  states, 
having  mortgaged  its  entire  line  thus  consolidated,  a  federal 
court  in  one  of  the  states  may  appoint  a  receiver  over  the  en- 
tire property.  And  in  such  case,  the  trustees  being  authorized 
by  the  mortgage  to  take  possession  of  and  to  operate  the  road 
upon  default,  and  having  refused  so  to  do  after  request  by  the 
bondholders,  the  relief  may  be  granted  upon  a  bill  by  the  bond- 
holders to  enforce  the  trust  and  to  foreclose  the  mortgage.*^^ 
But  when  a  consolidated  railway  system  is  composed  of  many 
different  lines  extending  through  several  states  and  receivers 
are  appointed,  upon  a  bill  filed  by  the  company  itself  alleging 
its  insolvency,  in  a  federal  court  in  one  of  such  states,  and  by 
ancillary  proceedings  the  same  receivers  are  appointed  in  a 
federal  court  of  another  state  over  the  lines  in  that  state,  which 
are  covered  by  separate  mortgages,  the  latter  court  may,  at 
the  suit  of  mortgage  bondholders,  remove  such  receivers  and 
appoint  a  new  receiver  over  the  lines  within  its  jurisdiction.'''^ 

69  Union  Trust  Co.  v.  Rockford,  session   before  the  appointment   of 

Rock   Island   &    St.    Louis   R.    Co.,  a    receiver    by    the    federal    court, 

6  Biss.,  197;  S.  C,  7  Chicago  Legal  such  possession  would  not  be  dis- 

News,  33.    But  see,  contra,  Wilmer  turbed  by  the  latter  court,  although 

V.  A.  &  R.  A.  L.  R.  Co.,  2  Woods,  it  had  first  acquired  jurisdiction  by 

409,    where    it    was    held    that    the  the  filing  of  the  bill  and  by  service 

priority  of  jurisdiction  between  the  of  process. 

federal   and   state   court   should  be  "^O  Wilmer  v.   A.  &  R.  A.  L.  R. 

determined,   not  by   prior   jurisdic-  Co.,  2  Woods,  409. 

tion    of   the    person    or    service    of  71  Atkins  v.  Wabash,  St.  L.  &  P. 

process,  but  by  prior  seizure  of  the  R.  Co.,  29  Fed.,  16L    And  see  Cen- 

property;  and  that,  the  receiver  of  tral  Trust  Co.  v.  Wabash,  St.  L.  & 

the  state  court  having  taken  pos-  P.  R.  Co.,  29  Fed.,  618 ;  Chattanooga 


CHAP.   XI.]  RAILWAYS.  489 

§  388&.  When  president  and  directors  regarded  as  re- 
ceivers. When  in  an  action  brought  for  the  foreclosure  of 
a  railway  mortgage,  and  seeking  the  appointment  of  a  receiver, 
an  order  is  made  authorizing  the  president  and  directors  of 
the  company  to  continue  in  the  possession  and  management 
of  the  road,  under  and  subject  to  the  orders  of  the  court,  to 
which  they  are  required  to  report  from  time  to  time  the  condi- 
tion of  the  road  and  its  earnings  and  expenses,  such  order  is  to 
be  construed  as  appointing  them  receivers  of  the  property,  and 
they  will  be  regarded  as  operating  the  road  as  officers  of  the 
court  and  not  of  the  railway  company.'^^ 

§  389.  Right  of  company  to  discharge  receiver  on  pay- 
ment of  debt.  When  a  receiver  is  appointed  upon  a  bill 
to  foreclose  a  mortgage  executed  by  a  railway  company  to 
secure  its  bonds,  the  right  to  a  discharge  of  the  receiver  and  a 
restoration  of  the  property,  upon  payment  of  the  mortgage  in- 
debtedness, is  a  clear,  legal  right,  in  no  sense  discretionary 
with  the  court,  and  a  refusal  to  grant  such  right  is  judicial 
error. ''^2 

§  289a.  Liability  of  plaintiff  in  foreclosure  for  wages  of 
receiver's  employees.  The  appointment  of  a  receiver  of  a 
railway  in  aid  of  mortgage  bondholders  is  not  a  matter  of  strict 
right  but  rests  in  the  sound  discretion  of  the  court  subject  to 
such  conditions  as  the  court  may  see  fit  to  impose.  While, 
therefore,  it  is  proper  to  make  such  appointment  upon  the  con- 
dition that  the  plaintiff  shall  undertake  to  secure  to  employees 
of  the  receiver  the  payment  of  their  wages  in  case  the  net  earn- 
ings of  the  receivership  are  insufficient  to  meet  such  demands, 
yet  where  no  such  condition  has  been  imposed,  no  liability  at- 
taches to  the  plaintiff  who  has  procured  the  appointment,  where 
the  net  earnings  are  insufficient  to  meet  the  demands  for  wages 
of  employees.'''^ 

Terminal  Ry.  Co.  v.  Fclton,  69  Fed.,  v.  Soutter,  2  Wal.,  510.     See  S.  C, 

273.  Wool  worth's  C.  C,  49. 

72  7n  re  Fifty- four  First  Mort-  74  Farmers'  Loan  &  Trust  Co.  v. 
gage  Bonds,  15  S.  C,  304;  Ex  parte  Oregon  Pac.  R.  Co.,  31  Ore.,  237,  48 
Brown,  15  S.  C,  518.  Pac,  706,  38  L.  R.  A.,  424,  65  Am. 

73  Milwaukee  &  Minnesota  R.  Co.  St.  Rep.,  822. 


490  RECEIVERS.  [chap.  XI. 


III.  Functions  and  Duties  of  the  Receiver. 

§  390.     Receiver's  functions  and  duties  usually  fixed  by  order;  when 
authorized  to  complete  road. 
390j.  Contracts   subject  to   control   of  court;   construction   of   rival 
line;  unjust  discrimination;  pooling  contracts. 

391.  To  payment  of  what  debts  earnings  applied. 

392.  Discretion  allowed  as  to  expenditures;  what  may  be  allowed 

in  receiver's  accounts. 

393.  Injunction  against  diverting  earnings  or  divesting  receiver  of 

control. 
393a.  Strikers  punished  for  contempt. 
393b.  Revision  of  wages  by  court. 
393c.  Receiver     not     bound     by   contract   of  company;   joint   traffic 

agreement;  contract  to  carry  passengers. 

394.  Rights  of  action  vested  in  receiver. 

§  390.  Receiver's  functions  and  duties  usually  fixed  by 
order ;  when  authorized  to  complete  road.  The  usual  prac- 
tice of  courts  of  equity,  in  appointing  receivers  over  railway 
corporations,  is  to  prescribe  in  the  order  of  appointment  the 
functions  and  duties  of  the  receiver,  which  may  be  modified 
or  extended  from  time  to  time  by  further  order  of  court,  as 
the  exigencies  of  the  case  may  require.  In  general,  these  du- 
ties comprise  the  operation  and  management  of  the  road,  the 
payment  of  current  expenses,  and  the  application  of  the  residue 
of  the  earnings  and  receipts  to  the  extinguishment  of  the  in- 
debtedness, to  secure  which  the  receiver  was  appointed.'^^  The 
receiver  is  seldom  authorized  to  enlarge  the  operations  of  the 
company,  or  to  extend  its  line  of  road,  his  functions  being  usu- 

75  Brown  v.  New  York  &  Erie  ton  v.  New  Jersey  West  Line  R. 
Railroad,  19  How.  Pr.,  84.  Ken-  Co.,  10  C.  E.  Green.  306.  As  to  the 
nedy  v.  St.  Paul  &  Pacific  R.  Co.,  functions  and  liabilities  of  statutory 
2  Dill.,  448;  Vermont  &  Canada  R.  receivers  of  railways  appointed  by 
Co.  V.  Vermont  Central  R.  Co.,  46  the  governor  of  the  state  pursuant 
Vt.,  792.  See,  as  to  the  power  of  to  statute,  in  Tennessee,  see  State  v. 
the  receiver  of  a  railway  company,  E.  &  K.  R.  Co.,  6  Lea,  353;  State  v. 
under  the  laws  of  New  Jersey,  to  McM.  &  M.  R.  Co.,  6  Lea,  369.  As 
sell  the  property,  rights  and  fran-  to  the  effect  of  a  consent  decree  ter- 
chises  of  the  company,  free  from  minating  a  receivership  over  a  rail- 
all  liens  and  incumbrances.  Middle-  way,    the    receivers   still    continuing 


CHAP.    XI.] 


RAILWAYS. 


491 


ally  limited  to  the  management  of  the  property  in  its  existing 
condition  for  the  protection  of  creditors,  and  subject  always 
to  the  supervision  of  the  court.  And  the  better  doctrine  un- 
doubtedly is,  that  the  power  of  the  court  extends  only  to  the 
custody  and  preservation  of  the  property,  and  that  it  has  no 
power  to  extend  or  to  complete  a  railway  enterprise,  and  for 
this  purpose  to  raise  money  by  charging  the  railway  and  its 
appurtenances  with  liens  which  shall  supersede  prior  mort- 
gages, without  the  consent  of  the  holders  of  such  mortgages. "^^ 


in  possession  of  and  operating  the 
road  as  managers,  see  Vermont  & 
Canada  R.  Co.  v.  Vermont  Central 
R.  Co.,  50  Vt.,  500.  See,  also,  Lang- 
don  V.  Vermont  &  Canada  R.  Co., 
53  Vt.,  228;  S.  C,  54  Vt.,  593.  As 
to  the  liability  of  such  managers  to 
an  accounting  in  a  subsequent  ac- 
tion brought  by  mortgage  bond- 
holders in  a  federal  court,  and  as  to 
the  effect  of  a  plea  to  such  action 
of  the  pendency  of  the  former  pro- 
ceedings in  the  state  court,  see 
Andrews  v.  Smith,  5  Fed.,  833.  As 
to  the  proper  orders  to  be  entered 
concerning  the  operation  and  man- 
agement by  receivers  of  a  system  of 
railway  extending  through  several 
states,  made  up  of  various  consoli- 
dated and  leased  lines,  the  entire 
system  being  covered  by  one  gen- 
eral mortgage  and  the  various  sub- 
ordinate lines  by  underlying  mort- 
gages, some  of  the  lines  being  prof- 
itable and  others  unprofitable,  and 
as  to  the  method  of  accounting  be- 
tween such  lines  and  the  right  of 
lessor  companies  to  reclaim  leased 
lines,  see  Central  Trust  Co.  v.  Wa- 
bash, St.  L.  &  P.  R.  Co.,  23  Fed., 
863.  For  mandamus  against  the  re- 
ceiver of  a  railway  company  to 
compel  him  to  comply  with  the  pro- 
visions of  a  statute  providing  that 


where  a  street  has  been  raised  or 
lowered  for  railroad  purposes,  it 
shall  be  placed  in  as  good  repair 
as  it  originally  was,  see  City  of 
Fort  Dodge  v.  M.  &  St.  L.  Ry.  Co., 
87  Iowa,  389,  54  N.  W.,  243.  As  to 
the  right  of  the  court  to  prevent  the 
unwarranted  discharge  of  an  em- 
ployee of  a  railway  company  by 
its  receiver,  see  Farmers'  Loan  & 
Trust  Co.  V.  Central  R.  &  B.  Co., 
166  Fed.,  333. 

76  Meyer  v.  Johnston,  53  Ala., 
237.  Manning,  J.,  delivering  the 
opinion  of  the  court,  says,  p.  337: 
"It  is  in  the  exercise  of  the  judicial 
function  only  that  a  court  obtains 
jurisdiction  between  litigant  parties 
of  the  cause  in  which  it  is  author- 
ized to  take  such  control  for  the 
preservation  of  the  property  in- 
volved. And  we  are  not  aware  of 
any  principle  of  law  or  element  of 
wise  policy  which  would  justify 
such  court,  after  so  getting  posses- 
sion, in  laying  aside  its  judicial 
character  and  engaging,  however 
hopeful  the  scheme,  in  the  comple- 
tion of  unfinished  undertakings,  and 
in  raising  money  for  this  purpose, 
as  the  parties  themselves  could  not, 
namely,  by  setting  up  liens  which 
shall  displace  other  and  older  liens, 
without  the  consent  of  the  persons 


492 


RECEIVERS. 


[CIIAP.  XI. 


In  extreme  cases,  however,  the  courts  have  authorized  the  ex- 
tension or  completion  of  a  road  by  a  receiver,  when  necessary 
to  its  successful  maintenance  and  operation,'^'^  or  to  prevent 
the  forfeiture  of  valuable  land  grants  and  franchises  which 
would  result  from  the  non-completion  of  the  road  within  the 
time  fixed  by  law."^^  And  in  such  cases,  the  receivers  have 
been  authorized  to  issue  debentures  or  certificates,  to  meet  the 
expenses  of  construction,  which  were  made  a  first  lien  upon 
the  railway."^  And  in  such  case  the  court  may  authorize  its 
receiver  to  institute  and  prosecute  condemnation  proceedings 
to  acquire  land  for  the  completion  of  the  road.^^    In  general, 


to  whom  they  belong.  ...  If, 
therefore,  the  action  of  the  chan- 
cellor, in  this  case,  goes  to  the  ex- 
tent of  taking  the  property  of  the 
defendant  corporation  in  its  hands 
for  the  purpose,  through  its  ap- 
pointees, of  completing  an  unfin- 
ished work,  or  of  enlarging  or 
improving  a  finished  one,  beyond 
what  is  necessary  for  its  preserva- 
tion, and,  to  that  end,  of  raising 
money  by  charging  the  railway  and 
its  appurtenances  with  liens  which 
are  to  supersede  older  ones,  with- 
out the  consent  of  the  holders  of 
these,  he  has  inadvertently  passed 
beyond  the  boundaries  of  a  chan- 
cellor's jurisdiction.  In  our  opin- 
ion, no  such  power  is  vested  or  re- 
sides in  any  judicial  tribunal." 

'i'7  Miltenberger  v.  Logansport  R. 
Co.,  106  U.  S.,  286,  1  Sup.  Ct.  Rep., 
140;  Bank  of  Montreal  v.  C,  C.  & 
W.  R.  Co.,  48  Iowa,  578. 

"8  Kennedy  v.  St.  Paul  &  Pacific 
IL  Co.,  2  Dill.,  448;  S.  C,  5  Dill., 
519.  Dillon,  J.,  says,  5  Dill.,  p.  525 : 
"I  assent  in  the  fullest  manner  to 
the  proposition  that  a  court  of 
equity  ought  not  to  enter  upon  the 
work  of  either  operating  or  build- 
ing a  railway,  if  this  can  possibly  be 


avoided  without  the  certain  and 
great  sacrifice  of  the  rights  and  se- 
curities of  the  parties  in  interest. 
The  original  order  in  this  case  was 
made  upon  this  principle,  and  upon 
the  exceptional  case  which  the  rec- 
ord presented  (Kennedy  v.  St.  Paul 
&  Pacific  Railroad  Co.,  2  Dill.,  448). 
It  is  not  to  be  inferred  from  the  re- 
port of  that  case  that  authority  even 
to  complete  the  building  of  an  un- 
finished line  of  railway,  and  to  issue 
debentures  for  that  purpose,  is  to  be 
conferred  without  an  overwhelm- 
ing and  irresistible  necessity.  When 
such  authority  is  conferred  it  ought 
to  be  guarded  with  the  utmost 
care."  And  see  the  form  of  order 
in  this  case,  2  Dill.,  448;  5  Dill., 
527,  and  the  subsequent  proceedings 
in  the  case,  5  Dill.,  530.  As  to  the 
power  of  receivers  of  an  insolvent 
railway  in  New  York,  to  complete 
the  construction  of  the  road,  and 
as  to  the  right  of  abutting  property 
owners  to  enjoin  such  construction 
when  their  damages  have  not  been 
paid,  see  Moran  v.  SchaefTer,  27 
Hun,  582. 

"^9  See  cases  cited  supra. 

80  Morrison  v.  Forman,  177  111., 
427,  53  N.  E.,  73. 


CHAP.    XI.]  RAILWAYS.  493 

however,  the  courts  look  with  extreme  jealousy  upon  any 
proposition  for  the  extension  of  railway  projects  by  their  re- 
ceivers, and,  ordinarily,  before  such  an  expenditure  is  author- 
ized by  the  court,  there  should  be  a  reference  to  a  master  to 
determine  the  necessity  for  the  contemplated  improvement.^^ 
And  the  court  has  refused  to  authorize  receiver's  certificates 
for  an  extension  of  a  mile  in  a  street  railway  system  under  an 
ordinance  providing  that  the  company  should  add  during  each 
calendar  year  at  least  one  mile  of  additional  track  until  a  speci- 
fied mileage  was  reached,  and  that  in  default  thereof  they 
should  forfeit  all  further  rights  to  the  streets  granted  under 
the  ordinance. ^2 

§  390a.  Contracts  subject  to  control  of  court ;  construc- 
tion of  rival  line ;  unjust  discrimination ;  pooling  contracts. 
A  receiver  of  a  railway  has  no  power,  without  the  sanction 
of  the  court,  to  make  contracts,  as  for  the  purchase  of  materials, 
which  will  bind  the  fund  or  estate  which  he  represents.  All 
contracts  made  by  him  are  subject  to  modification  by  the  court, 
and  persons  contracting  with  him  are  chargeable  with  notice  of 
his  limited  powers  in  this  regard,  and  deal  with  him  at  the 
risk  of  their  contracts  not  being  approved  by  the  court.^-^  If, 
however,  he  is  empowered  by  the  court  to  purchase  such  ma- 
terials and  supplies  as  he  may  deem  necessary,  completed  con- 
tracts made  by  him  for  the  purchase  of  necessary  materials 
bind  the  estate  or  fund  and  not  the  receiver  personally.  Par- 
si  Hand  v.  Railroad  Co.,  10  S.  the  companies  before  their  insolv- 
C,  406,  approved  in  Pueblo  T.  &  E.  ency  for  the  use  by  one  company  of 
Co.  V.  Allison,  30  Colo.,  337,  70  the  tracks  and  terminal  facilities 
Pac,  424.  of  the  other.    In  re  N.  J.  &  N.  Y.  R. 

82'pueblo  T.  &  E.  Co.  V.  Allison,       Co.,  29  N.  J.  Eq.,  67.     But  the  ex- 
30  Colo.,  337,  70  Pac,  424.  ercise  of  such  power  may  well  be 

83  Lehigh,  C.  &  N.  Co.  v.  Central  challenged  as  impairing  the  obliga- 
R.  Co.,  35  N.  J.  Eq.,  426.  It  is  also  tion  of  the  contract.  As  to  the 
held  in  New  Jersey,  that  when  two  extent  to  which  covenants  of  the 
insolvent  railway  companies  are  in  receiver  are  binding  upon  subse- 
the  hands  of  receivers  appointed  by  quent  purchasers  of  the  railway, 
the  same  court,  the  court  may,  see  Martin  v.  N.  Y.,  S.  &  W.  R.  Co., 
upon  the  application  of  either  re-  36  N.  J.  Eq.,  109. 
ceiver,  modify  a  contract  made  by 


494  RECEIVERS.  [CHAF.  XI. 

ties  claiming  under  such  contracts,  therefore,  may  have  the 
same  rehef  against  a  successor  of  the  original  receiver  after 
his  death  to  which  they  would  have  been  entitled  against 
the  original  receiver.  If,  however,  such  contracts  are  ill-ad- 
vised and  injudicious,  as  for  an  amount  of  materials  largely 
in  excess  of  the  real  necessities  of  the  road,  such  successor 
will  not  be  required  to  perform  them,  nor  will  damages,  as 
such,  be  allowed  for  their  non-performance.  But  if  the  par- 
ties so  contracting  to  furnish  materials  have  acted  in  good 
faith,  and  without  fraud,  they  may  be  reimbursed  any  actual 
loss  which  they  may  have  sustained  in  preparing  to  perform 
the  contracts  before  their  disaffirmance  by  the  receiver,  and 
for  this  amount  may  be  compensated  out  of  the  fund  in  his 
hands.^"*  It  is  not  the  duty  of  the  receiver  to  interfere  with  or 
to  prevent  the  construction  of  a  rival  line,  even  though  such 
construction  might  result  in  diminishing  the  earnings  of  the 
road  under  his  control.  He  will  not,  therefore,  be  allowed 
credit  in  his  accounts  for  money  expended  in  endeavoring  to 
defeat  a  subsidy  in  aid  of  the  construction  of  a  parallel  road.^'** 
Nor  will  he  be  allowed  to  give  a  preference  for  freights  to  one 
shipper  over  another,  or  to  permit  an  unjust  discrimination  in 
rates  in  violation  of  the  laws  of  the  state  in  which  the  railway  is 
located. ^^  And  he  may  be  directed  to  repay  to  a  shipper 
amounts  which  have  been  exacted  from  him  as  the  result  of 
unjust  discrimination  and  in  excess  of  rates  charged  other 
shippers. ^"^  But  if  the  receiver  continues  the  operation  of  a 
pooling  contract  as  to  certain  classes  of  freight,  which  was  in 
force  with  other  roads  at  the  time  of  his  appointment,  he  may 
be  decreed  to  pay  to  such  other  companies  the  proportions  due 
to  them  under  the  contract  which  come  into  his  hands  as  re- 

84  Vanderbilt  v.   Central   R.    Co.,  85  Cowdrey  v.  G.,  H.  &  H.  R.  Co., 

43  N.  J.  Eq.,  669,  reversing  S.  C,  93  U.  S.,  352. 

sub.  nom.   Lehigh  C.  &   N.    Co.  v.  86  Missouri  P.  R.  Co.  v.  Texas  & 

Central  Co.,  41  N.  J.  Eq.,  167,  and  P.   R.   Co.,  30  Fed.,  2;    Cutting  v. 

overruling  in  part  Lehigh  C.  &  N.  Florida  R.  &  N.  Co.,  43  Fed.,  747. 

Co.  V.  Central  R.  Co.,  35  N.  J.  Eq.,  8'  Cutting  v.  Florida  R.  &  N.  Co., 

426.  43  Fed..  747. 


CHAP.    XI.]  RAILWAYS.  495 

ceiver,  and  this  regardless  of  whether  the  contract  was  vahd 
in  the  first  instance.^^  And  a  receiver  appointed  over  the  prop- 
erty of  a  railway  system  and  ordered  to  continue  the  opera- 
tion of  the  system,  has,  within  the  scope  of  his  authority,  the 
same  powers  and  is  subjected  to  the  same  liabilities  as  the  com- 
pany itself.  And  it  is  accordingly  held  that  such  a  receiver 
has  the  power  to  contract  for  the  transportation  of  goods  be- 
yond the  line  of  the  company  and  to  assume  liability  for  the 
entire  distance  over  the  connecting  lines.^^  And  the  court  may 
authorize  the  receiver  of  a  railway  to  lease  the  property  of  the 
company,  although  in  such  case  the  court  should  act  with  great 
care  and  not  make  a  lease  running  for  such  a  length  of  time  as 
unnecessarily  to  prolong  the  receivership  proceeding.  And 
where,  during  the  term  of  the  lease,  the  property  has  been  sold 
at  foreclosure  sale  and  the  lessee  ousted  of  his  possession,  the 
court  should  make  him  an  allowance  for  the  damages  sus- 
tained by  reason  of  the  termination  of  the  lease.^^  And  the 
court  may  authorize  its  receiver  to  take  a  lease  of  another 
road.91 

§  391.  To  payment  of  what  debts  earnings  applied. 
When,  upon  a  bill  filed  by  bondholders  for  the  foreclosure  of  a 
railway  mortgage  securing  their  bonds,  receivers  of  the  rail- 
road are  appointed  pendente  lite,  and  hold  the  property  of  the 
road  only  provisionally  and  until  the  ultimate  determination  of 
the  cause,  they  are  not  authorized  to  appropriate  the  property 
and  assets  of  the  corporation  and  its  earnings  to  the  payment 
of  debts  of  the  company  previously  incurred  by  contract.  The 
contract  obligation,  although  binding  upon  the  railway  com- 
pany, does  not  constitute  a  lien  upon  its  property  or  franchises, 

88  Central     Trust     Co.     v.     Ohio  90  Farmers'  Loan  &  Trust  Co.  v. 
Central  R.  Co.,  23  Fed.,  306.                  Eaton,  51  C.  C.  A.,  640,  114  Fed., 

89  Farmers'  Loan  &  Trust  Co.  v.       14. 

Northern  Pac.  R.  Co.,  57  C.  C.  A.,  91  Mercantile  Trust  Co.  v.  M.,  K. 

533,  120  Fed.,  873,  reversing  S.  C,      &  T.  R.  Co.,  41  Fed.,  8. 

112  Fed.,  829;   Kansas   Pacific   Ry. 

Co.  V.  Bayles,  19  Colo.,  348,  35  Pac, 

744. 


496  RECEIVERS.  [chap.  XI. 

and  the  appropriation  by  the  receivers  of  funds  of  the  company 
to  the  payment  of  such  an  obHgation  would  be,  in  effect,  to  give 
a  preference  to  such  indebtedness,  and  would  be  inconsistent 
with  the  purposes  for  which  the  receivers  were  appointed. ^^ 
So  the  receiver  of  a  railway  will  not  be  permitted  to  adopt  a 
contract  which  had  been  made  prior  to  the  receivership  between 
the  company  and  an  injured  employee,  whereby  the  latter,  in 
consideration  of  the  settlement  of  his  claim,  was  to  be  retained 
in  the  employ  of  the  company  under  certain  conditions.  In 
such  case  the  contract  is  an  unsecured  obligation  of  the  com- 
pany the  adoption  of  which  would  result  in  giving  a  prefer- 
ence over  other  unsecured  obligations.^^  So  when  the  mort- 
gage bondholders  of  a  railroad  have  obtained  a  receiver,  in 
an  action  for  the  foreclosure  of  their  mortgages,  and  by  his 
order  of  appointment  the  receiver  is  authorized  to  pay  the 
amounts  due  and  maturing  for  materials  and  supplies  about 
the  operation  and  for  the  use  of  the  road,  the  court  will  incline 
to  limit  the  construction  of  the  order  to  the  payment  of  such 
obligations  as  are  necessary  to  keep  the  road  in  running  order, 
and  will  not,  therefore,  extend  it  so  far  as  to  direct  the  receiv- 
er to  pay  old  obligations  incurred  several  years  previous,  such 
demands  being  regarded  as  secondary  to  the  rights  of  the 
mortgagees.^'* 

§  392.  Discretion  allowed  as  to  expenditures ;  what  may 
be  allowed  in  receiver's  accounts.     The  duties  of  the  re- 

^2  Ellis    V.    Boston,    Hartford    &  such   contracts  are   charged   as   in- 

Erie  R.  Co.,  107  Mass.,  1.     And  in  cumbrances   upon   the   property,   or 

this   case   it   is    said   by   the   court,  are  necessary  to  its  proper  preserva- 

Wells,   J.,   p.   28:      "They    (the   re-  tion    and    security.      They    are    en- 

ceivers)    continue  the   operation   of  titled  to  repayment  of  their  reason- 

the    road    and    the    conduct    of    its  able  expenses  and  charges,  in  pref- 

business,   because    this    is    essential  erence  to  all  other  claims  upon  the 

to    its    proper    preservation.     They  property  of  whatever  nature."    See, 

may  fulfil  the  contracts  of  the  cor-  also,   Brocklebank  v.   East  London 

poration  so  far  as  beneficial.     They  Railway,  12  Ch.  D.,  839. 

will    not   pay    its    debts,    nor    fulfil  93  Whightsel  v.   Felton,  95   Fed., 

contracts  which  are  burdensome  or  923. 

tend   to   diminish   the   value   of  the  ^4  Brown   v.    New    York   &    Erie 

property    in    their    control,    unless  Railroad,  19  How.  Pr.,  84. 


CHAP.    XI.]  RAILWAYS.  •  497 

ceiver  of  a  railway,  intrusted  with  the  management  and  opera- 
tion of  the  road,  being  very  different  from  and  far  more  re- 
sponsible than  those  of  a  passive  receiver,  appointed  merely  to 
collect  and  hold  money,  a  somewhat  wider  discretion  is  allowed 
him  in  the  matter  of  expenditures  necessary  to  operate  the 
road. ^5  And  it  may  be  said  in  general  that  all  outlays  made 
by  him  in  good  faith,  in  the  ordinary  course  of  the  business  of 
the  road,  with  a  view  to  advance  and  promote  its  interests,  and 
to  render  it  profitable  and  successful,  may  be  allowed  him  in 
passing  his  accounts.  Such  outlays  may  include  not  only  keep- 
ing the  road  and  its  buildings  and  rolling  stock  in  repair,  but 
also  providing  such  additional  accommodations  and  stock  as 
the  necessities  of  the  business  may  demand,  always  referring 
to  the  court  or  master  for  advice  and  authority  when  any  con- 
siderable outlay  is  required.  Thus,  charges  for  rebate  on 
freight;  for  horses  and  wagons  for  the  delivery  of  freight; 
for  drayage  and  wharfage;  for  the  purchase  of  scales; 
for  office  room;  for  advertising  the  accommodations  of  the 
road ;  and  for  interest  paid  to  a  bank  for  loans  of  money,  have 
all  been  allowed. ^6    So  money  borrowed  by  the  receiver  for  the 

95  Morley     v.     Saginaw     Circuit  which  he  is  invested,  are  very  dif- 

Judge,   117    Mich.,   246,   75    N.   W.,  ferent  from  those  of  a  passive  re- 

466,  41  L.  R.  A.,  817.     In  this  case  ceiver,  appointed  merely  to  collect 

the    receivership    was    of    a    street  and     hold    moneys     due    on     prior 

railway  company.  transactions,  or  rents  accruing  from 

OeCowdrey  v.  The  Railroad  Co.,  houses  and  lands.  And  to  such  out- 
1  Woods,  331.  "It  may  be  laid  lays  in  ordinary  course  may  prop- 
down  as  a  general  proposition,"  erly  be  referred,  not  only  the  keep- 
says  Mr.  Justice  Bradley,  p.  336,  ing  of  the  road,  buildings  and  roll- 
"that  all  outlays  made  by  the  re-  ing  stock,  in  repair,  but  also  the 
ceiver  in  good  faith,  in  the  ordi-  providing  of  such  additional  ac- 
nary  course,  with  a  view  to  advance  commodations,  stock  and  instru- 
and  promote  the  business  of  the  mentalities  as  the  necessities  of  the 
road,  and  to  render  it  profitable  business  may  require,  always  re- 
and  successful,  are  fairly  within  ferring  to  the  court,  or  to  the  mas- 
the  line  of  discretion  which  is  nee-  ter  appointed  in  that  behalf,  for 
essarily  allowed  to  a  receiver  in-  advice  and  authority  in  any  mat- 
trusted  with  the  management  and  ter  of  importance,  which  may  in- 
operation  of  a  railroad  in  his  hands.  volve  a  considerable  outlay  of 
His  duties,  and  the  discretion  with  money  in  lump.  And  except  in 
Receivers — 32. 


498  RECEIVERS.  [chap.  XI. 

necessary  maintenance  and  operation  of  the  road,  may  be  re- 
paid out  of  the  income  of  the  receivership-^*^  And  rebates  up- 
on freight  allowed  by  the  receiver,  which  are  not  inequitable 
or  against  public  policy,  may  be  allowed  and  paid  out  of  the 
receiver's  earnings. ^^ 

§  393.  Injunction  against  diverting  earnings  or  divest- 
ing receiver  of  control.  It  is  the  clear  duty  of  the  court  ap- 
pointing a  receiver  over  a  railway  to  afford  him  all  necessary 
protection  in  the  performance  of  his  official  duties.  And  when 
the  order  of  appointment  directs  him  to  operate  and  manage 
the  road,  subject  to  the  decrees  and  orders  made  in  the  cause, 
and  subject  to  the  further  direction  of  the  court,  since  the  suc- 
cessful management  of  the  road  depends  upon  the  control  of 
the  receiver  over  its  income  and  earnings,  any  attempt  by  other 
parties  to  divert  such  earnings,  or  to  divest  the  receiver  of  his 
control  over  them,  will  be  enjoined  by  the  court,  when  the 
parties  making  such  attempt  are  within  its  jurisdiction,  even 
though  they  are  proceeding  to  divert  the  earnings  from  the  re- 
ceiver's control  by  suit  in  another  state.  In  such  a  case,  the 
court,  in  the  protection  of  its  receiver,  does  not  operate  by  its 
injunction  upon  the  court  in  the  other  state  in  which  the  ac- 
tion is  pending,  but  merely  operates  in  personam  upon  the  par- 
ties within  its  own  jurisdiction,  and  restrains  them  from  inter- 
fering with  or  diverting  the  income  and  funds  properly  be- 
longing to  the  custody  of  the  receiver.^^  And  the  court  ap- 
pointing a  receiver  over  a  street  railway  will  protect  his  pos- 
session by  enjoining  another  company  from  entering  upon  and 

extraordinary  cases,  the  submission  involving  a  large  outlay  of  money, 

by  the  receiver  of  his  accounts  to  the  receiver  should  always  apply  to 

the    master    at    frequent    intervals,  the   court    in    advance,    and    obtain 

whereby    the    latter    may    ascertain  its    authority    for    the   purchase   or 

from  time  to  time  the  character  of  improvement  proposed." 

the    expenditures    made,    and    dis-  ^^  Ex    parte    Carolina     National 

allow   whatever  may   not  meet  his  Bank,  18  S.  C,  289. 

approval,  will  be  regarded  as  a  suf-  ^^  Ex  parte  Benson,  18  S.  C,  38. 

ficient  reference  to  the  court  for  its  99  Vermont  &   Canada   R.   Co.   v. 

ratification    of    the    receiver's    pro-  Vermont    Central    R.    Co.,   46    Vt., 

ceedings.      In    extraordinary    cases,  792. 


CHAP.   XI.]  RAILWAYS.  499 

taking  possession  of  a  portion  of  the  right  of  way  and  road- 
bed of  the  former  company  without  lawful  authority.^  So  an 
injunction  will  lie  to  protect  the  receiver  of  a  railway  company 
in  the  joint  use  of  a  portion  of  the  line  of  another  company 
under  a  valid  lease  for  that  purpose.^ 

§  393a.  Strikers  punished  for  contempt.  Any  unauthor- 
ized interference  with  the  property  in  the  hands  of  the  receiver 
constitutes  a  contempt  of  court,  and  may  be  punished  by  at- 
tachment for  contempt  in  the  cause  in  which  the  receiver  was 
appointed,  the  punishment  being,  as  in  cases  of  contempt  gen- 
erally, by  fine  or  imprisonment  in  the  discretion  of  the  court. 
Striking  workmen,  therefore,  who  interfere  with  or  obstruct 
the  management  of  trains  or  the  operation  of  the  road  by  the 
receiver,  or  who  interfere  with  his  employees  in  the  discharge 
of  their  duties,  whether  such  interference  be  by  acts  of  phys- 
ical violence,  or  by  intimidations  and  threats,  are  subject  to 
attachment  for  contempt  and  to  such  punishment  as  the  court, 
in  its  discretion,  may  impose.^ 

§  393&.  Revision  of  wages  by  court.  It  is  proper  for  the 
court  which  has  appointed  a  receiver  over  a  railway  to  enter- 
tain an  application  by  an  organized  body  of  employees  in  the 
service  of  the  receiver  for  an  adjustment  of  difficulties  between 
receiver  and  employees  concerning  wages.'*  And  in  such  a 
proceeding  the  court  may  properly  direct  its  receiver  to  enter 
into  an  appropriate  contract  with  such  employees  concerning 

1  Fidelity  T.  &  S.  V.  Co.  v.  Mo-  way,  and  of  the  relative  rights  of 
bile  S.  R.  Co.,  53  Fed.,  687.  such    employees    and    the    receiver, 

2  Metropolitan  Trust  Co.  v.  Co-  see  observations  of  Mr.  Justice 
lumbus,  S.  &  H.  R.  Co.,  95  Fed.,  Brewer,  in  Frank  v.  Denver  &  R.  G. 
18.  R.  Co.,  23  Fed.,  757.    And  see  In  re 

3  Secor  v.  T.,  P.  &  W.  R.  Co.,  7  Acker,  66  Fed.,  290. 

Biss.,  513;  King  v.  O.  &  M.  R.  Co.,  4  Waterhouse  v.   Comer,  55  Fed., 

7  Biss.,  529;  United  States  v.  Kane,  149;  Thomas  v.  Cincinnati,  N.  O.  & 

23    Fed.,    748;    In   re   Doolittle,    23  T.  P.  R.  Co.,  62  Fed.,  669;  United 

Fed.,  544;  In  re  Higgins,  27  Fed.,  States   Trust   Co.  v.   Omaha  &   St. 

443;  Thomas  v.  Cincinnati,  N.  O.  &  L.  R.  Co.,  63  Fed.,  7?>7 ;  Guarantee 

T.  P.  R.  Co.,  62  Fed.,  803.     For  a  Trust  &  S.  D.  Co.  v.  P.,  R.  &  N.  E. 

full  discussion  of  the  rights  of  em-  R.  Co.,  69  Conn.,  709,  38  Atl,  792, 

ployees    of   the    receiver    of   a    rail-  38  L.  R.  A.,  804. 


500  RECEIVERS.  [chap.  XI. 

their  emplo}'Tnent,  and  upon  such  terms  and  conditions  as  to 
the  court  may  seem  just.^  And  the  court  has  the  power  to 
revise  the  wage  schedule  of  the  employees  of  the  receiver  even 
though  it  becomes  necessary  for  the  receiver  to  send  such  em- 
ployees, in  the  operation  of  the  system,  beyond  the  jurisdiction 
of  the  court,  part  of  the  system  being  in  another  state.  And 
while  the  court  of  original  appointment  would  ordinarily  be  the 
proper  court  to  entertain  a  petition  for  the  revision  of  such 
schedules,  nevertheless  it  may  be  possible  that  the  interests  of 
the  property  may  require  and  the  nature  of  the  proceedings  in 
both  courts  justify,  the  direction  of  the  court  of  ancillary  juris- 
diction as  to  the  wages  of  the  employees.  And  when  the  court 
has  ordered  the  receiver  to  restore  a  higher  wage  schedule 
which  had  existed  at  the  time  of  his  appointment,  an  appeal 
will  lie  from  such  order  upon  behalf  of  the  receiver.^  While, 
however,  the  court  will  receive  and  entertain  such  an  applica- 
tion, it  will  not  ordinarily  interfere  with  matters  of  detail  in 
the  administration  of  the  estate  which  are  properly  intrusted 
to  the  receiver,  no  abuse  of  his  discretion  in  such  matters  being 
shown.  "^ 

§  393c.  Receiver  not  bound  by  contract  of  company; 
joint  traffic  agreement;  contract  to  carry  passengers.  It 
is  elsewhere  shown  that  a  receiver  is  not  ordinarily  liable  upo.i 
the  contracts  and  covenants  of  the  person  over  whose  property 
he  is  appointed.^  Upon  this  principle  it  has  been  held  that  a 
receiver  appointed  over  a  railway  company  is  not  bound  by  a 
joint  traffic  agreement  made  by  the  company  prior  to  the  re- 
ceivership. And  it  is  accordingly  held  that  such  receiver  is  not 
criminally  liable  under  the  provisions  of  the  interstate  com- 

«"» Waterhouse  v.  Comer,  55  Fed.,  may  be  exercised  by  the  court  over 

149.  the  action  of  its  receivers  in  chan- 

6  Guarantee  Trust  &  S.  D.  Co.  v.  ging  schedules  and  regulations  gov- 
P.,  R.  &  N.  E.  R.  Co.,  69  Conn.,  erning  the  employment  and  wages 
709,  38  Atl.,  792,  38  L.  R.  A.,  804.  of  operatives  and  laborers,  Ames  v. 

7  Continental  Trust  Co.  v.  To-  Union  Pacific  R.  Co.,  60  Fed., 
ledo,  St.  L.  &  K.  C.  R.  Co.,  59  Fed.,  674. 

514.     See,  as  to  the  control  which  8  Ante,  §  273;  post,  §  398a. 


CHAP.   XI.]  RAILWAYS.  501 

merce  law  for  departing  from  the  rates  named  in  the  schedule 
filed  with  the  agreement.^  And  the  receiver  of  a  railway  com- 
pany is  not  bound  by  a  contract  to  carry  passengers  which  had 
been  made  by  the  company  prior  to  his  appointment.^^  But  it 
has  been  held,  under  the  act  of  congress  which  requires  that 
receivers  appointed  by  a  federal  court  shall  manage  the  prop- 
erty under  their  control  according  to  the  valid  laws  of  the 
state,  that  an  indictment  will  lie  against  such  a  receiver  for 
failure  to  comply  with  a  statute  which  requires  that  water 
closets  shall  be  maintained  at  stations.^i 

§  394.  Rights  of  action  vested  in  receiver.  As  regards 
rights  of  action  vesting  in  a  receiver  of  a  railway  corporation 
by  virtue  of  his  appointment,  he  must,  in  their  enforcement, 
pursue  the  appropriate  remedies  provided  by  law  for  that  pur- 
pose. And  when  he  is  authorized  to  take  possession  of  the 
bills,  bonds,  notes  and  other  evidences  of  indebtedness  belong- 
ing to  the  company,  with  full  power  and  authority  to  sue  for 
and  collect  all  money  due  thereon,  if  he  seeks  to  enforce  pay- 
ment of  a  subscription  due  from  a  subscriber  to  the  capital 
stock  of  the  company,  he  must  bring  an  action  at  law,  the 
right  being  of  a  legal  nature,  and  he  will  not  be  allowed  to 
maintain  a  bill  in  equity.12  And  since  proceedings  for  the 
foreclosure  of  a  mortgage,  given  by  a  railway  company  to  se- 
cure its  bonds,  are  regarded  as  in  rem,  in  that  they  seek  to 
reach  such  property  of  the  corporation  as  was  mortgaged  to 

9  United    States    v.    De    Coursey,       manager  in  possession  of  any  prop- 
82  Fed.,  302.  erty,  such  receiver  or  manager  shall 

10  Casey  v.  Northern  Pac.  R.  Co.,  manage  and  operate  such  property 
15  Wash.,  450,  48  Pac,  53.  according  to  the  requirements  of  the 

11  Commonwealth  v.  Felton,  107  valid  laws  of  the  State  in  which 
Ky.,  330,  53   S.  W.,   1046.     Section  such  property  shall  be  situated,  in 

2,  of  the  act  of  congress  of  March       the  same  manner  that  the  owner  or 

3,  1887,  c.  2>72),  24  Stat.,  554,  as  possessor  thereof  would  be  bound 
amended  by  the  act  of  August  13,  to  do  if  in  possession  thereof."  1 
1888,  c.  866,  25  Stat.,  436,  provides:  U.  S.  Comp.  Stat.  1901,  p.  582;  4 
"that  whenever  in  any  cause  pend-  Fed  Stat.  Ann.,  386. 

ing    in    any    court  of    the    United  12  Freeman     v.     Winchester,     18 

States  there  shall  be  a  receiver  or      Miss.,  577. 


502  RECEIVERS.  [chap.  XI. 

secure  its  bonds,  the  right  of  a  receiver  appointed  therein  ex- 
tends only  to  the  specific  property  which  is  the  subject  of  the 
Htigation  and  covered  by  the  mortgage,  being  necessarily 
subject  to  the  same  limitations  as  the  right  of  the  bondholders 
themselves.  The  receiver,  therefore,  can  not  maintain  an  ac- 
tion against  the  superintendent  of  the  railway  company  for 
the  recovery  of  money  held  by  him,  which  had  accrued  from 
the  earnings  of  the  road  before  the  receiver  was  appointed, 
where  the  mortgage  itself  did  not  attach  to  such  earnings.^^ 

13  Noyes  v.  Rich,  52  Me.,  115. 


CHAP.   XI.]  RAILWAYS.  503 


IV.  Preferred  Debts. 

§  394fl.  Unsecured  debts  preferred  to  mortgages;  indefensible  upon 
principle. 

394b.  Receiver's  expenses  a  prior  charge;  extending  line;  damages; 
rentals;   supplies;   distribution;  taxes;  rolling  stock. 

394c.  Diversion  of  current  income  ground  of  preference  to  current 
debts. 

394d.  Preference  based  upon  necessity  of  preserving  property,  inde- 
pendent of  diversion;  salary  of  attorney;  wages. 

394^.  Mortgagee  seeking  equitable  relief  must  submit  to  conditions; 
preference  to  assignee  of  debt. 

394/.  Rolling  stock;  car-trust  leases;  sale  of  rolling  stock  under  fore- 
closure; use  of  rolling  stock  by  receiver;  right  of  appeal. 

394g.  When  judgment  creditors  allowed  priority. 

394/1.  Claims  of  general  creditors  other  than  for  operating  expenses 
not  preferred. 

394i.  Judgments  and  claims  for  personal  injuries  occurring  prior  to 
receivership  not  preferred. 

394/.   When  payment  allowed  out  of  proceeds  of  sale. 

294k.  Statutory  liens  preserved;  when  interest  disallowed. 

394/.    Claims  for  construction;  board;  groceries. 

394m.  Receiver  not  an  assignee  of  term  under  lease;  how  far  liable 
for  rent. 

394«.  Paramount  lien  enforced  by  resale  of  road. 

§  394a.  Unsecured  debts  preferred  to  mortgages;  in- 
defensible upon  principle.  The  most  important  and  most 
difficult  questions  connected  with  railway  receiverships  are 
those  which  pertain  to  indebtedness  incurred  in  the  manage- 
ment and  operation  of  the  railway,  and  the  extent  to  which 
certain  classes  of  pre-existing  debts  may  be  preferred  in  pay- 
ment, either  out  of  the  income  of  the  receivership,  or  out  of  the 
proceeds  of  foreclosure,  as  against  the  claims  of  mortgage 
bondholders  and  other  creditors.  That  mere  contract  debts 
of  a  railway  company,  as  for  labor,  materials  and  supplies,  in- 
curred prior  to  the  appointment  of  a  receiver,  and  unsecured 
by  any  Hen  upon  the  property,  may,  through  the  aid  of  a  court 
of  equity,  be  given  priority  over  antecedent  mortgages,  would 
seem  to  be  a  proposition  wholly  indefensible  upon  sound  legal 
reasoning.     The  allowance  of  such  preference  plainly  impairs 


504  RECEIVERS.  [chap.  XI. 

the  obligation  of  the  mortgage  contract,  and  in  practice  fre- 
quently absorbs  much  of  the  mortgage  security.  Nevertheless 
the  doctrine  of  the  courts  upon  this  subject,  although  fre- 
quently criticised  by  the  profession  and  in  vigorous  and  able 
dissenting  opinions  from  the  bench,  is  so  strongly  intrenched 
in  authority  that  it  may  no  longer  be  questioned.  And  it  only 
remains  to  consider  what  may  now  be  regarded  as  well  estab- 
lished rules  applicable  to  this  class  of  questions,  with  the  rea- 
soning of  the  courts  upon  which  such  rules  are  founded. 

§  394??.  Receiver's  expenses  a  prior  charge;  extending 
line ;  damages ;  rentals ;  supplies ;  distribution ;  taxes ;  roll- 
ino-  stock.  As  reerards  indebtedness  incurred  by  the  re- 
ceiver  himself  in  the  maintenance,  operation,  necessary  repairs 
and  betterments  of  the  road  while  in  his  custody,  but  little 
difficulty  is  experienced  in  practice,  and  the  power  of  a  court 
of  equity  to  create  such  debts  through  its  receiver,  and  to  give 
them  preference  over  the  lien  of  the  mortgage  indebtedness, 
is  well  established.!^  The  exercise  of  this  power  rests  upon  the 
obvious  principle,  that  the  court  having  undertaken  the  man- 
agement of  the  railway  at  the  request  and  for  the  benefit  of 
the  mortgage  creditors,  all  necessary  expenses  incurred  in  such 
management  are  a  prior  charge  upon  the  fund  or  property,  and 
constitute,  in  effect,  a  part  of  the  necessary  costs  of  the  litiga- 
tion. It  is,  therefore,  customary  in  the  order  appointing  the 
receiver,  to  direct  him  to  pay,  out  of  the  earnings  of  the  road, 
all  necessary  expenses  of  management  and  operation.  Such 
subsequent  orders  with  reference  to  this  class  of  debts  are  from 
time  to  time  made  during  the  progress  of  the  cause  as  the 

14  Miltenberger  v.  Logansport  R.  affirmed  in  170  U.  S.,  355,  18  Sup. 

Co,  106  U.  S.,  286,  1  Sup.  Ct.  Rep.,  Ct.  Rep.,  657,  42  L.  Ed.,  1068,  siih 

140;    Union    Trust    Co.    v.    Illinois  nom.  Virginia  &  Alabama  Coal  Co. 

Midland  R.  Co.,   117  U.   S.,  434,  6  v.  Central  R.  &  B.  Co.;  Savannah, 

Sup.  Ct.  Rep.,  809;  ^IcLane  v.  Plac-  F.  &  W.  R.  Co.  v.  J.,  T.  &  K.  W. 

erville  &  S.  V.  R.  Co.,  66  Cal.,  606,  R.  Co.,  24  C.  C.  A.,  437,  79  Fed., 

6  Pac,  748 ;  Clark  v.  Central  R.  &  35,  52  U.  S.  App.,  51 ;  First  National 

B.   Co.,  14  C.   C.   A.,   112,  66  Fed.,  Bank  v.  Ewing,  43  C.  C.  A.,  150,  103 

803,  30  U.  S.  App.,  263,  which  was  Fed.,  16a 


CHAP.    XI.]  RAILWAYS.  505 

exigencies  of  the  case  may  require,  and  if  the  receiver's  income 
proves  insufficient  to  satisfy  his  indebtedness,  the  residue  is 
usually  paid  out  of  the  proceeds  of  the  foreclosure  sale,  before 
a  distribution  is  made  to  the  mortgage  bondholders.  Nor  is 
such  expenditure  by  the  receiver  limited  to  the  actual  operation 
and  management  of  the  property;  and  reasonable  expenses  in- 
curred by  him  in  completing  the  road  for  operation,  thereby 
preserving  the  property  and  rendering  it  productive  for  the 
benefit  of  the  mortgage  bondholders,  have  been  allowed  prior- 
ity over  other  claims  against  the  company,  including  those  of 
the  bondholders. 15  And  when,  under  authority  of  the  court, 
the  receiver  has  constructed  a  branch  line  of  road  out  of  the 
income  of  the  receivership,  thereby  largely  increasing  the  rev- 
enues and  profits  of  the  road,  and  no  complaint  is  made  by  the 
parties  in  interest  until  more  than  two  years  after  such  action, 
the  court  will  not  entertain  objections  to  such  expenditure. ^^ 
So  damages  for  goods  lost  in  transportation,  and  for  injury  to 
property  while  the  road  is  operated  by  the  receiver,  are  a  proper 
charge  upon  his  earnings  before  the  bondholders  are  entitled 
to  share  therein. ^^  So  rentals  due  for  a  line  or  road  operated 
by  the  company  under  lease,  the  operation  of  which  the  re- 

15  Hale  V.  Nasliua  &  Lowell  Rail-  construction  will  not  be  paid  in  full 
road,  60  N.  H.,  333;  First  National  out  of  the  proceeds  of  sale,  but  will 
Bank  v.  Ewing,  43  C.  C.  A.,  150,  be  prorated  in  the  proportion  which 
103  Fed.,  168.  See,  also,  Milten-  the  value  of  the  extension  bears 
berger  v.  Logansport  R.  Co.,  106  to  the  value  of  the  entire  road, 
U.  S.,  286,  6  Sup.  Ct.  Rep.,  809.  considered    with    reference    to    the 

16  Gibert  v.  W.  C,  V.  M.  &  G.  S.  purchase-money  of  the  whole. 
R.  Co.,  ii  Grat.,  586.  But  when  Hand  v.  Savannah  &  Charleston  R. 
the    receiver   is    authorized    by    the  Co.,  17  S.  C,  219. 

court    to    construct    an     additional  1"  Cowdrey  v.  G.,  H.  &  H.  R.  Co., 

tract   or   extension,   to   be   paid    for  92  U.   S.,  352.     In  In  re  Wreyham, 

out  of  surplus  income,  the  order  re-  ]\I.  &  C.  Q.  Ry.  Co.,    (1900)   2  Ch. 

serving  a   lien   upon   such   track   as  436,  it  was  held  that  a  judgment  for 

security   for  the  persons   furnishing  injuries    to   plaintiff's    property    oc- 

material    and   money   therefor,   and  curring  through  the  negligence  of  a 

such  branch  is  afterward  sold  with  receiver  is  not   entitled  to   priority 

the  road  as  an  entirety  in  the  fore-  under  the  provisions  of  the  Railway 

closure   proceedings,  claims   for  its  Companies  Act. 


506  RECEIVERS.  [chap.  XI. 

ceiver  is  authorized  to  continue  under  the  lease,  may  be  paid 
out  of  the  receiver's  income. ^^  And  when  the  receiver  contin- 
ues to  use  a  line  which  had  been  leased  to  the  company,  with 
the  full  knowledge  and  acquiescence  of  the  mortgage  bond- 
holders, the  payment  of  a  fair  rental  for  the  use  of  such  line 
and  for  supplies  and  materials  in  its  operation  may  be  en- 
forced out  of  the  proceeds  of  foreclosure,  prior  to  distribution 
among  the  bondholders. ^^  So  a  claim  for  the  reasonable  rental 
value  of  terminal  facilities  furnished  to  the  receiver  of  an  in- 
solvent railway  company  after  his  appointment  is  entitled  to 
payment  as  a  preferred  claim.^^  So,  also,  a  claim  for  coal 
which  was  on  hand  at  the  time  of  the  appointment  of  a  re- 
ceiver and  for  other  coal  which  was  furnished  him  after  his 
appointment  and  used  in  the  operation  of  the  road  is  entitled 
to  priority  in  payment. ^l  But  to  warrant  the  payment  of  the 
receiver's  operating  expenses,  as  for  money  advanced,  supplies 
and  damages  incurred,  out  of  the  corpus  of  the  mortgaged 
property  in  preference  to  the  bondholders,  such  priority  must 
be  specially  authorized  by  the  court,  and  it  will  not  be  allowed 
merely  under  an  order  authorizing  him  to  pay  operating  ex- 
penses out  of  income.22  It  is  proper  to  allow  the  expenses 
of  the  receiver  incurred  in  the  discharge  of  his  trust,  such  as 
counsel  fees,  costs  of  litigations  in  protecting  the  property,  ex- 
penses of  care  and  maintenance,  as  well  as  for  necessary  rolling 
stock  and  machinery  the  purchase  of  which  has  been  author- 
is  Woodruff  V.  Erie  R.  Co.,  93  N.  amount  of  rental,  see  Peoria  &  P. 
Y.,  609.  U.  R.  Co.  V.  Chicago,  P.  &  S.  W. 

19  Miltenberger  v.  Logansport  R.  R.  Co.,  127  U.  S.,  200,  8  Sup.  Ct. 
Co.,  106  U.  S.,  286,  6  Sup.  Ct.  Rep.,      Rep.,  1125. 

809.  21  Clark  v.  Central  R.  &  B.  Co., 

20  Savannah,  F.  &  W.  R.  Co.  v.  14  C.  C.  A.,  112,  66  Fed.,  803,  30 
J.,  T.  &  K.  W.  R.  Co.,  24  C.  C.  A.,  U.  S.  App.,  263,  which  was  affirmed 
437,  79  Fed.,  35,  52  U.  S.  App.,  51.  in  170  U.  S.,  355,  18  Sup.  Ct.  Rep.. 
As  to  the  liability  of  the  receiver  657,  42  L.  Ed.  1068,  sub  notn.  Vir- 
for  the  use  of  terminal  facilities  of  ginia  &  Alabama  Coal  Co.  v.  Cen- 
another  company,  continued  by  him  tral  R.  &  B.  Co. 

durii^  his   receivership,  in  the   ab-  22  Hand  v.   Savannah  &  Charles- 

sence    of    any    contract  as    to    the      ton  R.  Co.,  17  S.  C,  219. 


CHAP.   XI.]  RAILWAYS.  507 

ized  by  the  court.23  So  supplies  furnished  the  receiver,  which 
are  necessary  to  the  continued  operation  of  the  road  and  which 
become  a  part  of  the  mortgaged  property  sold  under  foreclos- 
ure, may  be  awarded  priority  of  payment  out  of  the  proceeds 
of  sale,  there  being  no  other  fund  available  for  their  payment. 
And  the  road  consisting  of  different  divisions,  which  were 
operated  by  the  receiver  as  an  entirety  and  sold  at  different 
times  under  separate  mortgages  upon  the  respective  divisions, 
in  the  absence  of  proof  to  the  contrary  it  will  be  presumed  upon 
appeal  that  the  order  of  distribution  of  such  indebtedness  by 
the  court  below  among  the  different  divisions  is  correct.^^  In 
such  case,  supplies  furnished  under  his  original  appointment 
upon  a  creditor's  bill,  subsequently  extended  in  a  foreclosure 
suit  afterwards  instituted,  may  be  allowed  priority,  such  sup- 
plies having  contributed  to  the  preservation  of  the  property  dur- 
ing the  receivership. 25  And  when  an  insolvent  railway  is 
operated  by  a  receiver  in  a  foreclosure  suit,  who  has  in  his 
hands  sufficient  funds  arising  from  gross  earnings  with  which 
to  pay  taxes  imposed  under  the  laws  of  the  state  upon  gross 

23  McLane  v.  Placerville  &  S.  V.  nary  taxable  costs  incurred  in  the 
R.  Co.,  66  Cal.,  606,  6  Pac,  748.  As  proceeding.  Farmers'  Loan  & 
to  the  allowance  of  the  expenses  of  Trust  Co.  v.  Green,  24  C.  C.  A., 
a  reorganization  committee,  see  506,  79  Fed.,  222,  52  U.  S.  App.,  69. 
Clarke  v.  Central  R.  &  B.  Co.,  54  24  Kneeland  v.  Bass  Foundry  & 
Fed.,  556;  Central  Trust  Co.  v.  Machine  Works.  140  U.  S.,  592,  11 
Cincinnati,  J.  &  M.  R.  Co.,  58  Fed.,  Sup.  Ct.  Rep.,  857. 
500.  Where  the  purchaser  at  a  25  Kneeland  v.  Bass  Foundry  & 
foreclosure  sale  of  a  railroad  after-  Machine  Works,  140  U.  S.,  592,  11 
wards  seeks  to  be  released  from  his  Sup.  Ct.  Rep.,  857.  But  see,  contra, 
purchase  and  is  finally  so  released  Kneeland  v.  American  L.  &  T.  Co., 
and  his  deposit  is  ordered  returned  136  U.  S.,  89,  10  Sup.  Ct.  Rep., 
to  him,  the  proceeding  is  to  be  re-  950,  where  rentals  for  rolling  stock 
garded  as  a  hostile  one  and  not  as  used  by  the  receiver  in  the  same 
one  brought  for  the  benefit  or  pro-  case  were  refused  priority  during 
tection  of  the  subject-matter  of  the  the  period  of  the  receivership  under 
receivership,  and  it  is  consequently  the  judgment  creditor's  bill,  but  al- 
error  to  allow  him  counsel  fees  to  lowed  priority  during  the  receiver- 
be  paid  out  of  the  funds  in  the  ship  as  extended  in  the  foreclosure 
hands  of  the  receiver.  But  in  such  proceedings, 
case  he  should  be  allowed  the  ordi- 


508  RECEIVERS.  [chap.  XI. 

earnings,  the  Hen  of  the  state  for  such  taxes  will  be  held  para- 
mount, and  the  court  may,  upon  the  application  of  the  attorney- 
general  of  the  state,  direct  their  payment  by  the  receiver. 26 
And  in  such  case  it  is  proper  to  allow  interest,  penalties  and 
costs.^"^  So  it  is  competent  for  the  court  in  a  receivership  over 
a  railway,  under  foreclosure  proceedings,  to  authorize  the  re- 
ceiver to  purchase  necessary  rolling  stock  for  the  use  of  the 
road,  and  to  make  such  indebtedness  a  prior  lien  upon  the  mort- 
gaged premises,  or  upon  their  proceeds.^S 

§  394c.  Diversion  of  current  income  ground  of  prefer- 
ence to  current  debts.  With  regard  to  indebtedness  in- 
curred by  a  railway  company  for  labor,  materials,  equipment 
and  supplies  before  the  appointment  of  a  receiver,  the  right  to 
priority  of  payment  out  of  the  income  of  the  receivership  has 
frequently,  although  not  always,  been  based  upon  a  diversion 
of  current  income  from  the  payment  of  current  indebtedness. 
The  duty  of  the  railway  company  being  to  apply  its  current 
income  to  the  payment  of  obligations  incurred  in  the  daily 
operation  and  management  of  the  road,  before  applying  such 
income  for  the  benefit  of  mortgage  bondholders,  a  diversion 
of  such  income,  as  by  payment  of  bonded  indebtedness,  or  by 
permanent  improvement  of  the  property  for  the  benefit  of  the 
bondholders,  will  justify  the  court  in  restoring  to  such  unse- 
cured creditors  from  the  receiver's  income  what  has  been  im- 
properly diverted  by  the  company  for  the  benefit  of  bond- 
holders. The  mortgagee,  in  accepting  his  security,  is  regarded 
as  having  impliedly  agreed  that  the  current  debts  of  the  com- 
pany incurred  in  the  ordinary  course  of  its  business  shall  be 
paid  out  of  its  receipts  before  he  has  any  claim  upon  the  in- 
come. And  the  court,  in  directing  such  payment  out  of  the 
receiver's  income,  only  does  in  effect  what  the  company  itself 

26  Central  Trust  Co.  v.  New  28  Vilas  v.  Page,  106  N.  Y.,  439, 
York  City  &  N.  R.  Co.,  110  N.  Y.,       13  N.  K,  743. 

250,  18  N.  E.,  92. 

27  First  National  Bank  v.  Ewing, 
43  C.  C.  A.,  150,  103  Fed.,  168. 


CHAP.    XI.] 


RAILWAYS. 


509 


should  have  done  had  no  receiver  been  appointed.  Whenever, 
therefore,  the  current  income  of  the  road  has  been  diverted  by 
the  company  from  the  payment  of  debts  for  supphes,  materials 
and  labor,  and  has  been  appropriated  for  the  benefit  of  mort- 
gage bondholders,  either  by  the  payment  of  interest  or  by  the 
permanent  betterment  of  the  property,  the  labor  and  supply 
creditors  may  be  allowed  priority  of  payment  out  of  the  re- 
ceiver's income.  29     It  is  obvious  that  the  allowance  of  such 


29Fosdick  V.  Schall,  99  U.  S., 
235,  25  L.  Ed.,  339;  Burnliam  v. 
Bowen,  111  U.  S.,  776,  4  Sup.  Ct. 
Rep.,  675 ;  Williamson's  Adm'r  v. 
VV.  C,  V.  M.  &  G.  S.  R.  Co.,  33  Grat., 
624 ;  Turner  v.  I.,  B.  &  W.  R.  Co., 
8  Biss.,  315 ;  Clark  v.  Central  R.  & 

B.  Co.,  14  C.  C.  A.,  112,  66  Fed.,  803, 
30  U.  S.  App.,  263,  which  was  af- 
firmed in  170  U.  S.,  355,  18  Sup.  Ct. 
Rep.,  657,  42  L.  Ed.,  1068,  sub  nom. 
Virginia  &  Alabama  Coal  Co.  v. 
Central  R.  &  B.  Co.;  St.  Louis 
Trust  Co.  V.  Riley,  16  C.  C.  A.,  610, 
70  Fed.,  32,  36  U.  S.  App.,  100,  30 
L.  R.  A.,  456;  Southern  Ry.  Co.  v. 
Carnegie  Steel  Co.,  22  C.  C.  A., 
289,  76  Fed.,  492,  42  U.  S.  App., 
145,  which  was  affirmed  in  176  U. 
S.,  257,  20  Sup.  Ct.  Rep.,  347,  44  L. 
Ed.,  458;  Southern  Ry.  Co.  v. 
American  Brake  Co.,  22  C.  C.  A., 
298,  76  Fed.,  502,  42  U.  S.  App., 
162;  Southern  Ry.  Co.  v.  Adams,  22 

C.  C.  A.,  300,  76  Fed.,  504,  42  U.  S. 
App.,  167;  Central  Trust  Co.  v. 
East  T.,  V.  &  G.  R.  Co.,  26  C.  C.  A., 
30,  80  Fed.,  624,  47  U.  S.  App.,  663 ; 
Central  Trust  Co.  v.  Clark,  26  C, 
C  A.,  397,  81  Fed.,  269,  49  U.  S. 
App.,  453;  First  National  Bank  v. 
Ewing,  43  C.  C.  A.,  150,  103  Fed., 
168;  Illinois  Trust  &  Savings  Bank 
V.  Doud,  44  C.  C.  A.,  389,  105  Fed., 
123.  See,  also.  Union  Trust  Co.  v. 
Illinois  Midland  R.  Co.,  117  U.  S., 


434,  6  Sup.  Ct.  Rep.,  809,  affirming 
in  part  and  reversing  in  part  S.  C, 
28  Fed.,  169;  Finance  Co.  v.  Char- 
leston, C.  &  C.  R.  Co.,  48  Fed., 
188;  Finance  Co.  v.  Charleston,  C. 
&  C.  R.  Co.,  49  Fed.,  693.  Fosdick 
V.  Schall,  99  U.  S.,  235,  25  L.  Ed., 
339,  is  regarded  as  the  leading  case 
upon  the  subject,  and  although  what 
is  there  said  upon  the  question  of 
diversion  is  obiter,  the  opinion  of 
the  court  seems  to  have  been  in- 
tended to  establish  the  rule  for  fu- 
ture cases,  and  has  so  been  general- 
ly accepted.  Two  questions  were 
presented:  1st,  whether  the  lien  of 
railway  mortgages  attached  to  af- 
ter-acquired cats;  and,  2nd,  whether 
the  payment  of  rentals  for  such  cars 
during  the  receivership,  and  for  six 
months  prior  thereto,  out  of  the 
fund  in  court,  it  not  appearing  that 
there  were  any  funds  except  those 
resulting  from  the  foreclosure  sale, 
was  warranted.  From  the  case  as 
reported,  it  does  not  appear  that 
income  had  been  diverted,  either 
by  the  company  or  by  the  receiver, 
and  the  question  of  diversion  does 
not  appear  to  have  been  argued  by 
counsel.  Waite,  C.  J.,  says,  p.  251 : 
"As  to  the  second  question,  we 
have  no  doubt  that  when  a  court 
of  chancery  is  asked  by  railroad 
mortgagees  to  appoint  a  receiver 
of   railroad   property   pending   pro- 


510 


RECEIVERS. 


[chap.  XI. 


claims  does  not  rest  upon  any  lien  in  the  technical  sense,  but 
rather  upon  the  exercise  of  the  equitable  powers  of  the  court 
in  dealing  with  property  of  a  peculiar  character,  and  under  cir- 
cumstances which,  until  recently,  have  been  without  precedent 


ceedings  for  foreclosure,  the  court, 
in  the  exercise  of  a  sound  judicial 
discretion,  may,  as  a  condition  of 
issuing  the  necessary  order,  impose 
such  terms  in  reference  to  the  pay- 
ment from  the  income  during  the 
receivership  of  outstanding  debts 
for  labor,  supplies,  equipment  or 
permanent  improvement  of  the 
mortgaged  property,  as  may,  under 
the  circumstances  of  the  particular 
case,  appear  to  be  reasonable.  .  .  . 
The  income  out  of  which  the  mort- 
gagee is  to  be  paid  is  the  net  in- 
come obtained  by  deducting  from 
the  gross  earnings  what  is  required 
for  necessary  operating  and  man- 
aging expenses,  proper  equipment 
and  useful  improvements.  Every 
railroad  mortgagee,  in  accepting 
his  security,  impliedly  agrees  that 
the  current  debts  made  in  the  or- 
dinary course  of  business  shall  be 
paid  from  the  current  receipts  be- 
fore he  has  any  claim  upon  the  in- 
come. If,  for  the  convenience  of 
the  moment,  something  is  taken 
from  what  "may  not  improperly  be 
called  the  current  debt  fund,  and 
put  into  that  which  belongs  to  the 
mortgage  creditors,  it  certainly  is 
not  inequitable  for  the  court,  when 
asked  by  the  mortgagees  to  take 
possession  of  the  future  income  and 
hold  it  for  their  benefit,  to  require, 
as  a  condition  of  such  an  order, 
that  what  is  due  from  the  earnings 
to  the  current  debt  shall  be  paid  by 
the  court  from  the  future  current 
receipts  before  anything  derived 
from  that  source  goes  to  the  mort- 


gagees. In  this  way  the  court  will 
only  do  what,  if  a  receiver  should 
not  be  appointed,  the  company 
ought  itself  to  do.  .  .  .  We  think, 
also,  that,  if  no  such  order  is  made 
when  the  receiver  is  appointed,  and 
it  appears  in  the  progress  of  the 
cause  that  bonded  interest  has  been 
paid,  additional  equipment  pro- 
vided, or  lasting  and  valuable  im- 
provements made  out  of  earnings 
which  ought  in  equity  to  have  been 
employed  to  keep  down  debts  for 
labor,  supplies,  and  the  like,  it  is 
within  the  power  of  the  court  to 
use  the  income  of  the  receivership 
to  discharge  obligations  which,  but 
for  the  diversion  of  funds,  would 
have  been  paid  in  the  ordinary 
course  of  business." 

It  has  generally  been  supposed 
that  Fosdick  v.  Schall  was  the  first 
reported  case  upon  the  question  of 
diversion  of  income  as  the  ground 
for  awarding  preference  to  labor 
and  supply  creditors.  But  the  doc- 
trine had  been  previously  recog- 
nized and  followed  in  some  of  the 
circuits,  and  it  is  plainly  indicated, 
in  the  earlier  reported  opinion  of 
Drummond,  J.,  in  Turner  v.  I.,  B. 
&  W.  R.  Co.,  8  Biss.,  315.  Upon 
the  question  of  diversion  of  cur- 
rent income  by  the  receiver  to  the 
betterment  of  the  mortgaged  prop- 
erty, as  entitling  a  claimant  for 
personal  injuries  sustained  while 
the  road  was  operated  by  the  re- 
ceiver to  payment  out  of  the  pro- 
ceeds of  such  property,  see  Ryan  v. 
Hays,  62  Tex.,  42. 


CHAP.   XI.] 


RAILWAYS. 


511 


in  the  history  of  litigation.^^  Nor  is  it  necessary  that  the 
diversion  of  income  should  have  occurred  before  the  appoint- 
ment of  the  receiver;  and  if,  during  the  receivership,  current 
income  is  apphed  for  the  benefit  of  the  mortgagees,  as  in  pay- 
ment for  additional  grounds  and  rolling  stock  which  inure  to 
their  benefit,  and  which  are  sold  as  a  part  of  the  mortgaged 
property,  debts  of  the  company  for  supplies  may  be  made  a 
charge  upon  the  property  acquired  under  the  foreclosure,  which 
may  be  sold  to  satisfy  such  indebtedness.^^    But  the  allowance 


30  Opinion  of  Drummond,  J.,  in 
Turner  v.  I.,  B.  &  W.  R.  Co.,  8 
Biss.,  315;  Central  Trust  Co.  v. 
Clark,  26  C.  C.  A.,  397,  81  Fed.,  269, 
49  U.  S.  App.,  453. 

31  Union  Trust  Co.  v.  Souther, 
107  U.  S.,  591,  2  Sup.  Ct.  Rep.,  295; 
Burnham  v.  Bowen,  111  U.  S.,  776, 
4  Sup.  Ct.  Rep.,  675 ;  Clark  v.  Cen- 
tral R.  &  B.  Co.,  14  C.  C.  A.,  112, 
66  Fed.,  803,  30  U.  S.  App.,  263, 
which  was  affirmed  in  170  U.  S., 
355,  18  Sup.  Ct.  Rep.,  657,  42  L. 
Ed.,  1068,  sub  nom.  Virginia  & 
Alabama  Coal  Co.  v.  Central  R.  & 

B.  Co.;  Southern  Ry.  Co.  v.  Car- 
negie Steel  Co.,  22  C.  C.  A.,  289, 
76  Fed.,  492,  42  U.  S.  App.,  145, 
which  was  affirmed  in  176  U.  S., 
257,  20  Sup.  Ct.  Rep.,  347,  44  L. 
Ed.,  458 ;  Southern  Ry.  Co.  v.  Amer- 
ican Brake  Co.,  22  C.  C.  A.,  298, 
76  Fed.,  502,  42  U.  S.  App.,  162; 
Southern  Ry.  Co.  v.  Adams,  22  C. 

C.  A.,  300,  76  Fed.,  504,  42  U.  S. 
App.,  167.  See,  also.  Union  Trust 
Co.  V.  Illinois  Midland  R.  Co.,  117 
U.  S.,  434,  6  Sup.  Ct.  Rep.,  809, 
affirming  in  part  and  reversing  in 
part  S.  C,  28  Fed.,  169.  In  Burn- 
ham  V.  Bowen,  111  U.  S.,  776,  4 
Sup.  Ct.  Rep,,  675,  Waite,  C.  J., 
says,  p.  782:  "But  it  is  furtlier  in- 
sisted that,  even  though  the  court 


did  err  in  using  the  income  of  the 
receivership  to  pay  the  fixed  prior 
charges  on  the  mortgaged  property, 
and  thus  increased  the  security  of 
the  bondholders,  there  is  no  power 
now  to  order  a  sale  of  the  property 
in  the  hands  of  the  trustees  to  pay 
back  what  has  thus  been  diverted. 
In  Fosdick  v.  Schall,  p.  245,  it  was 
said  that  if  in  a  decree  of  fore- 
closure a  sale  is  ordered  to  pay  the 
mortgage  debt,  provision  may  be 
made  for  a  restoration  from  the 
proceeds  of  the  sale  of  the  fund 
which  has  been  diverted,  and  this 
clearly  because,  in  equity,  the  diver- 
sion created  a  charge  on  the  prop- 
erty for  whose  benefit  it  had  been 
made.  Here  the  parties  interested 
preferred  a  decree  of  strict  foreclo- 
sure, which  the  court  gave,  but  in 
giving  it  saved  the  rights  of  all  in- 
tervenors,  and  continued  the  case 
for  the  final  determination  of  all 
such  questions.  The  present  appeal 
is  from  a  decree  which  grew  out  of 
this  reservation.  As  the  diversion  of 
the  fund  created  in  equity  a  charge 
on  the  property  as  security  for  its 
restoration,  it  is  clear  that  if  the 
mortgagees  prefer  to  take  the  prop- 
erty under  a  decree  of  strict  fore- 
closure, they  take  it  subject  to  the 
charge  in  favor  of  the  current  debt 


512 


RECEIVERS. 


[chap.  XI. 


of  such  current  debt  claims,  to  be  paid  out  of  net  income,  does 
not  necessarily  entitle  them  to  payment  out  of  the  corpus  of  the 
property,  and  such  preference  will  not  be  allowed  unless  special 
equities  are  shown  entitling  the  claimants  to  priority  over 
the  mortgage  indebtedness.^^  g^t  where  it  appears  that  there 
has  been  a  diversion  of  income  by  the  payment  of  interest  on 


creditor  whose  money  they  have 
got,  and  that  he  can  insist  on  a  sale 
of  the  property  for  his  benefit,  if 
they  fail  to  make  the  payment  with- 
out." See,  also,  Langdon  v.  Ver- 
mont &  Canada  R.  Co.,  54  Vt.,  593, 
to  the  point  that  debts  incurred  by 
managers  of  a  railway,  after  their 
discharge  as  receivers  proper,  under 
a  consent  decree,  constitute  a  lien 
upon  the  property  in  the  nature  of 
an  equitable  mortgage,  which  may 
be  enforced  by  strict  foreclosure. 

32  Blair  v.  St.  L.,  H.  &  K.  R.  Co., 
22  Fed.,  471.  As  to  the  length  of 
time  prior  to  the  receivership  within 
which  current  debt  claims  must  have 
ciccrued  to  entitle  them  to  priority 
of  payment  out  of  the  receiver's  in- 
come, no  fixed  rule  has  been  deter- 
mined by  the  courts,  and  from  the 
nature  of  the  case  none  can  be.  In 
the  United  States  circuit  court  for 
the  seventh  circuit,  the  time  has 
frequently  been  fixed  at  six  months, 
and  this  has  been  followed  in  other 
circuits.  The  only  known  reason 
for  limiting  the  time  to  six  months 
in  the  seventh  circuit  is  by  analogy 
to  a  statute  of  Illinois  giving  a  stat- 
utory lien  upon  railways  for  labor, 
materials  and  supplies  furnished, 
provided  suit  be  brought  within  six 
months  after  completion  of  the  con- 
tract. See,  upon  this  point,  opinion 
of  Drummond,  J.,  in  Turner  v.  I., 
B.  &  W.  R.  Co.,  8  Biss.,  315.  And 
the    rule    fixing    the    time    at    six 


months  has  been  adopted  in  the 
sixth  circuit.  Central  Trust  Co.  v. 
East  T.,  V.  &  G.  R.  Co.,  26  C.  C. 
A.,  30,  SO  Fed.,  624,  47  U.  S.  App., 
663,  criticizing  the  rule  which  recog- 
nized a  reasonable  time;  Interna- 
tional Trust  Co.  V.  Townsend  B.  & 
C.  Co.,  37  C.  C.  A.,  396,  95  Fed., 
850.  But  this  rule  has  been  rejected 
in  the  eighth  circuit.  Northern  Pac. 
R.  Co.  V.  Lamont,  16  C.  C.  A.,  364, 
69  Fed.,  23,  32  U.  S.  App.,  480. 
And  the  circuit  court  for  the  north- 
ern district  of  Ohio,  eastern  divi- 
sion, also  declined  to  be  bound  by 
it  in  Cleveland,  C.  &  S.  R.  Co.  v. 
Knickerbocker  T.  Co.,  86  Fed.,  7Z. 
And  the  rule  has  not  been  generally 
adopted,  and  such  claims  have  been 
allowed  priority,  although  accruing 
one  or  more  years  before  the  re- 
ceivership. The  rule  recognizing  a 
reasonable  time  has  been  adopted  in 
the  fourth  circuit,  and  also  by  the 
circuit  court  for  the  district  of  Mass- 
achusetts. Southern  Ry.  Co.  v. 
Carnegie  Steel  Co.,  22  C.  C.  A.,  289, 
76  Fed.,  492,  42  U.  S.  App.,  145, 
which  was  affirmed  in  176  U.  S., 
257,  20  Sup.  Ct.  Rep.,  347,  44  L.  Ed., 
458;  Southern  Ry.  Co.  v.  American 
Brake  Co.,  22  C.  C.  A.,  298,  76  Fed., 
502,  42  U.  S.  App.,  162;  Southern 
Ry.  Co.  V.  Adams,  22  C.  C.  A.,  300, 
76  Fed.,  504,  42  U.  S.  App.,  167; 
Wood  V.  N.  Y.  &  N.  E.  R.  Co.,  70 
Fed.,  741.  See  the  authorities  as  to 
time   reviewed   in  note   to   Blair  v. 


CHAP.   XI.]  RAILWAYS.  513 

bonds  prior  to  the  appointment  of  the  receiver  and  it  also  ap- 
pears that  after  his  appointment,  he  has  expended  large  sums 
out  of  income  for  permanent  improvements,  the  creditor  should 
be  allowed  payment  of  his  claims  from  the  corpus  if  the  earn- 
ings in  the  hands  of  the  receiver  are  not  sufficient  to  pay 
them. ^2  And  where  an  insolvent  railway  company  had  been 
operating  a  leased  line  as  a  part  of  its  system  and  prior  to  the 
receivership  had  applied  earnings  of  the  system  to  improve- 
ments upon  the  leased  road  and  to  the  payment  of  interest 
upon  its  bonds,  a  claim  for  repairs  upon  the  leased  line  arising 
prior  to  the  appointment  of  the  receiver  is  entitled  to  priority 
over  the  mortgage  bondholders  and  is  entitled  to  payment  as 
against  the  purchasers  at  the  foreclosure  sale.^*  And  an  addi- 
tional reason  for  the  allowance  of  preferred  claims  is  found 
where  the  receiver  has  been  appointed  not  in  a  proceeding 
brought  for  the  foreclosure  of  a  mortgage  but  in  a  suit  insti- 
tuted by  stockholders  for  the  appointment  of  a  receiver  to 
manage  the  road  until  satisfactory  arrangements  can  be  made 
for  a  financial  reorganization. ^5  And  where,  prior  to  the  ap- 
pointment of  the  receiver,  an  action  has  been  commenced 
against  the  company  to  recover  the  amount  of  the  claim  in  ques- 

St.  L.,  H.  &  K.  R.  Co.,  22  Fed.,  475.  34  Southern  Ry.  Co.  v.  Tillett,  22 

See,    also,    Central    Trust    Co.    v.  C.  C.  A.,  303,  76  Fed.,  507,  42  U.  S. 

Texas  &  St.  Louis  Railway,  22  Fed.,  App.,  173. 

135;  Central  Trust  Co.  v.  Thurman,  35  New  England  R.  Co.  v.  Car- 
94  Ga.,  735,  20  S.  E.,  141.  As  to  negie  Steel  Co.,  21  C.  C.  A.,  219,  75 
the  extent  to  which  the  services  of  Fed.,  54,  33  U.  S.  App.,  491 ;  South- 
counsel  necessary  in  the  manage-  ern  Ry.  Co.  v.  Carnegie  Steel  Co., 
ment  of  the  road  are  entitled  to  22  C.  C.  A.,  289,  76  Fed.,  492,  42 
priority  out  of  the  proceeds  of  fore-  U.  S.  App.,  145,  which  was  affirmed 
closure,  see  Bayliss  v.  L.,  M.  &  B.  in  176  U.  S.,  257,  20  Sup.  Ct.  Rep., 
R.  Co.,  9  Biss.,  90.  347,  44  L.  Ed.,  458;  Southern  Ry. 
33  Clark  v.  Central  R.  &  B.  Co.,  Co.  v.  American  Brake  Co.,  22  C. 
14  C.  C.  A..  112,  66  Fed.,  803,  30  C.  A.,  298,  76  Fed.,  502,  42  U.  S. 
U.  S.  App.,  263,  which  was  affirmed  App.,  162;  Southern  Ry.  Co.  v. 
in  170  U.  S.,  355,  18  Sup.  Ct.  Rep.,  Adams,  22  C.  C.  A.,  300,  76  Fed.. 
657,  42  L.  Ed.,  1068,  sub  nom.  Vir-  504,  42  U.  S.  App.,  167. 
ginia  &  Alabama  Coal  Co.  v.  Cen- 
tral R.  &  B.  Co. 

Receivers — 33. 


514  RECEIVERS.  [chap.  XI. 

tion,  the  prosecution  of  the  action  to  judgment  after  the  in- 
stitution of  the  receivership  proceedings  will  not  constitute  a 
waiver  of  the  preferential  character  of  the  claim.  But  the 
judgment  in  such  case  is  not  conclusive  upon  the  receiver,  and 
where  it  appears  that  the  company  interposed  a  counterclaim 
for  damages  resulting  from  a  delay  in  the  delivery  of  the  goods 
in  question  and  the  record  of  the  judgment  affirmatively 
showed  that  the  issue  raised  by  such  counter-claim  had  never 
been  tried  in  that  proceeding,  it  is  proper  to  allow  the  receiver 
to  recoup  the  damages  alleged  to  have  resulted  from  the  delay. 
In  such  case  the  receiver  is  allowed  to  make  the  counter-claim 
upon  the  theory  that  the  intervener,  in  seeking  to  have  his  claim 
allowed,  is  proceeding  upon  purely  equitable  grounds  and 
must  accordingly  do  equity  himself  in  order  to  have  a  standing 
in  court.^^  But  when  rails,  which  are  necessary  to  the  main- 
tenance of  the  road  as  a  going  concern,  are  furnished  the  com- 
pany upon  such  credit  as  indicates  an  expectation  that  interest 
upon  the  mortgage  debts  is  to  be  paid,  and  current  income  is 
diverted  by  the  company  to  the  payment  of  interest  to  second- 
mortgage  bondholders,  at  whose  suit  the  receiver  is  appointed, 
such  indebtedness  is  held  not  to  be  a  prior  charge  upon  the 
receiver's  earnings  as  against  such  bondholders.^'^ 

§  394(/.  Preference  based  upon  necessity  of  preserving 
property,  independent  of  diversion;  salary  of  attorney; 
wages.  The  right  to  priority  of  payment,  of  the  class  of 
claims  under  consideration,  has  been  recognized  and  the  prefer- 
ence allowed  independent  of  any  question  of  diversion  of  in- 
come, and  solely  upon  the  necessity  for  preserving  the  property 
and  continuing  its  operation. ^^     Thus,  the  receiver  has  been 

36  Central  Trust  Co.  v.  Clark,  26  Co.,  106  U.  S.,  286,  1  Sup.  Ct.  Rep., 
C.  C.  A.,  397,  81  Fed.,  269,  49  U.  140;  Taylor  v.  P.  &  R.  R.  Co.,  7 
S.  App.,  453.  Fed.,  Z77 ;  Atkins  v.  Petersburg  R. 

37  Bound  V.  South  Carolina  R.  Co.,  3  Hughes,  307;  Union  Trust 
Co.,  7  C.  C.  A.,  322,  58  Fed.,  473,  Co.  v.  lUinois  Midland  R.  Co.,  117 
8  U.  S.  App.,  461,  reversing,  as  to  U.  S.,  434,  6  Sup.  Ct.  Rep.  809, 
such  allowance,  S.  C,  47  Fed.,  30.  affirming   in   part   and   reversing   in 

38  Miltenberger  v.  Logansport  R.  part  S.  C,  28  Fed.,  169;  Finance  Co. 


CHAP.    XI.] 


RAILWAYS. 


515 


authorized  to  pay  arrears  due  for  operating  expenses  for  a 
period  of  ninety  days  prior  to  his  appointment,  as  well  as 
amounts  due  to  other  railway  companies  for  materials  and  re- 
pairs and  for  ticket  and  freight  balances  before  the  receiver- 
ship. And  these  allowances,  together  with  sums  due  for 
rolling  stock  purchased  by  the  receiver,  and  for  completing  an 
additional  line  and  a  bridge  as  part  of  the  main  line  of  road, 
have  been  given  priority  over  the  mortgage  indebtedness,  to 
be  paid  out  of  the  earnings  of  the  receiver,  or,  if  necessary,  out 
of  the  proceeds  of  foreclosure.^^     So  when  employees  of  the 


V.  C,  C.  &  C.  R.  Co.,  10  C.  C.  A., 
323,  62  Fed.,  205,  8  U.  S.  App.,  547; 
Northern  Pacific  R.  Co.  v.  Lament, 
16  C.  C.  A.,  364,  69  Fed.,  23,  32  U. 
S.  App.,  480;  St.  Louis  Trust  Co.  v. 
Riley,  16  C.  C.  A.,  610.  70  Fed.,  32, 
36  U.  S.  App.,  100,  30  L.  R.  A.,  456 ; 
Central  Trust  Co.  v.  East  T.,  V.  & 
G.  R.  Co.,  26  C.  C.  A.,  30,  80  Fed., 
624,  47  U.  S.  App.,  663;  Guaranty 
Trust  Co.  V.  Galveston  C.  R.  Co., 
46  C.  C.  A.,  305,  107  Fed.,  311; 
Wood  V.  N.  Y.  &  N.  E.  R.  Co.,  70 
Fed.,  741 ;  Cleveland,  C.  &  S.  R.  Co. 
V.  Knickerbocker  T.  Co.,  86  Fed., 
72i ;  Cooper  v.  Preston,  105  Fed., 
403;  St.  Louis,  A.  &  S.  R.  Co.  v. 
O'Hara,  177  111.,  525,  52  N.  E.,  734, 
S3  N.  E.,  118.  And  see  Central 
Trust  Co.  V.  St.  Louis,  A.  &  T.  R. 
Co.,  41  Fed.,  551.  See,  contra,  Den- 
niston  v.  Chicago,  Alton  &  St.  Louis 
R.  Co.,  4  Biss.,  414.  And  the  rule 
laid  down  in  the  text  has  been  ap- 
plied in  the  case  of  a  receivership 
of  an  irrigation  company  which  is 
held  to  be  a  quasi-public  corpora- 
tion. Atlantic  Trust  Co.  v.  Wood- 
bridge  C.  &  I.  Co.,  79  Fed.,  39; 
Atlantic  Trust  Co.  v.  Woodbridge 
C.  &  I.  Co.,  86  Fed.,  975. 

30  Miltenberger  v.  Logansport  R. 
Co.,  106  U.  S.,  286,  1  Sup.  Ct.  Rep., 


140.  Mr.  Justice  Blatchford  says, 
p.  311:  "  Many  circumstances  may 
exist  which  may  make  it  necessary 
and  indispensable  to  the  business  of 
the  road  and  the  preservation  of  the 
property,  for  the  receiver  to  pay 
pre-existing  debts  of  certain  classes 
out  of  the  earnings  of  the  receiver- 
ship, or  even  the  corpus  of  the  prop- 
erty, under  the  order  of  the  court, 
with  a  priority  of  lien.  Yet  the  dis- 
cretion to  do  so  should  be  exercised 
with  very  great  care.  The  payment 
of  such  debts  stands,  prima  facie, 
on  a  different  basis  from  the  pay- 
ment of  claims  arising  under  the 
receivership,  while  it  may  be 
brought  within  the  principle  of  the 
latter  by  special  circumstances.  It 
is  easy  to  see  that  the  payment  of 
unpaid  debts  for  operating  expenses, 
accrued  within  ninety  days,  due  by 
a  railroad  company  suddenly  de- 
prived of  the  control  of  its  prop- 
erty, due  to  operatives  in  its  em- 
ploy, whose  cessation  from  work 
simultaneously  is  to  be  deprecated 
in  the  interests  both  of  the  property 
and  of  the  public,  and  the  payment 
of  limited  amounts  due  to  other  and 
connecting  lines  of  road  for  mate- 
rials and  repairs  and  for  unpaid 
ticket  and  freight  balances,  the  out- 


516  RECEIVERS.  [chap.  XI. 

company  were  threatening  to  strike  because  of  non-payment  of 
wages,  and  many  of  them  had  brought  attachment  suits  and 
recovered  judgments  against  the  company,  advances  to  the 
company  to  pay  such  wages,  with  an  agreement  for  repayment 
out  of  the  first  net  earnings,  have  been  allowed  priority  out  of 
receiver's  income.^^  So  claims  for  materials  and  supplies,  such 
as  car  springs  and  spirals  and  supplies  furnished  to  the  ma- 
chinery department,  before  the  appointment  of  the  receiver, 
and  used  by  him  in  the  management  and  operation  of  the  road, 
may  be  paid  in  full  out  of  the  net  income  of  the  receivership 
in  preference  to  the  demands  of  mortgage  bondholders.  Such 
claims  are  preferred  upon  the  principle  that  the  net  earnings 
of  a  railway,  while  in  the  hands  of  a  receiver  appointed  in  be- 
half of  mortgagees,  are  not  necessarily  or  exclusively  the  prop- 
erty of  the  mortgagees,  but  are  subject  to  the  disposal  of  the 
court  in  the  payment  of  claims  having  superior  equities.'*^  So 
the  regular  annual  salary  of  the  attorney  of  the  company  im- 
mediately prior  to  the  receivership  has  been  given  preference 
in  payment.42    ^^d  preferences  have  been  allowed  in  the  case 

come  of  indispensable  business  re-  40  Atkins  v.  Petersburg  R.  Co.,  3 
lations,  where  a  stoppage  of  the  Hughes,  307.  In  this  case,  the  ad- 
continuance  of  such  business  rela-  vances  for  wages  were  made  nearly 
tions  would  be  a  probable  result  in  two  years  before  the  receivership, 
case  of  non-payment,  the  general  In  Skiddy  v.  A.,  M.  &  O.  R.  Co., 
consequence  involving  largely  also  3  Hughes,  320,  the  same  court  or- 
the  interests  and  accommodation  of  dered  payment  by  the  receivers  of 
travel  and  traffic,  may  well  place  wages  due  to  employees  for  eight 
such  payments  in  the  category  of  months  prior  to  the  receivership, 
payments  to  preserve  the  mortgaged  but  refused  payment  of  such  claims 
property  in  a  large  sense,  by  main-  which  had  been  assigned  to  third 
taining  the  good  will  and  integrity  persons,  and  also  refused  payment 
of  the  enterprise  and  entitle  them  for  rails  and  supplies  furnished  to 
to  be  made  a  first   lien."     To  the  the  company. 

same  effect,  see  Barton  v.  Barbour,  41  Hale  v.   Frost,  99  U.    S.,  389. 

104  U.  S.,  126.    And  see  New  Eng-  See,  also.  United  States  Trust  Co. 

land  R.  Co.  v.  Carnegie  Steel  Co.,  v.   New  York,  W.  S.  &  B.  R.  Co., 

21   C.   C.   A.,  219,  75   Fed.,  54,   33  25  Fed.,  797. 

U.  S.  App.,  491.     And  see  the  case  42  Blair  v.  St.  Louis.  H.  &  K  R. 

last   cited    as    to   the   allowance   of  Co.,  23  Fed.,  521. 
interest  upon  the  claim. 


CHAP.    XI.]  RAILWAYS.  517 

of  the  following  claims,  which  have  been  held  to  be  properly 
classed  as  current  expenses  incurred  in  the  ordinary  operation 
and  maintenance  of  the  road :  an  unpaid  traffic  balance ;  ^^ 
balance  due  for  rental  of  terminal  facilities ;  ^*  claim  for  repair 
work  done  in  placing  a  defective  and  unsafe  railroad  bridge 
in  good  condition ;  "^^  claim  for  cross  ties  used  to  replace  old, 
decayed  ties ;  ^^  claim  for  necessary  coupling  links,  pins  and 
tank  steel ;  ^'^  claim  based  upon  judgment  for  providing,  fur- 
nishing and  maintaining  passenger  waiting  rooms,  office  rooms 
for  the  company's  agents  and  a  convenient  place  for  its  em- 
ployees to  board  and  lodge  at  reduced  rates ;  ^^  materials  fur- 
nished for  the  construction  of  freight  cars  which  were  neces- 
sary to  keep  the  road  a  live,  going  concern ;  ^^  claim  for  dam- 
ages resulting  to  an  abutting  property  owner  from  the  con- 
struction of  a  railway  in  a  public  highway ;  ^^  claim  based  upon 
the  loss  of  cars  which  had  been  furnished  by  another  railway 
company ;  ^1  claim  for  rail  joints  and  track  bolts  furnished  a 
street  railway  company  in  such  small  quantities  as  to  amount 
to  nothing  more  than  ordinary  repairs.^2  ^^id  wages  of  labor- 
ers and  employees  of  a  street  railway  company  for  a  period  of 
sixty  days  before  the  receivership  have  been  allowed  as  a  lien 
upon  the  mortgaged  property  prior  to  the  lien  of  mortgage 
bondholders.^^  It  is  to  be  observed,  however,  as  regards 
claims  which  are  allowed  priority  of  payment  out  of  the  pro- 

43  Finance  Co.  v.  C,  C.  &  C.  R.  O'Hara,  177  111.,  525,  52  N.  E.,  734, 
Co.,  10  C.  C.  A.,  323,  62  Fed.,  205,      53  N.  E.,  118. 

8  U.  S.  App.,  547.  50  Fordyce  v.  Kansas  City  &  N. 

44  Manhattan  Trust  Co.  v.  Sioux      C.  R.  Co.,  145  Fed.,  566. 

City  &  N.  R.  Co.,  102  Fed.,  710.  51  Grand  Trunk  Ry.  Co.  v.  Ccn- 

45  Cleveland,   C.  &   S.   R.   Co.   v.  tral  Vt.  R.  Co.,  88  Fed.,  636. 
Knickerbocker  T.  Co.,  86  Fed.,  73.  52  Cooper   v.    Preston,    105    Fed., 

46  Gregg  v.  Mercantile  Trust  Co.,  403. 

48  C.  C.  A.,  318,  109  Fed.,  220.  53  Litzenberger  v.  Jarvis-Conklin 

47  Wood  V.  N.  Y.  &  N.  E.  R.  Co.,  Trust  Co.,  8  Utah,  15,  28  Pac,  871. 
70  Fed.,  741.  As  to  the  right  to  priority  of  various 

48  Northern  Pac.  R.  Co.  v.  La-  classes  of  claims  out  of  the  net 
mont,  16  C.  C.  A.,  364,  69  Fed.,  23,  earnings  of  the  receiver,  or  out  of 
32  U.  S.  App.,  480.  the  proceeds  of  foreclosure,  in  pref- 

49  St.   Louis,  A.  &   S.   R.   Co.  v.  erence  to  mortgage  bondholders,  as 


518  RECEIVERS.  [chap.  XI. 

ceeds  of  foreclosure,  in  preference  to  mortgage  bonds,  whether 
represented  by  receivers'  certificates  or  otherwise,  that  no  pref- 
erence of  one  claim  over  another  is  allowed  among  the  differ- 
ent classes  of  such  demands,  except  as  to  indebtedness  for  taxes 
and  receivers'  certificates  issued  to  pay  taxes  or  to  discharge 
tax  liens,  which  are  given  priority  over  all  other  demands. ^^ 
And  where  the  principal  sum  of  a  preferred  claim  for  supplies 
furnished  a  railway  company  has  been  paid  by  the  receiver  and 
accepted  by  the  claimant,  the  latter  can  not  afterward  recover 
interest  upon  the  claim. ^^ 

§  394t'.  Mortgagee  seeking  equitable  relief  must  submit 
to  conditions;  preference  to  assignee  of  debt.  Preference 
has  also  been  given  in  the  payment  out  of  receiver's  income  of 
operating  expenses  incurred  by  the  company,  as  for  labor,  sup- 
plies and  equipment  in  the  operation  of  the  road,  upon  the 
ground  that  the  mortgagee,  having  invoked  the  extraordinary 
aid  of  a  court  of  equity  by  the  appointment  of  a  receiver  in 
aid  of  the  foreclosure,  the  court  may  impose  such  just  and  rea- 
sonable conditions  to  the  relief  sought  as  the  exigencies  of  the 
case  may  require.  The  mortgagee  usually  having  the  right 
under  the  terms  of  his  mortgage  to  take  possession  after  de- 
fault, he  may,  if  he  sees  fit,  invoke  the  ordinary  legal  remedies 
to  obtain  such  possession  and  to  enforce  his  lien.  If,  instead 
of  so  doing,  he  seeks  the  extraordinary  remedy  of  a  receiver 
to  manage  the  property,  he  must  submit  to  such  conditions  as 
the  court  may  see  fit  to  impose  with  reference  to  the  payment  of 
operating  expenses  already  incurred,  out  of  the  income  of  the 
receivership.     And  the  fact  that  the  mortgagee  has  suffered 

affected  by  legislation  in  Texas,  see  54  Union    Trust    Co.    v.    Illinois 

Giles  V.    Stanton,  86  Tex.,  620,   26  Midland  R.   Co.,   117  U.  S.,  434.  6 

S.  W.,  615.    As  to  priority  of  "work-  Sup.  Ct.  Rep.,  809,  affirming  in  part 

ing  expenses"  of  a  railway  operated  and  reversing  in  part  S.  C,  28  Fed., 

by    a    receiver    under    the    English  169;  First  National  Bank  v.  Ewing, 

Railway    Companies    Act    of    1867,  43  C.  C.  A.,  150,  103  Fed.,  168. 

and   as   to   payment   of  instalments  55  Southern    Ry.    Co.    v.    Dunlop 

due  upon  conditional  sales  of  rolling  Mills,  22  C.  C.  A.,  302,  76  Fed.,  505, 

stock,  see  In  re  Eastern  &  Midlands  42  U.  S.  App.,  169. 
Railway  Company,  45  Ch.  D.,  367. 


CHAP.  XI.]  RAILWAYS.  519 

the  railway  company  to  continue  in  the  possession  and  manage- 
ment of  the  property  for  a  considerable  period  of  time  after  de- 
fault, thereby  permitting  new  obligations  to  be  incurred  for 
operating  expenses  and  for  the  maintenance  of  the  property, 
affords  additional  ground  for  requiring  such  obligations  to  be 
discharged  out  of  the  income  of  the  receiver  as  a  condition  to 
his  appointment.^^  And  in  this  class  of  cases,  the  right  to 
preference  is  regarded  as  attaching  to  the  debt  or  demand  itself, 
and  not  to  the  person  of  the  creditor.  It  therefore  passes  by 
assignment,  and  the  same  preference  may  be  allowed  to  an  as- 
signee of  the  original  demand.^"^ 

§  394/.  Rolling  stock;  car-trust  leases;  sale  of  rolling 
stock  under  foreclosure;  use  of  rolling  stock  by  receiver; 
right  of  appeal.  Questions  concerning  the  payment  out  of 
receiver's  income  of  rentals  due  upon  rolling  stock  leased  by  the 
company  prior  to  the  receivership  are  governed  by  substantially 
the  same  rules  which  have  been  discussed  in  the  preceding  sec- 
tions. These  questions  are  usually  presented  in  cases  where 
the  company  had  leased  rolling  stock  under  what  are  known  as 
car-trust  leases,  or  other  evidences  of  conditional  sale,  the  lessor 
or  vendor  retaining  the  title  to  or  a  lien  upon  the  rolling  stock, 
until  the  stipulated  payments  are  fully  made  by  the  company. 
In  such  cases,  the  vendor's  title  or  lien  is  unaffected  by  the  ap- 
pointment of  the  receiver,  that  officer  acquiring  no  better  title 
to  the  rolling  stock  than  that  of  the  company.  If  the  receiver 
continues  to  use  such  rolling  stock,  the  owner  or  lessor  is  en- 
titled to  just  compensation  for  its  use,  to  be  paid  out  of  the  re- 
ceiver's earnings,  such  payment  being,  in  effect,  the  application 

56  Union    Trust    Co.    v.    Souther,  Newport  &  Cincinnati  Bridge  Co.  v. 

107  U.  S.,  591,  2  Sup.  Ct.  Rep.,  295 ;  Douglass,  12  Bush,  673. 

Douglass    V.    Cline,    12    Bush,    608.  57  Union    Trust    Co.    v.    Walker, 

See,  also,  Fosdick  v.  Schall,  99  U.  107  U.  S.,  596,  2  Sup.  Ct.  Rep.,  299; 

S.,  235,  25  L.  Ed.,  339;  Burnham  v.  Burnham  v.  Bowen,  111  U.  S.,  776, 

Bowen,   111   U.   S.,  776,  4  Sup.  Ct.  4  Sup.  Ct.  Rep.,  675;  Mcllhenny  v. 

Rep..  675.     As  to  the  right  to  net  Binz,    80   Tex.,    1,    13    S.    W.,   655. 

earnings  in  such  a  case,  as  between  See,  contra,  Skiddy  v.  A.,  M.  &  O. 

mortgage   bondholders   and   various  R.  Co.,  3  Hughes,  320. 
classes  of  unsecured  creditors,   see 


520  RECEIVERS.  [chap.  XI. 

of  ciiiTcnt  income  to  the  payment  of  current  expenses. ^^ 
Whether,  in  the  event  of  a  deficiency  of  receiver's  income,  such 
car  rentals,  accruing  either  before  or  during  the  receivership, 
are  entitled  to  payment  in  full  out  of  the  proceeds  of  fore- 
closure sale,  has  been  said  to  be  dependent  upon  whether  there 
has  been  a  diversion  of  current  income  from  current  expenses 
during  the  receivership.^^  Upon  principle,  however,  it  is  im- 
possible to  discriminate  between  claims  of  this  character,  and 
those  for  wages,  materials  and  other  operating  expenses,  which, 
as  already  shown,  have  been  frequently  allowed  priority  out  of 
receiver's  income,  or  have  been  paid  out  of  the  sale  of  the  prop- 
erty, in  the  absence  of  any  evidence  of  diversion  of  income, 
upon  other  equitable  considerations  addressing  themselves  to 
the  discretionary  powers  of  the  court.<50  g^t  if  the  receiver's 
income  is  sufficient  to  pay  for  additional  rolling  stock  necessary 
to  the  operation  of  the  road,  the  court  will  not  permit  him  to 
make  a  loan  by  the  creation  of  a  car  trust  to  procure  such  roll- 
ing stock,  in  order  that  current  income  may  be  applied  to  in- 
terest upon  bonded  indebtedness.^^  And  if  cars  held  by  the 
company  under  conditional  sales  are  used  by  the  receiver  and 

58  Fosdick  V.  Schall,  99  U.  S.,  235,  forth  in  the  case  as  reported,  and 
25  L.  Ed.,  339;  Myer  v.  Car  Co.,  having  purchased  additional  rolling 
102  U.  S.,  1 ;  Coe  v.  New  Jersey  stock,  these  allowances,  with  others, 
Midland  R.  Co.,  27  N.  J.  Eq.,  37;  were  awarded  priority  over  the 
Piatt  V.  Philadelphia  &  R.  R.  Co.,  mortgage  indebtedness,  to  be  paid 
28  C.  C.  A.,  488,  84  Fed.,  535,  55  out  of  the  receiver's  earnings,  or, 
U.  S.  App.,  452;  Mercantile  Trust  if  necessary,  out  of  the  proceeds  of 
&  Deposit  Co.  V.  Southern  I.  C.  foreclosure.  In  Coe  v.  New  Jersey 
Line,  113  Ala.,  543,  21  So.,  373;  Midland  R.  Co.,  27  N.  J.  Eq.,  37, 
Lane  v.  Macon  &  A.  Ry.  Co.,  96  it  was  held  that  lessors  of  rolling 
Ga.,  630,  24  S.  E.,  157.  stock  leased  to  a  railway  company 

59  Fosdick  v.  Schall,  99  U.  S.,  were  not  entitled  to  payment  in  full 
235,  25  L.  Ed.,  339.  of  the  rent  reserved  in  the  lease,  at 

60  Miltenberger  v.  Logansport  R.  the  hands  of  the  receivers,  unless 
Co.,  106  U.  S.,  286,  1  Sup.  Ct.  Rep.,  the  court  should  find  that  such  pay- 
140.  In  this  case,  the  receiver  having  ment  was  for  the  best  interests  of 
made  an  adjustment  with  the  own-  the  trust  represented  by  the  re- 
ers  of  rolling  stock  held  under  con-  ceivers. 

ditional   sales  to  the  company,  the  61  Taylor  v.   P.   &   R.   R.   Co.,  9 

nature  of  which  is  not  clearly  set      Fed.,  1. 


CHAP.   XI.]  RAILWAYS.  521 

sold  under  the  foreclosure  decree,  the  vendor  may  be  paid  in 
full  out  of  the  proceeds  of  such  sale,  his  lien  upon  the  cars  being 
paramount  to  that  of  the  mortgagees. ^2  go  if  rolling  stock  is 
purchased  by  the  receiver  out  of  the  earnings  of  the  road  and 
sold  under  the  foreclosure,  the  mortgage  covering  after-ac- 
quired property,  the  purchaser  at  the  sale  is  entitled  to  such 
rolling  stock  as  against  the  mortgagees.^'^  Rental  for  cars 
leased  and  used  by  the  receiver  is  entitled  to  preference,  as 
well  as  a  reasonable  sum  expended  for  ordinary  repairs  to  the 
cars  so  used,  although  interest  upon  such  sums  will  not  be  al- 
lowed as  against  mortgage  bondholders  or  purchasers.  But  car 
rentals  incurred  prior  to  the  receivership  will  not  be  preferred, 
such  indebtedness  being  distinguished  from  claims  for  labor 
and  supplies  which  are  necessary  from  day  to  day  for  the 
maintenance  of  the  road.^^  So  track  rentals  incurred  sev- 
eral years  prior  to  the  receivership  are  not  entitled  to  payment 
out  of  the  proceeds  of  the  foreclosure  sale,  especially  where 
there  is  nothing  to  show  that  the  claimant  relied  upon  any- 
thing more  than  the  general  credit  of  the  company  and  where 
there  is  no  other  special  equity  which  it  is  the  duty  of  the 
court  to  enforce.^^  Nor  will  such  a  claim  be  allowed  upon 
the  ground  that  the  insolvent  railroad  has  received  income  for 
the  use  of  the  leased  cars  upon  other  lines  of  road  after  the 
making  of  the  lease  and  prior  to  the  appointment  of  the  re- 
ceiver.66    And  the  receiver  of  a  railway  company  is  not  bound 

62  Fosdick  V.  Car  Company,  99  U.  Stock  T.  Co.  v.  Anderson,  22  C.  C. 
S.,  256.  A.,  109,  76  Fed.,  164,  46  U.  S.  App., 

63  Strang  v.  M.  &  E.  R.  Co.,  3  138;  Pullman's  Palace-Car  Co.  v. 
Woods,  613.  But  it  is  held  in  the  American  L.  &  T.  Co.,  28  C.  C.  A., 
same  case,  that  the  purchaser  is  not  263,  84  Fed.,  18,  55  U.  S.  App.,  170; 
entitled  to  a  balance  of  income  re-  Grand  Trunk  Ry.  Co.  v.  Central  Vt. 
maining    in    the    receiver's    hands,  R.  Co.,  90  Fed.,  163. 

such  income  belonging  to  the  cred-  65  Louisville  &  N.  R.  Co.  v.  Cen- 

itors  of  the  company  in  the  order  tral  Trust  Co.,  31   C.  C.  A.,  89,  87 

of  their  priorities.  Fed.,  500,  59  U.  S.  App.,  694. 

64  Thomas  v.  Western  Car  Co.,  66  Mather  Humane  Stock  T.  Co. 
149  U.  S.,  95,  13  Sup.  Ct.  Rep.,  824,  v.  Anderson,  22  C.  C.  A.,  109,  76 
reversing  in  part  and  modifying  S.  Fed.,  164,  46  U.  S.  App.,  138. 

C,  36  Fed.,  808;    Mather  Humane 


522  RECEIVERS.  [chap.  XI. 

by  such  leases  but  is  eutitled  to  a  reasonable  leng-th  of  time 
after  his  appointment  in  which  to  elect  whether  or  not  he  will 
adopt  them,  and  a  mere  temporary  use  under  the  order  of  his 
appointment  does  not  constitute  such  an  election,  nor  will  an 
experimental  arrangement  by  which  the  receiver  retains  pos- 
session of  the  cars  with  a  view  to  determining  whether  or  not 
their  use  will  be  profitable  constitute  such  an  adoption  of  the 
lease.^^'^  \\'hen  a  receiver  appointed  in  a  foreclosure  suit, 
brought  by  the  trustee  in  the  mortgage,  takes  possession  of 
and  continues  to  use  rolling  stock  wdiich  had  been  leased  to 
the  company  under  car-trust  leases,  he  thereby  becomes  liable 
for  a  reasonable  rental.  In  such  case  it  is  proper  to  allow  a 
fair  monthly  rental,  instead  of  rental  upon  the  basis  of  actual 
mileage,  and  if  there  are  no  net  earnings  by  the  receiver,  such 
rental  may  be  decreed  to  be  paid  in  full  out  of  the  proceeds  of 
foreclosure  sale  before  distribution  among  mortgage  bond- 
holders. Such  priority,  however,  will  not  be  allowed  for  the 
use  of  the  cars  during  a  prior  receivership  in  a  judgment 
creditor's  suit,  before  the  trustee  in  the  mortgage  had  filed  its 
bill  for  foreclosure  and  for  a  receiver.  And  the  purchaser  at 
the  foreclosure  sale,  to  whom  is  reserved  by  the  decree  the 
right  to  appeal  from  all  orders  allowing  priorities,  may  appeal 
from  an  order  fixing  the  amount  of  such  rentals  and  giving 
them  priority  over  mortgage  indebtedness.^^  So  an  order 
made  upon  a  petition  of  creditors,  preferring  their  claims  over 

67  Piatt  V.  Philadelphia  &  R.  R.  cumstances  of  the  case,  entitle  the 
Co.,  28  C.  C.  A.,  488,  84  Fed.,  535,  owner  or  lessor  to  rental  under  the 
55  U.  S.  App.,  452.  leases  at  the  hands  of  the  receiver, 

68  Kneeland  v.  American  L.  &  T.  or  out  of  the  corpus  of  the  estate, 
Co.,  136  U.  S.,  89,  10  Sup.  Ct.  Rep.,  but  only  to  a  return  of  the  cars 
950.  In  Farmers'  Loan  &  Trust  Co.  within  a  reasonable  time  and  to 
V.  Chicago  &  A.  R.  Co.,  42  Fed.,  rental  upon  a  quantum  meruit  for 
6,  it  was  held  that  the  retention  and  their  use  by  the  receiver.  It  was 
use  by  the  receiver,  with  the  knowl-  further  held  that  there  was  no  con- 
edge  of  mortgage  bondholders  and  version  of  the  cars  by  the  receiver 
without  their  disapproval,  of  cars  because  of  his  non-compliance  with 
held  by  the  company  under  car-  a  demand  upon  him  by  the  owner 
trust  leases,  did  not,  under  the  cir-  for  their  surrender. 


CHAP.    XI,]  RAILWAYS.  523 

that  of  a  mortgagee  of  rolling  stock  and  directing  its  sale  in 
satisfaction  of  their  demands,  is  an  appealable  order,  since  it 
finally  determines  the  title  to  the  rolling  stock  as  against  the 
mortgagee.  6^ 

§  394^.  When  judgment  creditors  allowed  priority.  The 
income  of  a  railroad  while  operated  by  receivers  appointed  in 
behalf  of  mortgage  bondholders  is  regarded  as  part  of  the 
mortgaged  property  in  the  sense  that  it  is  to  be  applied  to  ex- 
penses of  administration  and  management,  and  to  the  liens 
and  trusts  with  which  it  is  charged.  And  until  such  expenses 
and  liens  have  been  satisfied,  judgment  creditors  of  the  rail- 
way company  are  not  entitled  to  payment  out  of  the  income.*^^ 
But  judgment  creditors  of  the  company,  who  are  entitled  to 
payment  out  of  the  funds  in  the  hands  of  or  due  to  the  com- 
pany when  the  receiver  is  appointed,  may,  if  such  funds  are 
otherwise  appropriated  by  the  receiver,  be  paid  in  full  out  of 
the  receiver's  income  in  preference  to  mortgage  bondholders."^^ 
Whether  a  judgment  against  the  receiver  himself  is  payable  out 
of  the  proceeds  of  foreclosure  would  seem  to  depend  rather  up- 
on the  nature  of  the  cause  of  action  than  upon  the  fact  that  the 
demand  has  been  reduced  to  judgment.  If  the  cause  of  action 
grows  out  of  materials  supplied  for  the  necessary  operation  of 
the  road  for  the  benefit  of  the  mortgagees,  as  for  rental  of  and 
repairs  to  rolling  stock  used  by  the  receiver,  a  judgment  re- 
covered against  him  in  a  suit  brought  by  leave  of  the  court  ap- 
pointing him,  and  in  a  court  of  competent  jurisdiction,  is  con- 
clusive against  the  bondholders  and  may  be  paid  out  of  the 
proceeds  of  foreclosure.'^^  g^t  if  the  judgment  is  for  personal 
injuries  sustained  by  a  passenger  upon  the  road  while  oper- 
ated by  the  receiver,  it  is  held  not  to  be  entitled  to  payment 
out  of  the  fund  arising  from  the  foreclosure.  Such  a  judg- 
ment, it  is  held,  is  no  more  entitled  to  be  made  a  lien  upon 

on  Radebaugh  v.  Tacoma  &  P.  R.  71  Gibert  v.  W.  C,  V.  M.  &  G.  S. 

Co..  8  Wash.,  570,  36  Pac,  460.  R.  Co.,  33  Grat.,  645. 

70  North  Carolina  R.  Co.  v.  Drew,  72  Turner  v.  I.,  B.  &  W.  R.  Co., 

3  Woods,  692.  8  Biss.,  527. 


524  RECEIVERS.  [chap.  XI. 

the  property  or  fund,  as  against  the  mortgagees,  than  if  the 
injury  had  been  sustained  while  the  road  was  operated  by  the 
company,  the  creation  of  such  hen  not  being  necessary  to  the 
operation  of  the  road  for  the  benefit  of  the  bondholders  in 
whose  behalf  the  receiver  is  appointed.'^^  Such  a  judgment 
may,  however,  be  paid  out  of  the  net  income  of  the  receiver- 
ship in  preference  to  the  claims  of  the  bondholders  to  such  in- 
come7* 

§  394/?.  Claims  of  general  creditors  other  than  for  op- 
erating expenses  not  preferred.  Claims  of  general  cred- 
itors of  a  railway  company,  which  have  been  incurred  prior  to 
the  receivership,  and  which  do  not  fall  within  the  class  of  cur- 
rent expenses  for  the  ordinary  operation  and  maintenance  of 
the  road,  such  as  necessary  labor,  supplies,  materials  or  equip- 
ment, and  which  do  not,  therefore,  have  any  special  equities 
entitling  them  to  payment  out  of  current  income,  will  not  be 
preferred  out  of  the  earnings  of  the  receiver,  or  out  of  the 
proceeds  of  the  foreclosure  sale.  The  allowance  of  claims, 
which  results  in  the  displacement  of  the  priority  of  mortgage 
liens,  is  to  be  regarded  as  the  exception  and  not  as  the  rule, 
and  such  claims  will  not  be  given  a  preference  unless  they  may 
fairly  and  reasonably  be  regarded  as  debts  incurred  in  the  or- 
dinary, daily  operation  and  maintenance  of  the  road.  And 
where  the  expense  is  an  extraordinary  one,  incurred  outside 
the  ordinary  course  of  the  business  of  the  road,  such  as  for 
original  construction  or  reconstruction,  or  for  extraordinary 
repairs,  or  for  extensions  or  permanent  improvements,  the  pref- 
erence W'ill  not  be  granted.  And  while,  from  the  illustrations 
given  in  the  preceding  sections,  where  preferences  have  been 
given,  it  will  be  seen  that  the  courts  have,  in  particular  in- 
stances, gone  to  unwarranted  extremes  in  the  recognition  of 
such  claims,  the  decided  tendency  at  the  present  time,  as  shown 
by  the  recent  cases,  is  to  restrict  rather  than  to  extend  the  al- 

73  Davenport     v.      Receivers,     2  1'^  Ex  parte  Brown,  15  S.  C,  518; 

Woods,  519.     And  see  Hopkins  v.       Klein  v.  Jewett,  26  N.  J.  Eq.,  474. 
Connel,  2  Tenn.  Ch.,  323. 


CHAP.    XI.]  RAILWAYS.  525 

lowance.  As  Illustrating  the  rule  it  is  held  that  a  loan  made 
to  an  electric  street  railway  company  upon  the  pledge  of  its 
current  income  to  enable  it  to  construct  a  substantial  and  bene- 
ficial addition  to  its  plant,  which  was  necessary  to  the  main- 
tenance of  the  volume  of  its  business,  but  was  not  indispensable 
to  its  continuance  as  a  going  concern,  should  not  be  allowed  a 
preference. '^^  So  a  preference  has  been  denied  upon  a  claim 
for  a  plow  car  and  ballast  cars  which  were  purchased  by  a 
railway  company  to  be  used  in  filling  in  the  road."^^  So  the 
court  has  refused  a  preference  for  claims  for  salaries  of  offi- 
cers of  the  company,  money  loaned  to  the  company,  claims  of 
contractors  for  construction,'^'^  clocks  furnished  for  the  use  of 
the  company, ''^^  and  money  advanced  to  complete  the  construc- 
tion of  the  road,  which  will  not  be  preferred  when  it  is  not 
shown  that  such  advances  were  made  at  the  request  of  or  by 
reason  of  the  promises  of  the  bondholders.'^^  So  a  cause  of  ac- 
tion against  a  railway  company,  growing  out  of  the  destruc- 
tion of  property  caused  by  fire  escaping  from  a  locomotive, 
does  not  fall  within  that  class  of  operating  expenses  which  have 
been  allowed  priority,  and  can  not  be  enforced  against  the  re- 
ceiver.^o  And  when  a  locomotive  had  been  sold  to  the  com- 
pany on  credit  and  had  become  subject  to  the  lien  of  its  mort- 
gage more  than  six  months  prior  to  the  appointment  of  a 
receiver  in  a  foreclosure  suit,  and  the  owner  had  recovered  a 
considerable  portion  of  the  purchase  price  by  pursuing  his  or- 
dinary legal  remedies  against  the  company,  he  was  denied  pref- 
erence in  the  payment  of  the  balance  of  his  claim  out  of  the  re- 
ceiver's net  earnings.^l  As  further  illustrating  the  rule  under 
discussion,  the  following  claims  have  been  denied  a,  prefer- 

75  Illinois  Trust  &  Savings  Bank       New  York,  W.  S.  &  B.  R.  Co.,  25 
V.  Doud,  44  C.  C.  A.,  389,  105  Fed.,      Fed.,  800. 

123.  79 /„  re  Kelly,  5  Fed.,  846;  S.  C, 

76  Rodger     Ballast     Car     Co.    v.       10  Biss.,  151. 

Omaha.  K.   C.  &  E.  R.  Co.,  83  C.  80  Hiles  v.  Case,  14  Fed.,  141. 

C.  A.,  403,  154  Fed.,  629.  81  Manchester  Locomotive  Works 

77  Addison  v.  Lewis,  75  Va.,  701.  v.  Truesdale,  44  Minn.,  115,  46  N. 

78  United    States    Trust    Co.    v.  W.,  301. 


526 


RECEIVERS. 


[chap.  XI. 


ence :  a  claim  for  twenty  thousand  tons  of  steel  rails  held  to  be 
material  for  work  of  original  construction ;  ^^  money  loaned 
to  a  railway  company  upon  its  notes  at  various  times  from 
nine  months  to  four  years  prior  to  the  receivership  for  the 
purpose  of  placing  the  road  in  a  safer  condition  and  resulting 
in  increased  earnings  and  additional  security  to  the  bond- 
holders; ^^  claim  for  the  use  of  terminal  facilities  under  a  per- 
petual lease  which  gave  the  lessor  the  right  to  terminate  the 
lease  and  retake  possession  of  the  premises  and  all  improve- 
ments made  thereon  by  the  lessee  upon  default  in  payment  of 
the  rent  for  thirty  days ;  ^^  balance  due  for  locomotives  where 
it  does  not  appear  that  the  expenditure  was  to  keep  the  road  a 
going  concern,  although  it  increased  the  earning  capacity  and 
enhanced  the  security  of  the  bondholders ;  ^^  claim  for  adver- 
tising matter  ;^^  claims  for  labor,  materials  and  supplies  fur- 
nished for  w^ork  of  original  construction  or  reconstruction ;  ^'^ 
claim  for  heaters,  purifiers  and  condensers  furnished  a  street 


82  Lackawanna  Iron  &  Coal  Co. 
V.  Farmers'  L.  &  T.  Co.,  24  C.  C. 
A.,  487,  79  Fed.,  202,  52  U.  S.  App., 
91,  affirmed  in  176  U.  S.,  298,  20 
Sup.  Ct.  Rep.,  363,  44  L.  Ed.,  475. 

83  Morgan's  Louisiana  &  T.  R.  & 
S.  S.  Co.  V.  Farmers'  L.  &  T.  Co., 
24  C.  C.  A.,  495,  79  Fed.,  210,  52 
U.  S.  App.,  107;  Southern  Develop- 
ment Co.  V.  Same,  24  C.  C.  A.,  497, 
79  Fed.,  212,  52  U.  S.  App.,  111. 

84  Gregg  V.  Mercantile  Trust  Co., 
48  C.  C.  A.,  318,  109  Fed.,  220;  St. 
Louis  Merchants'  B.  T.  Ry.  Co.  z>. 
Continental  Trust  Co.,  49  C.  C.  A., 
529,  111  Fed.,  669. 

85  Rhode  Island  Locomotive 
Works  7'.  Continental  T.  Co.,  47  C. 
C.  A.,  147,  108  Fed.,  5;  Gregg  v. 
Mercantile  Trust  Co.,  48  C.  C.  A., 
318,  109  Fed.,  220. 

86  Central  Trust  Co.  v.  East  T., 
V.  &  G.  R.  Co.,  26  C.  C.  A..  30,  80 
Fed.,  624,  47  U.  S.  App.,  663.    And 


see  Poland  v.  Railroad  Co.,  52  Vt., 
144. 

87  First  National  Bank  v.  Ewing, 
43  C.  C.  A.,  150,  103  Fed.,  168;  St. 
Louis  Merchants'  B.  T.  Ry.  Co.  v. 
Continental  Trust  Co.,  49  C.  C.  A., 
529,  111  Fed.,  669;  Farmers'  Loan 
&  Trust  Co.  V.  Cape  Fear  &  Y.  V. 
R.  Co.,  73  Fed.,  712;  Atlantic  Trust 
Co.  V.  Woodbridge  C.  &  I.  Co.,  79 
Fed.,  39;  Atlantic  Trust  Co.  v. 
Woodbridge  C.  &  I.  Co.,  86  Fed., 
975.  In  Cleveland,  C.  &  S.  R.  Co. 
V.  Knickerbocker  T.  Co.,  86  Fed., 
73,  the  court  define  "original  con- 
struction" as  "that  construction  of 
bridges,  grades,  culverts,  rails,  ties, 
docks,  etc.,  that  is  necessary  to  be 
done  before  the  road  can  be  opened, 
or  before  it  can  be  occupied  or  used, 
not  such  structures  as  are  intended 
to  replace  old  and  worn-out  counter- 
parts." 


CHAP.   XI.]  RAILWAYS.  527 

railway  company ;  ^^  claim  of  a  surety  company  based  upon  its 
liability  as  surety  upon  a  supersedeas  bond  given  by  a  railway 
company  upon  appeals  from  judgments  against  it,  the  com- 
pany having,  pending  the  appeal,  become  insolvent  and  a  re- 
ceiver having  been  appointed. ^^  So  claims  for  legal  services 
rendered  to  the  company  more  than  a  year  before  the  receiver- 
ship have  been  refused  priority  as  against  mortgage  bondhold- 
ers, such  claims  being  distinguishable  from  those  for  labor  and 
supplies  necessary  to  maintain  the  road  as  a  going  concern.^^ 
And  while  legal  services  rendered  and  disbursements  paid 
by  the  regular  counsel  of  the  company  before  the  receivership 
may  be  paid  out  of  the  receiver's  income  in  like  manner  and  to 
the  same  extent  as  the  services  of  other  employees,  under  an 
order  authorizing  the  receiver  to  pay  all  sums  due  to  employees 
for  ninety  days  before  his  appointment,  they  will  not  be  allowed 
priority  over  mortgage  bonds;  but  the  attorney's  lien  upon 
papers  and  muniments  of  title  of  the  company  in  his  posses- 
sion will  be  recognized  to  the  full  extent  of  his  entire  claim. ^^ 

^8  McCornack  v.   Salem  Ry.  Co.,  ment  of  the  judgment,   suits   were 

34  Ore.,  543,  56  Pac,  1022.  brought   against    the    sureties    upon 

80  Whitely  v.   Central  Trust  Co.,  the  bond.     Thereupon  the   sureties 

22  C.  C.  A.,  67,  76  Fed.,  74,  34  L.  intervened  in  the  receivership  pro- 

R.  A.,  303;  Pennsylvania  Steel  Co.  ceeding  to  have  the  judgment  paid 

V.  New  York  C.  Ry.  Co.,  165  Fed.,  out  of  net  income.     The  court  held 

485.    In  Farmers'  Loan  &  Trust  Co.  that  the  liability  of  the  sureties  did 

V.   Northern  Pac.   R.   Co.,  71   Fed.,  not  become   fixed   until   default  by 

245,  a  judgment  had  been  rendered  the  company  after  the  appointment 

against  a  railway  company  for  per-  of  the  receiver  and  that  the  claim 

sonal  injuries  sustained  through  the  was  one  for  the  ordinary  operation 

negligent    operation    of    the    road.  of  the  road  and  was  therefore  en- 

This    judgment    being    affirmed    by  titled  to  a  preference, 
the   supreme  court  of  the   state,   a  90  Blair  v.  St.  Louis,  H.  &  K.  R. 

writ  of  error  was  sued  out  of  the  Co.,  23   Fed.,   521 ;    Finance   Co.   v. 

supreme  court  of  the  United  States,  Charleston,  C.  &  C.  R.  Co.,  52  Fed., 

upon    the    filing    of    a    supersedeas  678. 

bond     with     sureties.       The    latter  01  Finance   Co.  v.   Charleston,  C. 

court  dismissed  the  proceeding  for  &  C.  R.   Co.,  52  Fed.,   526.     As  to 

want  of  jurisdiction.     In  the  mean-  the   allowance   of   counsel    fees    for 

time    the    road    had    gone   into   the  services  rendered  in  behalf  of  cred- 

hands  of  a   receiver  and,  upon  de-  itors  in  procuring  the  allowance  of 

fault   of  the   company   in    the   pay-  claims  against  the  receiver,  see  Cen- 


52S  RECEIVERS.  [chap.  XI. 

So  a  claim  for  legal  services  rendered  to  a  former  railway 
company,  whose  property  has  passed  by  foreclosure  and  sale 
to  a  new  company,  will  not  be  enforced  against  a  receiver  in 
foreclosure  proceedings  against  the  new  company. ^2  go  claims 
for  advances  by  an  attorney  to  pay  judgments  against  the  com- 
pany for  wages  and  for  killing  stock  before  the  receivership 
will  not  be  allowed  priority.  Nor  will  preference  be  given  to 
the  claim  of  an  attorney  for  the  amount  of  judgments  recov- 
ered against  the  company  and  paid  by  him  as  surety  upon  ap- 
peal bonds,  the  judgments  being  upon  demands  which  would 
not  have  been  entitled  to  priority.^^ 

§  394/.  Judgments  and  claims  for  personal  injuries  oc- 
curring prior  to  receivership  not  preferred.  The  rule  is 
well  established  that  judgments  or  claims  for  damages  for 
personal  injuries  resulting  from  the  negligence  of  the  em- 
ployees of  a  railway  company  prior  to  the  appointment  of  a 
receiver  are  not  entitled  to  priority  over  the  mortgage  bond- 
holders and  are  therefore  not  payable  as  preferred  debts  either 
out  of  the  surplus  income  or  out  of  the  corpus  of  the  estate  in 
the  case  of  a  sale.  Such  judgments  or  claims  can  in  no  sense 
be  said  to  have  been  incurred  for  the  improvement  of  the 
road  or  to  be  based  upon  considerations  which  in  any  way 
enure  for  the  benefit  of  the  mortgage  security,  and  accordingly 
no  equity  exists  in  favor  of  their  allowance,^^    Nor  can  such 

tral  Trust  Co.  v.  Valley  R.  Co.,  55  vent  a  sale  of  its  property  under  ex- 
Fed.,  903.  And  see  Evansville  &  ecution,  to  a  lien  upon  the  property 
St.  Louis  R.  Co.  V.  Wilson,  138  U.  of  the  company  after  its  sale  under 
S.,  501,  11  Sup.  Ct.  Rep.,  405,  34  foreclosure,  see  Union  Trust  Co.  v. 
L.  Ed.,  1023 ;  Gregg  v.  Mercantile  Morrison,  125  U.  S.,  591,  8  Sup.  Ct. 
Trust  Co.,  48  C.  C.  A.,  318,  109  Rep.,  1004. 
Fed.,  220.  94  St.  Louis  Trust   Co.  v.   Riley, 

92  Bound  V.  South  Carolina  R.  16  C.  C.  A.,  610,  70  Fed.,  32,  36 
Co.,  51  Fed.,  58.  S.  C,  on  appeal  U.  S.  App..  100,  30  L.  R.  A.,  456; 
from  final  decree,  7  C.  C.  A.,  322,  Farmers'  Loan  &  Trust  Co.  v. 
58  Fed.,  473,  8  U.  S.  App.,  461.  Northern  Pac.  R.  Co.,  24  C.  C.  A., 

93  Blair  v.  St.  Louis,  H.  &  K.  R.  511,  79  Fed.,  227,  48  U.  S.  App,, 
Co.,  23  Fed.,  521.  As  to  the  right  324;  Farmers'  Loan  &  Trust  Co.  v. 
of  a  surety  upon  an  injunction  bond  Nestelle,  25  C.  C.  A.,  194,  79  Fed., 
given  by  a  railway  company  to  pre-  748,  48  U.  S.  App.,  326;  Veatch  v. 


CHAP.   XI.]  RAILWAYS.  529 

a  judgment  or  claim  be  allowed  upon  the  ground  of  diversion 
of  income  by  the  bondholders'  receiver,  where  the  trust  deed 
provides  that  in  case  of  default,  the  trustee  may  take  posses- 
sion and  may  from  time  to  time  make  such  repairs  and  im- 
provments  as  may  seem  proper  to  promote  the  interests  of  the 
bondholders.  But  where,  prior  to  the  appointment  of  the  re- 
ceiver for  the  mortgage  bondholders,  a  receiver  had  been  ap- 
pointed in  a  stockholders'  suit,  in  whose  hands  income  had  ac- 
cumulated, to  which  the  lien  of  the  mortgage  did  not  attach, 
such  judgments  or  claims,  whether  arising  in  contract  or  tort, 
are  entitled  to  participate  in  the  distribution  of  such  income 
which  had  thus  accumulated  while  the  road  was  being  oper- 
ated by  the  receiver,  at  the  instance  of  the  stockholders,  before 
the  income  had  been  impounded  by  the  mortgage  bondhold- 
ers.^^ But  such  judgments  or  claims  are  not  payable  out  of 
net  income  which  had  been  earned  prior  to  the  receivership 
and  turned  over  to  the  receiver  upon  his  appointment,  where 
the  claimant  had  delayed  proceeding  against  the  fund  until 
the  company  had  paid  the  money  to  the  receiver.^^ 

§  394;'.  When  payment  allowed  out  of  proceeds  of  sale. 
Upon  the  question  whether  debts  and  obligations  incurred  in 
the  ordinary  operation  and  maintenance  of  a  railroad  prior 
to  the  appointment  of  a  receiver  are  entitled  to  payment,  as 
against  the  mortgage  bondholders,  out  of  the  proceeds  of  the 
foreclosure  sale  where  there  is  no  sufficient  income  in  the  hands 

American  L.  &  T.  Co.,  25  C.  C.  A.,  Northern  Pac.  R.  Co.,  74  Fed.,  431 ; 

39,  79  Fed.,  471,  49  U.  S.  App.,  191,  Front     Street     Cable    Ry.     Co.     v. 

affirmed  on   rehearing  in  28  C.   C.  Drake,  84  Fed.,  257;   Pennsylvania 

A.,  384,  84  Fed.,  274,  55  U.  S.  App.,  Steel  Co.  v.  New  York  C.  Ry.  Co., 

191 ;  Hampton  v.  Norfolk  &  W.  R.  165  Fed.,  457. 

Co.,  62  C.  C.  A.,  388,  127  Fed.,  662;  95  Veatch   v.   American  L.   &  T. 

Atlantic  Trust   Co.  v.  Dana,  62  C.  Co.,  25  C.  C.  A.,  39,  79  Fed.,  471, 

C.  A.,  657,  128  Fed.,  209 ;  Atchison,  49  U.  S.  App.,  191,  affirmed  on  re- 

T.  &  S.   F.   R.    Co.   V.   Osborn,   78  hearing  in  28  C.  C.  A..  384,  84  Fed., 

C.  C.  A.,  378,  148  Fed.,  606;  Far-  274,  55  U.  S.  App.,  191. 

mers'  Loan  &  Trust  Co.  v.  Detroit,  ^6  Farmers'  Loan  &  Trust  Co.  v. 

B.   C.   &   A.   R.   Co.,  71   Fed.,   29;  Detroit,  B.  C.  &  A.  R.  Co.,  71  Fed., 

Farmers'    Loan    &    Trust    Co.    v.  29. 
Receivers — 34. 


530  RECEIVERS  [chap.  XI. 

of  the  receiver  to  meet  them,  the  authorities  are  somewhat  un- 
settled. The  tendency  at  the  present  time,  however,  is  to  make 
the  solution  of  the  question  depend  upon  whether  or  not  there 
has  been  a  diversion  of  income  prior  to  the  appointment  of 
the  receiver.  The  supreme  court  of  the  United  States  has 
made  the  distinction  between  debts  incurred  for  supplies  which 
were  necessary  for  the  business  of  the  road  and  those  which 
were  necessary  merely  for  its  preservation,  holding  that  claims 
of  the  latter  class  are  not  entitled  to  payment  out  of  the  corpus 
of  the  estate  in  the  hands  of  the  receiver  unless  a  prior  diver- 
sion of  income  can  be  shown. ^"^  And  the  court  of  appeals  of 
the  sixth  circuit  in  several  well  considered  cases  has  held  gen- 
erally that  claims  of  the  character  under  discussion  are  payable 
out  of  the  corpus  of  the  estate  only  when  there  has  been  a 
prior  diversion  of  income  and  then  only  to  the  extent  of  such 
diversion. ^^  And  the  rule  as  thus  laid  down  has  been  applied 
by  the  supreme  court  of  Alabama. ^^ 

§  394A;.  Statutory  liens  preserved;  when  interest  dis- 
allowed. Statutory  liens  upon  the  property  of  a  railway 
company,  given  to  creditors  furnishing  labor  and  supplies,  may 
be  enforced  and  the  rights  of  such  creditors  protected,  not- 
withstanding the  appointment  of  receivers  in  foreclosure  pro- 
ceedings against  the  company.  And  when  such  creditors  are 
entitled,  by  statute,  to  an  attachment  against  the  rolling  stock 
and  personal  property  of  the  railway,  the  rights  of  the  mort- 
gagees being  subordinated  by  the  statute  to  those  of  the  at- 
taching creditors,  they  may  enforce  their  rights  after  the  ap- 
pointment of  receivers  against  such  property,  and  if  that  shall 
prove  insufficient  they  may  be  preferred  in  payment  out  of 

97  Gregg  V.  Metropolitan  Trust  Townsend  B.  &  C.  Co.,  37  C.  C.  A., 
Co.,  197  U.  S.,  183,  25  Sup.  Ct.  Rep.,  396,  95  Fed.,  850;  Rhode  Island  Lo- 
415,  affirming  S.  C,  59  C.  C.  A.,  comotive  Works  v.  Continental  T. 
637.  124  Fed.,  721.  And  see  Rodger  Co.,  47  C.  C.  A.,  147,  108  Fed.,  5 ; 
Ballast  Car  Co.  v.  Omaha,  K.  C.  &  Gregg  v.  Mercantile  Trust  Co.,  48 
E.  R.  Co.,  83  C.  C.  A.,  403,  154  Fed.,  C.  C.  A.,  318,  109  Fed.,  220. 

629.  99Hammerly  v.   Mercantile  T.  & 

98  International     Trust      Co.     v.      D.  Co.,  123  Ala.,  596,  26  So.,  646. 


CHAP.  XI.]  RAILWAYS.  531 

the  net  income  of  the  receivers.^  So  when  the  receiver  has 
been  appointed  by  a  federal  court,  creditors  claiming  statutory- 
liens  upon  the  property  may  be  permitted  to  present  their 
claims  in  the  suit  in  which  the  receiver  was  appointed,  with 
like  effect  as  if  filed  in  the  courts  of  the  state.  And  creditors 
claiming  an  equitable  lien  under  demands  arising  in  other  states, 
where  no  statutory  lien  is  given,  may  establish  their  claims  in 
the  same  manner  against  the  fund  in  the  hands  of  the  re- 
ceiver.^  But  whether  interest  shall  be  paid  upon  demands 
which  are  allowed  by  the  court  out  of  the  funds  of  the  receiver- 
ship is  regarded  as  depending  upon  the  nature  of  the  cause  of 
action  itself,  rather  than  upon  the  fact  that  it  has  been  reduced 
to  judgment.  And  when  claims  for  damages  resulting  from 
the  operation  of  the  railway  are  reduced  to  judgment  in  ac- 
tions against  the  corporation,  and  are  afterward  allowed  as 
claims  against  the  receiver's  fund,  they  are  not  entitled  to  in- 
terest, since  as  against  the  fund  they  are  treated  as  divested  of 
their  character  as  judgments  and  rest  upon  the  equities  of  the 
original  cause  of  action,  the  damages  in  which  were  unliquidat- 
ed.3  And  in  general,  where  the  property  of  an  insolvent  rail- 
way company  passes  into  the  hands  of  a  receiver,  interest  on 
claims  should  not  be  allowed  against  the  fund,  since  the  delay 
in  such  case  is  the  act  of  the  law  and  is  a  necessary  incident  to 
the  settlement  of  the  estate."* 

§  394/.  Claims  for  construction;  board;  groceries.  As 
regards  claims  for  construction  prior  to  the  receivership,  when 
mortgages  securing  bonds  of  the  company  are  executed  upon 

1  Poland  V.  Railroad  Co.,  52  Vt.,  parties    in    interest.      Receivers    v. 
144.  Wortendyke,  27  N.  J.  Eq.,  658. 

2  Blair  v.  St.  L.,  H.  &  K.  R.  Co.,  3  Ex  parte  Brown,  18  S.  C,  87. 
19  Fed.,  861.     But  persons  claiming  And  see,  post,  §  803. 

an  equitable  lien  for  advances  upon  4  Thomas    v.    Western    Car    Co., 

rolling  stock  in  use  by  the  receiver  149  U.  S.,  95,  13  Sup.  Ct.  Rep.,  824, 

should  not  be  heard,  or  their  rights  reversing  in  part  and  modifying  S. 

determined,   in    advance   of   a   final  C,  36  Fed.,  808;  Grand  Trunk  Ry. 

hearing  as  to  all  claims  upon  such  Co.  v.  Central  Vt.  R.  Co.,  91  Fed., 

property,    when    conflicting    claims  569. 
and  liens  are  asserted  by  different 


532  RECEIVERS.  [chap.  XI. 

its  unfinished  road,  which  show  upon  their  face  that  the  work 
of  construction  shall  be  carried  to  completion  and  that  the 
mortgage  lien  shall  attach  to  the  road  as  completed,  the  new 
road  thus  constructed  after  the  execution  of  the  mortgages 
may  be  regarded  as  a  "useful  improvement"  for  the  purpose 
of  determining  the  right  of  creditors  for  such  construction  to 
priority  over  bondholders.  If  the  road  passes  into  the  hands  of 
a  receiver  before  payment  for  such  construction  is  made,  and 
if  the  receiver's  net  income  from  operation  is  diverted  to  pay- 
ment of  interest  upon  the  mortgage  bonds  and  to  permanent 
betterments  of  the  property,  priority  may  be  allowed  for  such 
construction  as  against  the  bondholders.  Upon  similar  grounds 
claims  for  labor  in  construction,  operation  and  maintenance, 
which  are  entitled  to  liens  under  the  laws  of  the  state,  may 
be  allowed  priority,  although  incurred  more  than  six  months 
before  the  receivership.  So  claims  of  boarding-house  keepers 
for  boardiflg  laborers  and  of  grocers  for  furnishing  supplies 
to  such  boarding  houses,  the  wages  of  the  laborers  having  been 
withheld  for  payment  of  such  claims,  but  not  applied  for  that 
purpose,  are  entitled  to  like  priority.  Nor  does  the  taking 
of  additional  security,  as  the  note  of  the  company,  for  such 
claims  deprive  them  of  their  right  to  priority.^  And  where, 
prior  to  the  appointment  of  a  receiver  over  a  railway  com- 
pany, work  had  been  commenced  upon  the  construction  of  a 
building  to  be  occupied  as  a  hotel  and  for  offices  of  the  com- 
pany, and  the  building  was  afterward  completed  under  a  con- 
tract with  the  receiver,  and  it  appeared  that  the  work  was  for 
the  benefit  of  the  railroad  and  its  receiver  and  was  in  other 
respects  in  furtherance  of  the  interests  of  the  road  and  that 
the  building  must  be  completed  or  the  work  already  done  would 
be  a  total  loss,  it  was  held  that  the  balance  due  for  the  comple- 
tion of  the  structure  was  entitled  to  payment  as  a  preferred 
claim.  And  it  was  further  held  that  the  fact  that  the  building 
was  not  covered  by  the  mortgage  rendered  it  more  equitable 

5  Mcllhenny  v.   Binz,  80  Tex.,  1,    13  S.  W.,  655. 


CHAP.   XI.] 


RAILWAYS. 


533 


that  the  proceeds  of  any  sale  of  the  building  should  be  applied 
to  the  payment  of  the  cost  of  its  construction. ^ 

§  394wi.  Receiver  not  an  assignee  of  term  under  lease; 
how  far  liable  for  rent.  A  receiver  of  a  railway,  by  taking 
possession  of  leased  lines  which  are  embraced  in  the  order  ap- 
pointing him,  does  not  thereby  become  an  assignee  of  the 
term  or  liable  for  rent  under  the  covenants  of  the  leases.  He 
is  entitled  to  a  reasonable  time  after  taking  possession  to  de- 
termine whether  it  is  advantageous  to  retain  such  leased  lines, 
and  when  within  such  time  he  reports  to  the  court  that  a  leased 
line  is  not  profitable,  and  the  court  afterward  surrenders  it 
to  the  owners,  rental  for  the  use  of  such  line  by  the  receiver 
will  not  be  decreed  priority  out  of  the  proceeds  of  sale  of  the 
mortgaged  premises.*^    Upon  the  other  hand,  where  the  court 


6  Girard  Insurance  &  Trust  Co. 
V.  Cooper,  162  U.  S.,  529,  16  Sup. 
Ct.  Rep.,  879,  40  L.  Ed.,  1062,  af- 
firming S.  C,  2  C.  C.  A.,  245,  51 
Fed.,  332,  4  U.  S.  App.,  631. 

TQuincy,  M.  &  P.  R-  Co.  v. 
Humphreys,  145  U.  S.,  82,  12  Sup. 
Ct.  Rep.,  787,  affirming  S.  C,  34 
Fed.,  259;  St.  Joseph  &  St.  L.  R. 
Co.  V.  Humphreys,  145  U.  S.,  105, 
12  Sup.  Ct.  Rep.,  795,  affirming  S. 
C,  34  Fed.,  259;  United  States 
Trust  Co.  V.  Wabash  W.  R.  Co., 
150  U.  S.,  287,  14  Sup.  Ct.  Rep., 
86;  Seney  v.  Wabash  W.  R.  Co., 
150  U.  S.,  310,  14  Sup.  Ct.  Rep.,  94; 
Ames  V.  Union  Pacific  R.  Co.,  60 
Fed.,  966;  Carswell  v.  F.  L.  &  T.  Co., 
20  C.  C.  A.,  282,  74  Fed.,  88,  43  U.  S. 
App.,  300;  Mercantile  Trust  Co.  v. 
Farmers'  L.  &  T.  Co.,  26  C.  C.  A., 
383,  81  Fed.,  254,  49  U.  S.  App.,  462, 
affirming  ».  C,  71  Fed.,  601;  Cen- 
tral Trust  Co.  V.  Continental  Trust 
Co.,  30  C.  C.  A.,  235,  86  Fed.,  517, 
58  U.  S.  App.,  6.04.  And  see,  ante, 
§  273.  And  see  Sunflower  Oil  Co. 
V.  Wilson,  142  U.  S.,  313,  12  Sup. 


Ct.  Rep.,  235;  Savannah,  F.  &  W. 
R.  Co.  V.  J.,  T.  &  K  W.  R.  Co.,  24 
C.  C.  A.,  437,  79  Fed.,  35,  52  U.  S. 
App.,  51 ;  Park  v.  New  York,  L.  E. 
&  W.  R.  Co.,  57  Fed.,  799;  New 
York,  P.  &  O.  R.  Co.  v.  New  York, 
L.  E.  &  W.  R.  Co.,  58  Fed.,  268; 
Central  Railroad  &  Banking  Co.  v. 
Farmers'  L.  &  T.  Co.,  79  Fed.,  158; 
Commonwealth  v.  Franklin  Insur- 
ance Co.,  115  Mass.,  278;  Gaither  v. 
Stockbridge,  67  Md.,  222,  9  Atl.,  632, 
10  Atl.,  309 ;  Seibert  v.  Minneapolis 
&  St.  L.  Ry.  Co.,  58  Minn.,  53,  59 
N.  W.,  879.  In  Spencer  v.  Brooks, 
97  Ga.,  681,  25  S.  E.,  480,  it  was 
held  that  where  an  employee  of  a 
railway  company  had  entered  into  a 
contract  with  the  company  agreeing 
to  be  bound  by  a  rule  prohibiting 
brakemen  to  go  between  cars  to 
couple  and  uncouple  them,  such  con- 
tract was  inadmissible  in  evidence 
upon  behalf  of  the  receiver  of  the 
company  in  an  action  brought  by  a 
brakeman  against  the  receiver  for 
injuries  suffered  while  uncoupling 
cars. 


534  RECEIVERS.  [chap.  XI. 

determines  that  it  is  for  the  best  interests  of  the  parties  con- 
cerned that  the  receiver  should  adopt  the  leases  covering  leased 
lines,  the  rents  reserved  by  them  become  an  integral  part  of 
the  operating  expenses  of  the  receivership  and  as  such  are 
entitled  to  a  preference  over  the  mortgage  indebtedness  out  of 
the  earnings  of  the  receivership  or  the  proceeds  of  the  sale. 
And  in  such  case  the  determination  of  the  question  whether 
it  is  to  the  best  interest  of  all  concerned  that  the  leases  should 
be  adopted  or  renounced  is  one  of  business  and  administrative 
policy  resting  largely  in  the  discretion  of  the  chancellor  and 
his  judgment  in  the  matter,  in  the  absence  of  a  clear  abuse  of 
such  discretion,  will  not  be  disturbed  upon  appeal.^  And  when 
the  company  is  operating  leased  lines  prior  to  a  receivership  up- 
on a  bill  for  foreclosure  by  mortgage  bondholders,  and  immedi- 
ately upon  the  appointment  of  the  receivers  the  lessor  demands 
of  them  the  adoption  of  the  lease  or  the  surrender  of  the  leased 
lines,  and  against  his  protest  a  delay  of  several  weeks  occurs 
in  determining  whether  the  receivers  will  elect  to  surrender  the 
property,  which  is  then  surrendered,  for  the  period  of  such  use 
by  the  receivers  they  may  be  decreed  to  pay  full  rental  in  ac- 
cordance with  the  terms  of  the  lease.  Nor,  in  such  case,  will 
the  receivers  be  permitted  to  set  off  against  such  rental  de- 
mands in  favor  of  the  lessee  company  and  against  the  lessor 
which  accrued  prior  to  the  receivership.^  If,  however,  the  re- 
ceivers are  ordered  to  take  possession  of,  operate  and  manage 
all  rolling-stock  leases  and  other  property  of  the  company,  and 
they  take  possession  of  sleeping-cars  held  under  contract  or 
lease  by  the  company,  and,  with  full  knowledge  of  such  con- 
tract and  of  its  covenants,  they  continue  to  use  such  cars  until 
the  expiration  of  the  term,  they  will  be  treated  as  assignees  of 

8  Mercantile    Trust    Co.    v.    Far-  9  Farmers'  Loan  &  Trust   Co.  v. 

mers'  L.  &  T.  Co.,  26  C.  C.  A.,  383,  Northern    Pacific   R.   Co.,^  58   Fed., 

81    Fed.,   254,  49   U.    S.    App.,  462,  257.     And   see   Charlotte,   C.   &   A. 

affirming  S.  C,  71  Fed.,  601;  Cen-  R.   Co.  v.   C.   &   L.   N.   G.   R.   Co., 

tral  Trust  Co.  v.  Continental  Trust  118  N.  C,  1078,  24  S.  E.,  769;  Clyde 

Co.,  30  C.  C.  A.,  235,  86  Fed.,  517,  v.  R.  &  D.  R.  Co.,  63  Fed.,  21. 
58  U.  S.  App.,  604. 


CHAP.  XI.]  RAILWAYS.  535 

the  company  and  will  be  liable  for  necessary  repairs  to  the  cars 
upon  their  return  to  the  lessor,  to  the  same  extent  that  the  les- 
see would  have  been  liable.^^  And  where  a  railway  company 
was  operating  part  of  its  line  under  a  lease  from  another  com- 
pany, by  which  the  lessee  agreed  to  pay  all  taxes  upon  the 
leased  line,  and  the  receiver  of  the  lessee  railway  company  has 
adopted  and  affirmed  the  lease,  a  claim  for  prior  taxes  which 
have  been  paid  by  the  lessor  but  for  which  the  lessee  was  li- 
able under  its  agreement  is  entitled  to. priority  as  a  preferred 
claim. ^1 

§  394w.  Paramount  lien  enforced  by  resale  of  road. 
When  an  indebtedness  is  incurred  by  the  receiver  of  a  railway, 
under  an  order  of  the  court,  in  discharging  a  paramount  lien 
upon  the  mortgaged  property,  and  a  sale  is  had  without  satis- 
fying such  indebtedness,  the  sale  being  made  subject  to  such 
liens  as  the  court  may  thereafter  determine,  the  appropriate 
method  of  satisfying  such  demand,  in  default  of  payment  by 
the  purchaser,  is  by  a  resale  of  the  property,  or  of  so  much  as 
may  be  necessary  for  this  purpose.  And  in  such  case,  satis- 
faction should  be  had  by  a  resale,  rather  than  by  setting  aside 
the  former  sale  after  its  confirmation  and  after  the  execution 
of  a  deed  to  the  purchaser.^^ 

10  Easton  v.  Houston  &  T.  C.  R.  the  receiver  was  not  appointed  until 
Co.,  38  Fed.,  784.  1894. 

11  United  States  Trust  Co.  v.  12  Farmers'  Loan  &  Trust  Co.  v. 
Mercantile  Trust  Co.,  31  C.  C.  A.,  Newman,  127  U.  S.,  649,  8  Sup.  Ct. 
427,  88  Fed.,  140,  59  U.  S.  App.,  Rep.,  1364.  This  case  in  effect 
330.  It  is  to  be  observed  in  this  overrules  Farmers  Loan  &  Trust 
case  that  the  taxes  in  question  were  Co.  v.  Burlington  &  S.  W,  R.  Co., 
for  the  years  1887  and  1888,  while  32  Fed.,  805. 


536  RECEIVERS.  [chap.  XI. 


V.  Actions  Against  the  Receiver. 

§  395.     Receivers  answerable  in  official  capacity  for  injuries  sustained; 

judgment    not    personal;    action    need    not   be    at    receiver's 

domicile. 
395a.  Leave  to  sue  receiver  necessary;  relief  on  petition. 
395b.  Rule  changed  by  act  of  congress;  construction  of  act. 
395c.  Removal  of  cause  by  receiver  to  federal  court. 
395d.  New  York  decisions  unsettled;  liability  for  injuries;  rental  of 

leased  lines. 

396.  Railway   company   in   hands   of   receiver   not   responsible   for 

negligence  of  his  servants;  liability  of  company  for  failure 
to  comply  with  penal  statute. 

397.  Statutory  liability  of  company;  judgment  not  enforceable  by 

state  court  out  of  funds  held  by  receiver  of  United  States 

court. 
397a.  Suit  against  company  after  surrender  of  possession  by  receiver. 
397b.  Receiver's    liability    official,    not    personal;    may    be    enforced 

against  his  successor. 

398.  Receivers  liable  to  action  for  breach  of  duty  as  common  car- 

riers. 

398a.  Right  of  way;  contract  with  express  company;  personal  con- 
tracts of  company  not  binding  on  receiver. 

398&.  Receiver  not  liable  after  discharge;  liability  of  purchasers  of 
road. 

§  395.  Receivers  answerable  in  official  capacity  for  in- 
juries sustained;  judgment  not  personal;  action  need  not 
be  at  receiver's  domicile.  It  has  elsewhere  been  shown, 
that,  as  to  rights  of  action  which  may  be  maintained  against 
receivers,  they  are,  in  general,  the  same  which  might  have  been 
maintained  against  the  person  to  whose  estate  and  rights  the 
receiver  succeeds.  And  in  conformity  with  this  general  doc- 
trine, when  the  affairs  of  a  railway  company  have  passed  into 
the  hands  of  receivers,  who  are  operating  the  road  under  the 
direction  of  the  court,  having  exclusive  charge  of  its  manage- 
ment and  of  the  employment  of  operatives  and  employees,  the 
entire  control  of  the  company  having  passed  to  the  receivers 
as  fully  as  it  was  before  exercised  by  the  officers  of  the  road, 
the  receivers  may  be  held  answerable  in  their  official  capacity 
for  injuries  sustained,  in  the  same  manner  that  the  corpora- 


CHAP.   XI.] 


RAILWAYS. 


537 


tion  would  have  been  liable.  An  action  will,  therefore,  lie 
against  such  receivers  in  their  official  capacity,  leave  of  court 
being  obtained,  to  recover  for  personal  injuries  sustained  by 
reason  of  the  negligent  management  of  the  road.  And  in  de- 
termining the  liability  of  the  receivers,  in  such  cases,  upon 
such  questions  as  negligence  of  principal  and  of  agent,  acts  of 
co-employees,  responsibility  for  defective  machinery,  and  kin- 
dred questions,  the  same  principles  are  applicable  which  gov- 
ern this  class  of  actions  when  instituted  against  railways 
themselves.12    In  such  an  action,  the  receivers  can  not  exempt 


13  Meara's  Administrator  v.  Hol- 
brook,  20  Ohio  St.,  137;  Potter  v. 
Bunnell,  id.,  159;  Klein  v.  Jewett, 
26  N.  J.  Eq.,  474;  Erwin  v.  Daven- 
port, 9  Heisk.,  44;  Ex  parte  Brown, 
IS  S.  C,  518;  Ex  parte  Johnson, 
19  S.  C,  492;  Blumenthal  v.  Brain- 
erd,  38  Vt.,  402;  Lyman  v.  Central 
Vermont  R.  Co.,  59  Vt.,  167,  10  Atl., 
346;  Missouri  Pacific  R.  Co.  v. 
Texas  Pacific  R.  Co.,  30  Fed.,  167; 
Missouri  Pacific  R.  Co.  v.  Texas 
Pacific  R.  Co.,  30  Fed.,  169;  Central 
Trust  Co.  V.  Wabash,  St.  L.  &  P. 
R.  Co.,  26  Fed.,  12;  Hornsby  v. 
Eddy,  56  Fed.,  461 ;  Rouse  v.  Harry, 
55  Kan.,  589,  40  Pac,  1007 ;  Fuller- 
ton  V.  Fordyce,  121  Mo.,  1,  25  S. 
W.,  587,  42  Am.  St.  Rep.,  516;  St. 
Louis  .S.  W.  Ry.  Co.  v.  Holbrook, 
19  C.  C.  A.,  385,  73  Fed.,  112,  41 
U.  S.  App.,  33.  See,  also,  Ohio  & 
Mississippi  R.  Co.  v.  Davis,  23  Ind., 
553;  Nichols  v.  Smith,  115  Mass., 
332;  Sloan  v.  Central  Iowa  R.  Co., 
62  Iowa,  728,  16  N.  W.,  331 ;  Paige 
V.  Smith,  99  Mass.,  395.  But  see, 
contra,  Cardot  v.  Barney,  63  N.  Y., 
281.  In  South  Carolina  &  G.  R.  Co. 
V.  C,  C.  G.  &  C.  Ry.  Co.,  35  C.  C. 
A.,  423,  93  Fed..  543,  it  was  held 
that  where  the  receiver  of  an  in- 
solvent   railway   company    had    en- 


tered into  a  valid  agreement  by 
which  another  railway  company  was 
to  operate  the  insolvent  railroad, 
whereby  the  latter  became  the  agent 
of  the  receiver,  and  judgments  for 
personal  injuries  resulting  from  the 
operation  of  the  road  had  been  re- 
covered against  the  agent  carrier, 
the  latter  was  entitled  to  be  reim- 
bursed by  the  receiver  on  account 
of  such  judgments,  where  it  ap- 
peared that  the  injuries  were  not 
the  result  of  recklessness  or  gross 
carelessness  upon  the  part  of  the 
operating  railway  and  that  the  lat- 
ter had  exercised  due  care  in  the 
management  of  the  road  and  in  the 
selection  of  employees.  In  Georgia 
the  liability  of  receivers  and  others 
operating  railways  has  been  defined 
by  statute.  Laws  of  1895,  p.  103. 
See  Barry  v.  McGhee,  100  Ga.,  759, 
28  S.  E.,  455.  Meara's  Administra- 
tor V.  Holbrook,  20  Ohio  St.,  137, 
supra,  was  an  action  by  an  adminis- 
trator, brought  by  leave  of  court 
against  the  receivers  of  a  railroad, 
for  personal  injuries  alleged  to  have 
been  sustained  by  the  deceased,  who 
was  a  laborer  on  the  railroad,  in  the 
employ  of  defendants,  in  attempting 
to  couple  two  cars  in  use  upon  the 
road.    The  cause  of  action  was  set 


538 


RECEIVERS. 


[chap.  XI. 


themselves  from  liability  upon  the  ground  that  they  are  public 
officers,  and  as  such,  not  responsible  for  the  negligence  of 
their  employees,  nor  on  the  ground  that  they  are  agents  and 
trustees;  for,  as  to  the  public  and  as  to  their  employees,  the  re- 
ceivers occupy  neither  of  these  capacities,  there  being  no  tangi- 
ble principle  behind  them  who  can  be  held  liable  in  such  ac- 


forth  in  a  petition  and  an  amended 
petition,  to  both  of  which  demurrers 
were  filed.  The  demurrers  were 
sustained  in  the  court  below  and 
judgment  was  rendered  against  the 
plaintiff.  On  error  to  the  supreme 
court,  the  judgment  was  reversed. 
The  court,  Day,  J.,  observe,  p.  147: 
'The  demurrers  admit  the  truth  of 
the  allegations  contained  in  the  peti- 
tions.- It  is  averred  in  each  of  them 
that  Meara  was  employed  by  the  re- 
ceivers as  a  laborer  on  the  railroad. 
It  is,  therefore,  not  questioned  but 
that  his  position  as  such  was  subor- 
dinate to  the  managing  agents  and 
superintendents  of  the  receivers. 
It  is  averred  in  each  of  the  peti- 
tions that  the  death  of  Meara  was 
caused  while  engaged  in  the  busi- 
ness of  the  receivers,  without  any 
fault  of  his  own.  In  the  original 
petition  it  is  alleged  to  have  been 
caused  by  the  negligence  of  the 
agents  and  superintendents  of  the 
receivers;  and,  in  both  the  amended 
petitions,  by  the  negligence  of  the 
receivers  themselves.  The  questions 
are,  therefore,  presented,  whether  a 
receiver  operating  a  railroad  is  an- 
swerable in  his  official  capacity  for 
an  injury  to  his  servant,  sustained, 
while  in  his  employment,  by  reason 
of  the  negligence  of  the  receiver,  or 
the  negligence  of  his  agents  in  a 
position  superior  to  that  of  the  serv- 
ant. On  the  strength  of  the  authori- 
ties   already   cited,    as    well    as    the 


reason  and  justice  of  the  case,  we 
think  the  question  of  his  liability,  in 
an  action  against  him  as  receiver, 
should  be  determined  by  the  same 
rules  and  principles  that  are  appli- 
cable to  persons  or  corporations  en- 
gaged in  the  business  of  operating 
a  railroad.  .  .  .  Nor  would  a  re- 
covery against  him,  and  satisfac- 
tion out  of  the  fund  properly  ap- 
plicable to  that  purpose,  work  a 
greater  hardship  to  the  creditors 
and  stockholders  of  the  company 
than  that  always  sustained  by  them 
where  the  company  itself  is  made 
liable  for  like  grievances  when  it 
operates  its  own  road.  On  the  con- 
trary, if  the  receiver  be  not  held 
officially  chargeable,  in  many  in- 
stances they  might  gain  an  advan- 
tage, by  his  operating  the  road,  over 
what  they  would  have  if  the  com- 
pany conducted  its  own  business, 
subject  to  its  incidental  losses.  Nor 
does  it  follow,  if  the  receiver  be 
held  answerable  as  the  company 
would  have  been  if  it  had  operated 
the  road,  that  he  would  be  relieved 
from  accountability  to  his  cestui 
que  trust  for  losses  they  might 
sustain  through  his  personal  mis- 
conduct or  negligence.  In  every 
view,  therefore,  it  accords  with 
sound  principle  and  reason,  that  a 
receiver,  exercising  the  franchises 
of  a  railroad  company,  should  be 
held  amenable  in  his  official  ca- 
pacity to  the  same  rules  of  liability 


CHAP.  XI.] 


RAILWAYS. 


539 


tions.i^  /^n^  since  they  exercise  the  functions  and  powers  of 
common  carriers,  they  can  not  escape  corresponding  duties  and 
liabilities.!^  When,  therefore,  a  statute  of  the  state  provides 
that  railway  companies  shall  be  liable  for  all  damages  which 
may  be  sustained  by  any  employee  by  reason  of  the  negligence 
of  other  employees,  or  when  damages  are  given  by  statute  for 
the  killing  of  cattle  by  a  railway  company,  a  receiver  operating 
a  railway  is  liable  in  like  manner  and  to  the  same  extent  as  the 
company  itself  would  have  been.i^    It  is,  however,  important 


that  are  applicable  to  the  company 
while  it  exercises  the  same  powers 
of  operating  the  road.  In  deter- 
mining the  case  before  us,  then,  it 
only  remains  for  us  to  apply  the 
ordinary  principles  controlling  cases 
of  this  class.  Where  a  subordinate 
servant  is  injured,  without  his  own 
fault,  while  engaged  in  the  business 
of  his  employment,  by  reason  of  the 
negligence  of  his  master  or  his 
agents,  the  master  is  liable  to  him  in 
damages.  Fifield  v.  Northern  Rail- 
road, 42  N.  H.,  225;  Brydon  v. 
Stewart,  2  Macq.  H.  L.,  30;  Rail- 
road V.  Keary,  3  Ohio  St.,  201. 
Meara  was  the  servant  of  the  re- 
ceivers and  was  injured  according 
to  the  cases  made  in  the  several 
petitions  demurred  to,  either 
through  the  negligence  of  the  re- 
ceivers, or  that  of  their  agents  in  a 
position  superior  to  that  of  Meara. 
The  receivers  are,  therefore,  liable. 
It  follows  that  the  court  of  common 
pleas  erred  in  sustaining  the  de- 
murrers of  the  receivers  to  each  of 
the  petitions,  and  that  the  judgment 
in  their  favor  must,  therefore,  be 
reversed." 

14  Mcara's  Administrator  v.  Hol- 
brook,  20  Ohio  St.,  137.  See,  con- 
tra. Cardgt  v.  Barney,  63  N.  Y.,  281. 

15Z:-r  parte  Brown,  15  S.  C,  518. 


16  Hornsby  v.  Eddy,  56  Fed.,  461 ; 
Central  Trust  Co.  v.  Wabash,  St. 
L.  &  P.  R.  Co.,  26  Fed.,  12;  Inter- 
national &  G.  N.  Ry.  Co.  V.  Bender, 
87  Tex.,  99,  26  S.  W.,  1047.  But  see 
Central  Trust  Co.  v.  Wabash,  St. 
L.  &  P.  R.  Co.,  30  Fed.,  344.  In 
Georgia  it  is  held  that  a  statute  pro- 
viding that  railway  companies  shall 
be  liable  for  injuries  caused  to  their 
employees  through  the  negligence 
of  co-employees  does  not  apply  to 
the  receiver  of  a  railway  company 
and  that  the  fellow-servant  rule 
therefore  remains  in  force.  And  it 
is  accordingly  held  that  the  receiver 
is  not  liable  where  the  injury  results 
from  the  negligence  of  a  fellow- 
servant.  Henderson  v.  Walker,  55 
Ga.,  481 ;  Thurman  v.  Cherokee  R. 
Co.,  56  Ga.,  376;  Youngblood  v. 
Comer,  97  Ga.,  152,  23  S.  E., 
509,  25  S.  E.,  838;  Robinson  v. 
Huidekoper,  298  Ga.,  306,  25  S. 
E.,  440;  Central  Trust  Co.  v. 
East  Tennessee,  V.  &  G.  Ry. 
Co.,  69  Fed.,  353,  followed  by  Same 
V.  Same,  69  Fed.,  357.  But  in 
Minnesota  it  is  held  that  the  em- 
ployees of  the  receiver  of  a  rail- 
way company  who  is  operating  and 
managing  the  road  come  within  the 
protection  of  the  statute  of  that 
state    which    abolishes    the    fellow- 


540 


RECEIVERS. 


[chap.  XI. 


to  observe  that  judgment  should  be  rendered  against  a  re- 
ceiver in  his  official  character  only  and  it  should  not  be  made  a 
lien  upon  the  property  or  earnings  in  his  possession.^"^  Such 
a  judgment  is  regarded  as  merely  ascertaining  and  fixing  the 
amount  due  to  the  plaintiff,  leaving  the  court  which  appointed 
the  receiver  to  determine  how  and  when  it  may  be  paid  out  of 
the  assets  in  the  receiver's  hands.^^  And  since  the  action  is 
brought  against  the  receiver  in  his  official  capacity  and  not 
against  him  personally,  it  is  not  necessary  that  it  should  be 
brought  at  the  domicile  of  the  receiver,  but  where  the  road  is 
operated  through  several  counties,  it  may  be  brought  in  the 
county  in  which  the  cause  of  action  has  arisen.^^  But  the 
receiver  of  a  railway  company  is  not  liable  for  damages  for 
personal  injuries  suffered  prior  to  his  appointment  and  he  is 
therefore  not  a  proper  party  to  an  action  brought  for  the  recov- 


servant  rule  in  its  application  to 
railway  companies.  Mikkelson  v. 
Truesdale,  63  Minn.,  137,  65  N.  W., 
260.  And  in  Peirce  v.  Van  Dusen, 
24  C.  C.  A.,  280,  78  Fed.,  693,  47  U. 
S.  App.,  339,  it  was  held  that  the 
statute  of  Ohio  which  provided 
that  railway  companies  within  the 
state  should  not  make  certain  con- 
tracts for  exemption  from  liability 
to  employees,  and  also  abolished 
under  certain  circumstances  the  fel- 
low-servant rule,  did  not  apply  to  a 
receiver  appointed  over  such  a  rail- 
way company,  and  that  it  made  no 
difference  in  such  case  that  the  re- 
ceiver had  been  appointed  by  a  fed- 
eral court. 

17  Brown  v.  Brown,  71  Tex.,  355, 
9  S.  W.,  261. 

18  Harding  v.  Nettleton,  86  Mo., 
658;  Brown  v.  Brown,  71  Tex.,  355, 
9  S.  W.,  261.  Where  receiver's 
certificates,  by  the  order  authoriz- 
ing their  issue  and  upon  their  face, 
are  made  a  first  and  prior  lien  up- 


on the  property  of  the  company  and 
upon  all  net  income  derived  from 
its  operation  after  the  payment  of 
operating  expenses  and  the  costs 
of  administration,  a  claim  for  per- 
sonal injuries  suffered  during  the 
operation  of  the  road  by  the  re- 
ceiver is  to  be  regarded  as  an  ex- 
pense incurred  in  the  operation  of 
the  road  and,  as  such,  it  is  entitled 
to  payment  out  of  the  income  or 
out  of  the  corpus  in  preference  to 
such  certificates.  Anderson  v.  Con- 
diet,  35  C.  C.  A.,  335,  93  Fed.,  349. 
As  to  the  liability  of  the  corpus  of 
the  estate  in  the  hands  of  the  re- 
ceiver of  a  railway  company  for  the 
satisfaction  of  a  claim  for  personal 
injuries  suffered  prior  to  the  ap- 
pointment of  the  receiver,  see  Fore- 
man V.  Central  Trust  Co.,  18  C.  C. 
A.,  321,  71  Fed.,  776,  30  U.  S.  App., 
653. 

19  Ball  V.  Mabry,  91  Ga.,  781,  18 
S.  E.,  64. 


CHAP.  XI.]  RAILWAYS.  541 

ery  of  such  damages. ^0  And  an  ancillary  receiver  appointed 
in  a  foreign  state  over  the  property  of  a  railway  company  can 
not  be  held  liable  for  damages  for  personal  injuries  suffered 
in  the  state  of  original  appointment  and  resulting  from  the 
operation  of  the  road  in  that  state  by  the  original  receiver. ^i 
§  395a.  Leave  to  sue  receiver  necessary;  relief  on  peti- 
tion. It  is  to  be  borne  in  mind  that  the  general  doctrine 
elsewhere  discussed,22  requiring  leave  of  court  to  be  granted 
before  suit  may  be  brought  against  a  receiver,  applies,  in  the 
absence  of  legislation  to  the  contrary,  with  equal  force  in  ac- 
tions against  receivers  of  railways.23  And  it  rests  wholly  with- 
in the  discretion  of  the  court  appointing  the  receiver,  upon 
leave  being  asked  to  bring  an  action  against  him,  to  grant  per- 
mission to  bring  an  independent  suit,  or  to  determine  the  mat- 
ter upon  petition  in  the  cause  in  which  he  was  appointed,  di- 
recting, if  necessary,  an  issue  to  be  tried  by  a  jury  as  to  the 
damages  sustained.24  The  general  usage  is  to  determine  all 
demands  against  a  receiver  upon  petition  in  the  original  cause, 
and  this  practice  is  both  more  expeditious  and  more  economical 
than  by  resort  to  an  independent  action.     And  the  right  to  a 

20  Northern  Pacific  R.  Co.  v.  3  Fed.,  97;  S.  C,  2  Flippin,  704; 
Heflin,  27  C.  C.  A.,  460.  83  Fed.,  Central  Trust  Co.,  v.  Wabash,  St. 
93,  48' U.  S.  App.,  562.  And  see,  L.  &  P.  R.  Co.,  23  Fed.,  858; 
post,  §  397&.  Central  Trust  Co.  v.  D.  &  R.  G.  R. 

21  Union  Trust  Co.  v.  Atchison,  Co.,  38  C.  C.  A.,  143,  97  Fed.,  239. 
T.  &  S.  F.  R.  Co.,  87  Fed.,  530.  And  see  Lyman  v.  Central  Vermont 

22  Chapter  VIII,'  subdivision  V,  R.  Co.,  59  Vt.,  167,  10  Atl.,  346, 
ante.  where   it   is   held   that   when   a   re- 

23  Barton  v.  Barbour,  104  U.  S.,  ceiver  of  a  railway  is  also  operating 
126,  affirming  S.  C,  3  MacArthur,  in  connection  therewith  another 
212;  Melendy  v.  Barbour,  78  Va.,  road  as  lessee,  he  is  regarded  as 
544;  Kennedy  v.  I.,  C.  &  L.  R.  Co.,  operating  the  leased  road,  not  in  his 
3  Fed.,  97;  S.  C,  2  Flippin,  704.  official  capacity,  but  under  contract 
See,  contra,  Kinney  v.  Crocker,  as  lessee,  and  that  an  action  may  be 
18  Wis.,  74;  St.  Joseph  &  Denver  brought  against  him  to  recover  for 
City  R.  Co.  V.  Smith,  19  Kan.,  225;  injuries  sustained  by  the  negligence 
Blumcnthal  v.  Brainerd,  38  Vt.,  of  his  servants  in  the  operation  of 
402;  Paige  v.  Smith,  99  ]\Iass.,  395.  such  leased  road,  without  leave  of 

24  Melendy   v.    Barbour,    78    Va.,      court. 
544;  Kennedy  v.  I.,  C.  &  L.  R.  Co., 


542  RECEIVERS.  [chap.  XI. 

trial  by  jury,  in  such  cases,  is  treated  as  wholly  discretionary 
with  the  court,  which  may  direct  the  issues  of  fact  to  be  tried 
by  a  jury  if  it  sees  fit,  or  may  refer  them  to  a  master  for  de- 
termination.25  But  it  is  regarded  as  the  better  practice,  when 
the  cause  of  action  is  in  tort,  to  grant  leave  to  bring  an  inde- 
pendent action  at  law  against  the  receiver,  a  court  of  equity 
not  being  the  proper  forum  for  determining  questions  of  tort 
and  of  damages. 26  And  when  a  street  railway  company  is  au- 
thorized by  statute  to  intersect  with  and  use  the  lines  of  an- 
other company,  upon  payment  of  just  compensation,  the  court, 
having  appointed  a  receiver  over  an  existing  street  railway, 
has  power  to  entertain  a  petition  by  another  company  to  deter- 
mine the  compensation  to  be  paid  by  it  for  the  use  of  the  tracks 
and  appurtenances  in  the  receiver's  possession.^'^  But  since  a 
receiver  of  a  railway  is  not  liable  to  an  action  for  injuries  sus- 
tained before  his  appointment  and  while  the  road  was  op- 
erated by  the  company,  leave  of  court  will  not  be  granted  to 
bring  such  action,  and  the  person  aggrieved  will  be  left  to  pur- 
sue his  remedy  against  the  company.28 

§  3956.  Rule  changed  by  act  of  congress;  construction 
of  act.  The  common-law  rule  requiring  leave  of  court 
before  bringing  an  action  against  a  receiver  has  been  changed 
by  act  of  congress,  as  regards  actions  brought  against  re- 
ceivers of  United  States  courts,  in  respect  to  their  transac- 
tions in  carrying  on  the  business  committed  to  their  charge, 
as  to  which  matters  suit  may  now  be  brought  without  leave  of 
court.29    The  effect  of  this  act  is  to  authorize  the  bringing  of 

25  Kennedy  v.  I.,  C.  &  L.  R.  Co.,  may  be  reviewed  upon  the  merits  on 
3  Fed.,  97;  S.  C,  2  Flippin,  704.  appeal.     And  see  Central  Trust  Co. 

26  Palys  V.  Jewett,  32  N.  J.  Eq.,  v.  D.  &  G.  R.  Co.,  38  C.  C.  A.,  143, 
302.    But  it  is  held  in  the  same  case,  97  Fed.,  239. 

that  where  the  person  seeking  dam-  -~  Pacific  R.  Co.  v.  Wade,  91  Cal., 
ages  for  injuries  sustained  while  449,  27  Pac,  768. 
the  road  is  operated  by  a  receiver  28  Finance  Co.  v.  Charleston,  C.  h 
submits  his  demand  by  petition  in  C.  R.  Co.,  46  Fed.,  508. 
the  equity  suit,  and  both  parties  29  Section  3,  of  the  act  of  con- 
submit  to  a  hearing  in  this  form,  gress  approved  T^Tarch  3,  1887,  c. 
the   judgment    of   the   court   below  373,   24    Stat.,   554,   as   revised   and 


CHAP.  XL] 


RAILWAYS. 


543 


actions  against  such  receivers  in  all  matters  growing  out  of 
their  management  of  the  property  in  their  charge,  in  any  court 
having  jurisdiction  of  the  subject-matter,  and  without  leave  of 
the  federal  court  by  which  the  receiver  was  appointed.  And 
while  no  other  court  may  interfere  with  the  custody  of  the 
property  in  the  receiver's  possession,  it  may  yet  establish  a  debt 
by  its  judgment  against  the  receivership,  leaving  the  manner 
of  its  payment  and  the  adjustment  of  all  equities  between  dif- 
ferent claimants  interested  in  the  property  to  the  determina- 
tion of  the  court  which  appointed  the  receiver.^^  And  under 


corrected  by  an  act  approved  Au- 
gust 13,  1888,  c.  866,  25  Stat.,  436, 
provides  as  follows :  "That  every 
receiver  or  manager  of  any  proper- 
ty, appointed  by  any  court  of  the 
United  States,  may  be  sued  in  re- 
spect of  any  act  or  transaction  of 
his  in  carrying  on  the  business  con- 
nected with  such  property,  without 
the  previous  leave  of  the  court  in 
which  such  receiver  or  manager 
was  appointed;  but  such  suit  shall 
be  subject  to  the  general  equity 
jurisdiction  of  the  court  in  which 
such  receiver  or  manager  was  ap- 
pointed, so  far  as  the  same  shall  be 
necessary  to  the  ends  of  justice." 
1  U.  S.  Comp.  Stat.  1901,  p.  582;  4 
Fed.  Stat.  Ann.,  387. 

30  Dillingham  v.  Russell,  73  Tex., 
47,  11  S.  W.,  139;  Dillingham  v. 
Hawk,  9  C.  C.  A.,  101,  60  Fed.,  494, 
23  U.  S.  App.,  273.  23  L.  R.  A.,  517; 
Reinhart  v.  Sutton,  58  Kan..  726,  51 
Pac,  221;  Chesapeake,  O.  &  S.  R. 
R.  Co.'s  Receivers  v.  Smith,  101 
Ky.,  707,  42  S.  W.,  538;  Baer  v. 
McCullough,  176  N.  Y.,  97,  68  N. 
E.,  129.  See,  also,  Southern  Pac. 
R.  Co.,  V.  Maddox,  75  Tex.,  300, 
12  S.  W.,  815;  Foreman  v.  Central 
Trust  Co.,  18  C.  C.  A.,  321.  71  Fed., 
776,  30  U.   S.  App.,  653;   Colonial 


Trust  Co.  V.  Pacific  P.  &  N.  Co., 
142  Fed.,  298;  Ball  v.  Mabry,  91 
Ga.,  781,  18  S.  E.,  64;  Rogers  v. 
Chippewa  Circuit  Judge,  135  Mich., 
79,  97  N.  W.,  154;  Peterson  v. 
Baker,  78  Kan.,  337,  —  Pac,  — . 
As  to  the  control  exercised  by  the 
federal  court  over  judgments  ob- 
tained against  its  receiver  since  the 
passage  of  the  act  in  question,  as  to 
the  effect  of  such  judgments  and  as 
to  the  method  of  enforcing  their 
payment,  see  Central  Trust  Co.  v. 
St.  Louis,  A.  &  T.  R.  Co.,  41  Fed., 
551 ;  Missouri  Pacific  R.  Co.  v. 
Texas  Pacific  R.  Co.,  41  Fed., 
311.  In  Baer  v.  McCullough,  supra, 
it  was  held,  under  the  New  York 
code  of  procedure  which  provides 
that  in  case  of  a  transfer  of  inter- 
est or  devolution  of  liability,  the 
action  may  be  continued  by  or 
against  the  original  party,  unless 
the  court  directs  the  person  to 
whom  the  interest  is  transferred 
or  upon  whom  the  liability  is  de- 
volved to  be  substituted  in  the  ac- 
tion or  joined  with  the  original 
party,  that  an  action  instituted  un- 
der the  act  of  congress  against  the 
receiver  of  a  railway  company  may, 
upon  the  final  discharge  of  the  re- 
ceiver by  the  federal  court,  be  con- 


544  RECEIVERS.  [CITAP.  XT. 

the  statute  it  is  held  that  where  a  judgment  is  recovered  against 
the  receiver  of  a  federal  court  in  the  court  of  a  state,  such  judg- 
ment is  concUisive  as  to  the  existence  and  amount  of  the  plain- 
tiff's claim  when  it  is  sought  to  enforce  it  in  the  receivership 
proceeding.31  Nor  is  the  conclusiveness  of  the  judgment  im- 
paired because  it  was  rendered  without  a  trial  by  jury,  where 
the  statute  of  the  state  permits  either  party  to  call  a  jury  but 
they  have  failed  to  do  so  in  the  particular  case.^^  A^d  the 
act  is  held  to  be  broad  enough  to  include  an  action  for  dam- 
ages for  injuries  resulting  from  the  negligence  of  a  receiver 
in  failing  to  keep  a  station  platform  in  a  reasonably  safe  condi- 
tion.^^  And  an  action  against  the  receiver  of  a  water  company 
for  injuries  resulting  from  a  defective  highway  which  the  re- 
ceiver was  bound  to  keep  in  a  reasonably  safe  condition  comes 
within  the  act  and  leave  to  sue  is  unnecessary.^^  So,  an  action 
against  the  receivers  of  a  railway  company  to  restrain  them 
from  entering  upon  plaintiff's  land  for  railroad  purposes  until 
condemnation  and  payment  of  compensation  falls  within  the 
statute  and  may  be  brought  without  leave  of  the  appointing 
court.^^  And  the  act  applies  to  a  receiver  of  a  corporation 
created  under  federal  law  appointed  by  one  of  the  territorial 
courts  of  the  United  States.^^  Nor  is  the  right  given  by  the 
statute  limited  to  the  bringing  of  actions  against  the  receiver 
in  the  court  by  which  he  was  appointed,  or  in  other  federal 
courts,  but  he  may  be  sued  in  any  court  of  competent  jurisdic- 
tion, either  state  or  federal. ^^^  And  process  may  be  served  upon 
the  receiver  in  the  same  manner  prescribed  by  the  law  of  the 

tinued  against  him,  or  the  plaintiff  Holbrook,  19  C.  C.  A.,  385,  73  Fed, 

in  the  action  may  substitute  the  pur-  112,  41  U.  S.  App.,  33. 

chaser  as  party  defendant.  33  Fullerton  v.  Fordyce,  121  Mo., 

31  Dillingham  v.   Hawk,  9  C.   C.  1,  25  S.  W.,  587,  42  Am.  St.  Rep., 
A.  101,  60  Fed.,  494,  23  U.  S.  App.,  516. 

273.  23  L.  R.  A.,  517;  St.  Louis  S.  34  Robinson    v.    Mills,    25    Mont., 

W.  Ry.  Co.  V.  Holbrook,  19  C.  C.  391,  65  Pac,  114. 

A..  385,  73  Fed.,  112,  41  U.  S.  App.,  35  Stoize  v.  M.  &  L.  W.  R.  Co., 

33.     And   see   State  v.    Port  Royal  104  Wis.,  47,  80  N.  W..  68. 

&  A.  R.  Co.,  84  Fed.,  67.  36  Wheeler  v.  Smith,  81  Fed.,  319. 

32  St.    Louis    S.    W.    Ry.    Co.    v.  36a  Central  Trust  Co.  v.  E.  T.,  V. 

&  G.  R.  Co.,  59  Fed.,  523. 


CHAP.  XI.]  RAILWAYS.  545 

state  for  the  service  of  like  process  upon  the  corporation  over 
which  he  has  been  appointed. ^"^  But  the  act  does  not  apply  to 
or  authorize  proceedings  by  garnishment,  since  such  proceed- 
ings are  not  suits  against  the  receiver  for  any  act  or  transac- 
tion of  his,  but  are  an  equitable  seizure  of  the  fund  within  the 
custody  of  the  court.^^  Upon  the  same  principle  it  is  improp- 
er to  institute  an  action  in  a  state  court  without  leave  of  the 
federal  court  which  has  appointed  a  receiver,  where  the  object 
of  the  action  is  to  recover  the  possession  of  property  in  the 
custody  of  the  receiver, ^^  Nor  will  the  statute  dispense  with 
the  necessary  leave  to  sue  in  the  case  of  an  action  brought 
against  the  receiver  for  the  purpose  of  taking  from  his  posses- 
sion and  control  property  belonging  to  the  company  and  held 
by  it  under  a  claim  of  title  at  the  time  the  receiver  was  ap- 
pointed.^^  Nor  does  the  act  apply  where  an  action  is  brought 
against  the  receiver  by  a  judgment  creditor  of  a  third  person 
for  the  purpose  of  subjecting  to  the  payment  of  such  judgment 
money  claimed  to  be  due  from  the  receiver  to  such  third  per- 
son ;  ^1  nor  to  an  action  brought  against  the  receiver  to  quiet 
title  to  land  claimed  by  the  plaintiff  but  in  which  the  receiver 

37  Peterson  v.  Baker,  78  Kan.,  upon  the  judgment  against  the  re- 
337,  —  Pac,  — .  And  see  this  case  ceiver  and  that  the  manner  in  which 
as  to  the  continuance  of  the  action  the  judgment  shall  be  paid  is  a  mat- 
in the  name  of  the  receiver  not-  ter  under  the  exclusive  control  of 
withstanding  his  discharge  by  the  the  court  which  appointed  the  re- 
federal  court.  ceiver,  and  the  judgment  can  be  sat- 

38  Central  Trust  Co.  v.  East-  isfied  only  by  application  to  that 
Tennessee,  V.  &  G.  R.  Co.,  59  Fed.,  court.  Irwin  v.  McKechnie,  58 
523 ;  Central  Trust  Co.  v.  Chatta-  Minn.,  145,  59  N.  W.,  987,  26  L.  R. 
nooga,  R.  &  C.  R.  Co.,  68  Fed.,  A.,  218,  and  note,  49  Am.  St.  Rep., 
685.    The  contrary  view   has  been  495. 

taken    in    Minnesota,    where    it    is  39  j.    I.    Case    Plow    Works    v. 

held  that   a  garnishment   suit   may  Finks,  26  C.  C.  A.,  46,  81  Fed.,  529, 

be     maintained     against     the     re-  52  U.  S.  App.,  253. 

ceiver    of    a    railway    company    to  40  Hollifield  v.  Wrightsville  &  T. 

reach      funds     in     his     possession  R.  Co.,  99  Ga.,  365,  27  S.  E.,  715. 

belonging     to     the     defendant,     al-  41  Glover  v.  Thayer,  101  Ga.,  824, 

though    it    is    expressly   stated   that  29  S.  E.,  36. 
no    executory    process    shall    issue 
Receivers — 35. 


546  RECEIVERS.  [chap.  XI. 

claims  some  interest  upon  behalf  of  the  company ;  ^2  nor  to  an 
action  for  damages  for  personal  injuries  sustained  prior  to  the 
appointment  of  the  receiver ;  ^^  nor  to  an  action  brought  against 
mortgagors  and  a  receiver  appointed  in  another  proceeding  to 
foreclose  a  mortgage  upon  property  in  the  hands  of  the  re- 
ceiver.'*^ Nor  is  the  refusal  of  the  receiver  to  agree  upon 
terms  and  conditions  under  which  another  railroad  may  cross 
its  lines  at  grade,^^  or  his  refusal  to  institute  an  action  upon  a 
cause  of  action  due  the  company,^^  an  act  or  transaction  of  the 
receiver  within  the  meaning  of  the  statute  in  question.  The 
evident  purpose  of  the  act  is  to  place  receivers  of  railway  com- 
panies appointed  by  the  federal  courts  upon  the  same  footing 
as  the  companies  themselves,  both  as  regards  their  liability  for 
acts  done  in  the  operation  of  the  road  and  in  obtaining  service 
of  process.^'^  The  right  given  by  the  act  is  not  limited  to  cases 
where  the  cause  of  action  arises  from  the  act  of  the  receiver 
himself  or  his  agents,  but  it  extends  to  the  successor  of  a 
former  receiver  under  whose  administration  the  right  of  ac- 
tion accrued.  So  long  as  the  property  remains  in  the  custody 
of  the  court  and  is  administered  through  the  agency  of  its 
officer,  the  receivership  is  continuous  and  uninterrupted,  al- 
though the  personnel  of  the  receiver  may  change.  The  action 
is,  therefore,  in  effect  against  the  receivership,  rather  than 
against  the  receiver,  the  liability  being  an  official  and  not  a 

42  Bennett  v.  Northern  Pac.  R.  where  receivers  were  appointed  by 
Co.,  17  Wash.,  534,  50  Pac,  496.  a  federal  court  over  a  railway  ex- 

43  Smith  V.  St.  Louis  &  S.  F.  Ry.  tending  through  different  states, 
Co.,    151    Mo.,  391,  52   S.   W.,   378,  having  their  principal  office  in  one 

;.,  48  L.  R.  A.,  368,  and  note.  of  such   states   so   that   they   could 

44  American  Loan  &  Trust  Co.  v.  not  be  personally  served  in  the 
Central  V.  R.  Co.,  84  Fed.,  917.  other,  an  order  was  entered  direct- 

45Buckhannon    &    N.    R.    Co.   v.  ing    that    service    upon   a   clerk   or 

Davis.  68  C.  C.   A.,  345,   135  Fed.,  station    agent    of   the    receivers    at 

707,  affirming  S.  C,  131  Fed.,  115.  any  station  in  the  county  in  which 

46  Swope  V.  Villard,  61  Fed.,  417.  process  might  issue,   should  be  ef- 

47  Eddy  v.  Lafayette,  1  C.  C.  A.,  fective  as  valid  service  upon  the  re- 
441,  49  Fed.,  807,  4  U.  *S.  App.,  247,  ceivers.  Central  Trust  Co.  v.  St. 
affirmed  in  163  U.  S.,  456,  16  Sup.  Louis,  A.  &  T.  R.  Co.,  40  Fed.,  426. 
Ct.  Rep.,  1082,  41  L.  Ed.,  225.    And 


CHAP.   XI.]  RAILWAYS.  547 

personal  one,  and  a  successor  may  be  sued  for  the  act  of  a 
former  receiver  in  a  state  court,  and  without  leave  of  the  fed- 
eral court.'*^  But  the  rule  in  such  case  applies  only  where  the 
property  involved  is  the  same,  and  it  has  no  application  where 
the  succeeding  receiver  is  appointed  over  only  a  small  part  of 
the  property  over  which  the  former  receiver  was  appointed.*^ 
And  an  action  may  be  brought  without  leave  against  a  receiver 
appointed  after  the  passage  of  the  act  of  congress,  although  for 
an  injury  sustained  by  the  plaintiff  before  the  passage  of  the 
act.50 

§  395c.  Removal  of  cause  by  receiver  to  federal  court. 
Upon  the  question  as  to  the  right  of  the  receiver  of  a  railway 
company  appointed  by  a  federal  court,  when  sued  without 
leave  in  a  state  court,  to  remove  the  cause  to  the  court  of  his 
appointment  where  the  amount  involved  is  less  than  two  thou- 
sand dollars,  there  is  a  direct  conflict  of  authority  in  the  deci- 
sions of  the  various  circuits.  It  has  been  held  that  such  actions, 
notwithstanding  the  statute,  are  to  be  considered  as  ancillary 
to  the  main  proceeding  and  are  therefore  removable  without 
the  jurisdictional  amount  involved.^!  The  weight  of  author- 
ity, however,  sustains  the  contrary  and  undoubtedly  the  better 
view.  These  cases  hold  that  while,  prior  to  the  statute,  such 
an  action  in  a  state  court  might  properly  be  considered  as  an- 
cillary to  the  main  cause  and  therefore  removable  without  the 
jurisdictional  amount  being  involved,  since  the  enactment  of 
the  statute  they  are  no  longer  to  be  regarded  as  ancillary  but 
are  separate  and  independent  suits  and  are  therefore  not  re- 
movable unless  the  requisite  amount  is  involved ;  and  that  to 
hold  otherwise  would  be  to  defeat  the  obvious  purpose  of  the 

48  McNulta  V.  Lochridge,  141  U.  50  Texas  &  Pacific  R.  Co-  v.  Cox, 
S.  327,  12  Sup.  Ct.  Rep.,  11,  affirm-  145  U.  S.,  593,  12  Sup.  Ct.  Rep., 
ing  S.   C,   137  111.,  270,  27  N.   E.,      905. 

452 ;   State  v.   Port  Royal  &  A.  R.  51  Carpenter  v.  Northern  Pac.  R. 

Co.,  84  Fed.,  67.  Co.,  75  Fed.,  850;  Sullivan  v.  Bar- 

49  Jones  v.   Schlapback,  81   Fed.,      nard,  81  Fed.,  886. 
274. 


548  RECEIVERS.  [chap.  XI. 

Statute  which  permits  such  actions  without  the  leave  of  the 
court  which  has  appointed  the  receiver.^^ 

§  395t/.  New  York  decisions  unsettled;  liability  for  in- 
juries; rental  of  leased  lines.  Notwithstanding  the  general 
doctrine,  holding  receivers  of  railways  to  the  same  liabilities 
as  common  carriers  as  the  companies  themselves,  has  the  clear 
weight  both  of  principle  and  of  authority  in  its  support,  it  has 
not  be  uniformly  followed  in  New  York,  and  some  incon- 
sistency and  much  uncertainty  are  observable  in  the  decisions 
in  that  state  upon  the  question  under  consideration.  Thus,  it 
has  been  held  that  the  receiver  occupies  a  position  analogous  to 
that  of  a  public  officer,  charged  with  duties  of  a  public  nature, 
in  the  performance  of  which  he  is  compelled  to  act  in  part 
through  others,  and  that  it  would  be  a  great  hardship  to  im- 
pose upon  him  the  responsibilities  Vv^hich  attach  to  persons  act- 
ing through  agents  appointed  for  their  own  convenience  or 
profit.  And  upon  these  considerations,  it  has  been  held  that  he 
is  not  liable  to  passengers  for  injuries  sustained  by  the  negli- 
gence of  his  employees,  when  no  personal  neglect  is  imputed 
to  the  receiver  in  their  selection,  the  doctrine  of  respondeat 
superior  not  being  applicable  in  such  cases. ^^  The  same  court 
having  previously  held  that,  when  a  railroad  is  operated  by  a 
special  receiver  appointed  in  bankruptcy  proceedings,  the  com- 
pany is  not  liable  in  an  action  for  damages  sustained  through 
the  negligence  of  the  receiver's  employees,^'*  in  the  light  of  these 
decisions  there  would  seem  to  be  absolutely  no  remedy  in  New 
York,  to  one  sustaining  loss  or  damage  through  the  operation  of 

52  Ray  V.  Peirce,  81  Fed.,  881;  court  of  New  York,  that,  while  an 
Gilmore  v.  Herrick,  93  Fed.,  525;  action  for  personal  injuries  sus- 
Pitkin  V.  Cowen,  91  Fed.,  599;  Pen-  tained  by  a  passenger  would  not  lie 
dleton  V.  Lutz,  78  Miss.,  322,  29  So.  against  the  receiver  personally,  he 
164.  As  to  the  right  of  removal  would  be  liable  in  such  action  as  re- 
in cases  which  do  not  come  within  ceiver,  and  the  judgment  should  be 
the  statute,  see  ante,  §  60b.  made   payable   out  of  the   funds   in 

53  Cardot   v.    Barney,    63    N.    Y.,  his  hands  as  receiver. 

281.    In  Camp  v.  Barney.  6  N.  Y.  S.  54  Metz  v.  B.,  C.  &  P.  R.  Co.,  58 

C.  (Thomp.  &  Cook),  622;  4  Hun,      N.  Y.,  61. 
373,    it    was    held    by   the    supreme 


CHAP.  XI.]  RAILWAYS.  549 

a  railroad  by  a  receiver.  But  in  a  later  case,  it  is  held  that 
a  receiver  of  another  state,  who,  under  the  authority  of  the 
court  appointing  him,  operates  a  railroad  in  New  York  as  les- 
see, having  covenanted  in  the  lease  to  assume  all  obligations 
of  the  lessor  company  as  a  common  carrier  or  otherwise,  is 
liable  to  an  action  in  New  York  for  damages  for  injuries  sus- 
tained by  an  employee  upon  such  road  by  reason  of  defective 
machinery.  In  such  case,  it  is  held  that  his  liability  is  not  af- 
fected by  the  fact  that  he  is  a  receiver  in  the  foreign  state,  since 
he  is  not  in  possession  of  the  road  in  New  York,  as  such  re- 
ceiver, but  by  virtue  of  his  contract,  and  he  can  not,  therefore, 
escape  the  ordinary  liabilities  of  persons  operating  railroads. 
And  the  action  being  in  tort,  it  may  be  brought  against  one  of 
several  receivers  who  occupy  the  same  relation  to  the  property 
and  to  the  subject-matter  of  the  action.^^  And  in  a  still  later 
case,  it  is  held  that  when,  by  the  order  appointing  him,  the  re- 
ceiver is  authorized  to  take  possession  of  all  the  property  of  the 
company  and  to  exercise  its  functions  and  continue  its  opera- 
tions, and  to  pay  rentals  under  any  leases  held  by  the  company, 
if  he  takes  possession  of  and  operates  a  road  held  under  lease 
by  the  company,  he  thereby  assumes  the  obligations  of  the  les- 
see and  binds  the  estate  to  the  payment  of  the  rent.  An  action 
may,  therefore,  be  maintained  against  him  to  recover  such  rent 
out  of  the  funds  in  his  hands,  and  in  such  action  he  is  estopped 
from  denying  the  validity  of  the  lease.^^ 

§  396.  Railway  company  in  hands  of  receiver  not  re- 
sponsible for  negligence  of  his  servants;  liability  of  com- 
pany for  failure  to  comply  with  penal  statute.  Since  re- 
ceivers of  a  railway,  who  are  vested  with  its  absolute  control 
and  management,  are  thus  liable  for  injuries  resulting  from 
negligence  in  operating  the  road,  to  the  same  extent  that  the 
company  itself  might  have  been  held  liable,  it  would  seem  to  be 

55Kain  v.  Smith,  80  N.  Y.,  458.  Y.,  609.     See,  also,  Frank  v.   New 

And  see  Fuller  v.  Jewett,  80  N.  Y.,  York,  L.  E.  &  W.  R.  Co.,  122  N.  Y, 

46.  197,  25  N.  E.,  332. 

56  Woodruff  V.  Erie  R.  Co.,  93  N. 


550 


RECEIVERS. 


[chap.  XI. 


clear,  upon  principle,  and  in  the  absence  of  any  absolute  lia- 
bility created  by  statute,  that  the  corporation  itself  can  not  be 
held  responsible  for  the  negligence  of  servants  of  a  receiver  op- 
erating the  road.  The  receiver's  possession  is  not  the  posses- 
sion of  the  corporation,  which  can  not  control  either  the  re- 
ceiver or  his  employees.  And  in  an  action  against  a  railway 
company  for  damages  for  personal  injuries,  or  for  the  killing 
of  stock,  alleged  to  have  resulted  from  the  carelessness  and  neg- 
ligence of  employees  and  servants,  it  is  a  sufficient  defense  that 
the  road,  at  the  time  of  the  alleged  injury,  was  not  in  defend- 
ant's possession,  but  in  the  possession  of  a  receiver,  who  had 
exclusive  charge  of  the  employment  and  management  of  the 
agents  and  employees  engaged  in  operating  the  road.'^'^  And 
while  the  owner  and  lessor  of  a  street  railway  company  may 
be  liable  for  the  negligence  of  the  servants  of  its  lessee,  it  can 


5"  Ohio  &  Mississippi  R  Co.  v. 
Davis,  23  Ind.,  553 ;  Bell  v.  I.,  C.  & 
L.  R.  Co.,  53  Ind.,  57;  Turner  v. 
Hannibal  &  St.  Joseph  R.  Co.,  74 
Mo.,  602;  Ohio  &  Mississippi  R.  Co. 
V.  Anderson,  10  Bradw.,  313 ;  Hicks 
V.  I.  &  G.  N.  R.  Co.,  62  Tex.,  38; 
Henning  v.  Sampsell,  236  111.,  375, 
86  N.  E.,  274;  Schurr  v.  Omaha  & 
St.  L.  Ry.  Co.,  98  Iowa,  418.  67  N. 
W.,  280 ;  St.  Louis  &  S.  F.  Ry.  Co. 
V.  Bricker,  65  Kan.,  321,  69  Pac, 
328;  Archambeau  v.  New  York  & 
N.  E.  R.  Co.,  170  Mass.,  272,  49  N. 
E.,  435;  Tobin  v.  Central  Vermont 
Ry.  Co.,  185  Mass.,  337,  70  N.  E., 
431 ;  Chamberlain  v.  N.  Y.,  L.  E.  & 
W.  R.  Co.,  71  Fed.,  636;  Gableman 
V.  Peoria,  D.  &  E.  R.  Co.,  82  Fed., 
790.  For  the  application  of  the 
same  principle  in  the  case  of  a  turn- 
pike company,  see  Lock  v.  Turn- 
pike Co.,  100  Tenn..  163,  47  S.  W., 
133.  See,  also,  Metz  v.  B.,  C.  &  P. 
R.  Co.,  58  N.  Y..  61 ;  I.  &  G.  N.  R. 
Co.  V.  Ormond,  62  Tex.,  274;  Heath 


V.  Missouri,  K.  &  T.  R.  Co.,  83  Mo„ 
617.  See,  also,  Godfrey  v.  Ohio  & 
M.  R.  Co.,  116  Ind.,  30,  18  N.  E., 
61.  But  it  has  been  held  that  in 
such  an  action  against  the  company, 
the  fact  that  the  road  is  in  the 
hands  of  a  receiver  can  not  be  in- 
quired into  upon  a  motion  to  dis- 
miss for  want  of  jurisdiction,  al- 
though it  may  be  urged  in  defense 
of  the  action.  Wyatt  v.  O.  &  M. 
R.  Co.,  10  Bradw.,  289.  And  in 
South  Carolina  it  has  been  held  that 
a  railway  company  is  liable  for  the 
tort  of  the  receiver  of  its  lessee. 
Parr  v.  Spartanberg,  etc.  R.  Co., 
43  S.  C,  197,  20  S.  E.,  1009,  49  Am. 
St.  Rep.,  826.  See  Texas  &  Pacific 
R.  Co.  V.  Gay,  88  Tex.,  Ill,  30  S. 
W.,  543,  as  to  the  liability  of  a 
railway  company  which  has  collu- 
sively  procured  the  appointment  of 
a  receiver  over  its  property  for  in- 
juries to  employees  in  the  employ 
of  the  receiver. 


CHAP.  XI.]  RAILWAYS.  551 

not  be  held  liable  for  injuries  resulting  from  the  negligence  of 
receivers  of  the  lessee  company  while  they  are  engaged  in  the 
operation  of  the  road.^^  So  when  a  railway  is  in  the  hands  of 
a  receiver  and  is  operated  by  his  servants  and  employees,  the 
company  will  not  be  held  liable  for  their  action  in  obstructing 
a  public  street. 5^  So  where  a  railway  is  being  operated  by  a 
receiver,  the  company  can  not  be  held  liable  for  failure  to  com- 
ply with  a  statute  requiring  the  giving  of  a  signal  upon  ap- 
proaching a  public  highway,  since  compliance  by  the  company 
with  the  statute  would  necessitate  interference  with  the  opera- 
tion of  the  road  by  the  receiver.^^  But  where  the  statutory  re- 
quirement is  one  with  which  the  company  may  comply  without 
interfering  with  the  possession  and  operation  of  the  road  by  the 
receiver,  as  where  the  statute  requires  the  erection  of  sign- 
boards at  crossings,  the  reason  for  the  rule  ceases  and  the  com* 
pany  may  be  held  liable.^!  But  where  a  railroad  is  in  the  hands 
of  a  receiver,  the  company  can  not  be  held  criminally  liable  for 
obstructing  a  public  highway  during  the  time  that  it  is  in  the 
hands  of  the  receiver.^^  "When  a  railway  company,  in  an  ac- 
tion brought  against  it  for  damages,  pleads  the  appointment  of 
a  receiver  who  has  charge  of  its  affairs,  a  copy  of  the  order  of 
appointment,  or  the  original,  should  be  set  forth  with  the  plead- 
ings.^^ 

§  397.  Statutory  liability  of  company;  judgment  not 
enforceable  by  state  court  out  of  funds  held  by  receiver  of 
United  States  court.  When,  however,  an  absolute  liability 
is  fixed  upon  a  railway  company  by  statute,  a  different  prin- 
ciple prevails.  Thus,  if  the  company  is  made  by  statute  abso- 
lutely liable  for  the  killing  of  stock  in  cases  where  its  road  is 

58  Henning  v.   Sampsell,  236  111.,  62  State  v.  Minneapolis  &  St.  L. 
375,  86  N.  E.,  274.                                   Ry.   Co.,  88  Iowa,  689,  56  N.  W., 

59  State   V.   Wabash    R.    Co.,   115      400. 

Ind.,  466,  17  N.  E.,  909.  63  Ohio  &   Mississippi  R.  Co.  v. 

60  Arkansas    Central    R.    Co.    v.      Fitch,  20  Ind.,  498. 
State,  72  Ark.,  250.  79  S.  W.,  77:i. 

61  Arkansas    Central     R.     Co.    v. 
State,  72  Ark.,  252,  79  S.  W.,  772. 


552 


RECEIVERS. 


[chap.  XI. 


not  securely  fenced,  the  fact  that  the  affairs  of  the  company 
have  passed  into  the  hands  of  a  receiver,  appointed  by  a  fed- 
eral court,  constitutes  no  defense  to  an  action  on  such  liability 
against  the  railway  company  in  a  state  court,  and  the  plaintiff 
may  recover  judgment  in  such  action  upon  the  statutory  lia- 
bility, notwithstanding  the  possession  of  the  receiver.  In  such 
cases  it  is  held  that  the  corporate  body  still  exists,  and 
since  the  law  renders  it  liable,  the  receiver  operates  the  road 
subject  to  such  liability.^^  So  under  a  statute  providing  that 
upon  the  refusal  of  a  railway  company  to  fence  its  right  of 


64  Ohio  &  Mississippi  R.  Co.  v. 
Fitch,  20  Ind.,  498;  McKinney  v. 
Ohio  &  Mississippi  R.  Co.,  22  Ind., 
99;  Louisville,  New  Albany  &  Chi- 
cago R.  Co.  V.  Cauble,  46  Ind.,  277 ; 
Kansas  Pacific  R.  Co.  v.  Wood,  24 
Kan.,  619.  But  see,  contra,  Brock- 
crt  V.  Central  Iowa  R.  Co.,  82  Iowa. 
369,  47  N.  W.,  1026.  The  doctrine 
of  the  text  is  very  clearly  stated  in 
Louisville,  New  Albany  &  Chicago 
R.  Co.  V.  Cauble,  46  Ind.,  277,  by 
Buskirk,  J.,  who  says,  p.  279:  "By 
the  first  section  of  the  act  of  March 
4,  1863,  3  Ind.  Stat.,  413,  it  is  pro- 
vided 'that  lessees,  assignees,  re- 
ceivers and  other  persons,  running 
or  controlling  any  railroad,  in  the 
corporate  name  of  such  company, 
shall  be  liable,  jointly  or  severally 
•with  such  company,  for  stock  killed 
or  injured  by  the  locomotives,  cars 
or  other  carriages  of  such  company, 
to  the  extent  and  according  to  the 
provisions  of  this  act.*  By  the 
above  quoted  section,  lessees,  as- 
signees, receivers  or  other  persons 
running  or  controlling  any  railroad 
company  in  the  corporate  name  of 
such  company  are  made  liable 
either  jointly  with  the  railroad 
company,  or  severally,  that  is,  with- 
out the  company  being  joined  with 


them,  for  stock  killed  or  injured  by 
the  locomotives,  cars  or  other  car- 
riages of  such  company,  to  the  ex- 
tent and  according  to  the  provisions 
of  such  act.  By  the  second  section 
of  such  act,  it  is  provided  in  express 
terms  that  such  action  may  be 
brought  against  the  railroad, 
whether  the  same  was  being  run 
by  the  company  or  by  a  lessee,  as- 
signee, receiver  or  other  person  in 
the  name  of  the  company.  The 
question  discussed  by  counsel  for 
appellant  therefore  resolves  itself 
into  the  question  of  whether  the 
legislature  of  this  state  possessed 
the  constitutional  power  to  pass  the 
above  recited  act.  The  corporate 
existence,  powers  and  franchises  of 
the  appellant  were  conferred  by 
the  legislature  of  this  state.  We 
have  carefully  examined  the  decree 
of  the  United  States  circuit  court 
for  the  district  of  Indiana,  appoint- 
ing Mr.  Chapman  receiver,  and  find 
nothing  therein  which  attempts  to 
take  away  the  corporate  existence, 
powers  or  franchises  of  the  appel- 
lant, and  it  is,  therefore,  unneces- 
sary for  us  to  express  any  opinion 
as  to  the  power  of  the  federal 
judiciary  to  decree  a  forfeiture  of 
the   corporate    existence    and    fran- 


CHAP.  XI.]  RAILWAYS.  553 

way,  an  adjacent  owner  may  build  the  fence  and  recover  double 
its  value  from  the  company,  the  fact  that  the  property  of  the 
company  has  passed  into  the  hands  of  and  is  being  operated  by 
a  receiver  constitutes  no  defense  to  such  an  action  against  the 
company. 65  And  under  a  statute  giving  a  right  of  action  when 
the  death  of  any  person  has  been  caused  by  the  negligence  or 
carelessness  of  the  proprietor,  owner,  charterer  or  hirer  of  any 
railroad,  or  by  the  negligence  or  carelessness  of  his  servants  or 
agents,  an  action  under  the  statute  will  not  lie  against  a  re- 
ceiver who  is  operating  a  railroad.  Such  a  receiver  does  not 
fall  within  the  class  of  persons  designated,  but  is  the  official 
representative  of  the  court  and  holds  possession  in  that  capa- 
city, having  no  personal  proprietorship,  ownership  or  interest 
in  the  property.^^  g^t  under  a  statute  providing  that  every 
railway  company  shall  be  responsible  in  damages  to  any  person 
whose  buildings  or  other  property  might  be  injured  by  fire 
communicated  by  locomotives,  it  is  held  that  the  statute,  being 
remedial,  should  be  given  a  liberal  construction,  and  that  the 

chises  of  a  corporation  created  by  company  and  its  operations  de- 
a  sovereign  state.  The  whole  de-  pended  upon  its  corporate  existence. 
cree  proceeds  upon  the  theory  that  If  that  had  been  taken  away,  the 
the  appellant  is  a  corporation  ere-  power  and  authority  of  the  receiver 
ated  and  existing  under  the  laws  would  have  ceased  and  terminated, 
of  this  state.  The  whole  effect  of  for  no  court,  federal  or  state,  can 
the  decree  is,  to  take  the  custody,  confer  corporate  powers  and  fran- 
control  and  management  of  such  chises  upon  an  individual.  Such 
corporation  out  of  the  hands  of  the  powers  can  be  created  and  con- 
persons  who  were  controlling  and  ferred  by  the  legislative  department 
managing   the    same,   and   to    place  alone." 

the    same    into    the    custody    and  65  Ohio  &   Mississippi   R.   Co.   v. 

under  the  control  and  management  Russell,  115  111.,  52,  3  N.  E.,  561. 
of  the  receiver  for  a  specified  time  66  Turner  v.  Cross,  83  Tex.,  218, 

and  for  a  special  purpose.    The  cor-  18   S.  W.,   578;   Yoakum  v.   Selph, 

porate    existence    of    the    appellant  83  Tex.,  607,  19  S.  W.,  145;  Texas 

was     left     intact.       The     corporate  &  Pacific  R.  Co.  v.  Collins,  84  Tex., 

powers    and    franchises    which    had  121,  19  S.  W.,  365;  Allen  v.  Dilling- 

been    exercised    by    the    officers    of  ham,  8  C.  C.  A.,  544,  60  Fed.,  176, 

the    company    were    conferred    for  23  U.   S.  App.,  167;  Burke  v.  Dil- 

the   time  being   upon   the   receiver.  lingham,  9  C.   C.   A.,  255,  60  Fed., 

The  power  and  authority  of  the  re-  729,  23  U.  S.  App.,  153. 
ceiver   to   manage   and   control   the 


554  RECEIVERS.  [chap.  XI. 

receiver  of  a  railway  company  should  therefore  be  held  liable 
under  it.^'^  And  in  an  action  brought  by  a  lessor  of  real  estate 
against  the  lessee,  a  railway  company,  to  recover  damages  for 
waste  to  the  demised  premises,  it  affords  no  defense  to  the  ac- 
tion that  the  alleged  acts  of  waste  occurred  while  the  railway 
was  in  the  possession  of  and  operated  by  a  receiver.  In  such 
case,  there  being  an  implied  covenant  upon  the  part  of  the  les- 
see to  so  use  the  premises  that  no  injury  shall  result  to  them, 
the  fact  that  the  breach  of  such  covenant  occurs  through  the 
act  of  a  stranger  to  the  lease,  the  receiver,  affords  no  defense 
to  the  action. ^^  And  since  the  appointment  of  a  receiver  over 
a  railway  company  does  not  prevent  the  prosecution  of  pend- 
ing actions  against  the  company,  it  is  improper  to  join  the  re- 
ceiver as  a  party  defendant  to  a  pending  action  to  recover  for 
an  alleged  trespass  committed  by  the  company  prior  to  the  re- 
ceivership.^9  A  state  court  is  powerless  to  enforce  payment  of 
a  judgment  against  a  railway  company,  out  of  funds  in  the 
hands  of  a  receiver  appointed  by  a  United  States  court,  even 
under  a  statute  of  a  state  providing  a  process  for  the  enforce- 
ment of  judgments  against  railway  corporations  out  of  the 
funds  in  the  hands  of  their  receivers  or  agents.  The  receiver 
deriving  his  appointment  and  authority  from  the  federal  court, 
and  being  charged  with  the  duty  of  operating  the  road  and  ac- 
countable to  that  court  for  the  proceeds,  these  proceeds  are  be- 
yond the  jurisdiction  or  control  of  the  state  court.  The  proper 
course  for  the  plaintiff,  in  such  a  case,  would  seem  to  be  either 
to  apply  to  the  federal  court  for  leave  to  sue  the  receiver,  or  for 
an  order  on  the  receiver  to  pay  the  judgment  recovered  in  the 
state  court."^^  And  in  an  action  against  a  railway  company  to 
recover  damages  for  personal  injuries,  defendant  can  not  plead, 
either  in  bar  or  in  abatement  of  the  action,  that  at  the  time  of 
beginning  the  suit  the  company  was  in  the  hands  of  a  receiver, 

67  Wall  V.   Piatt,   169  Mass.,  398,  69  Decker  v.  Gardner,  124  N.  Y., 
48  N.  E.,  270.  334,  26  N.  E.,  814. 

68  Powell  V.  Dayton,  S.  &  G.  R.  70  Ohio  &   Mississippi  R.   Co.   v. 
R.  Co.,  16  Ore.,  33,  16  Pac,  863.  Fitch,  20  Ind.,  498. 


CHAP.  XI.]  RAILWAYS.  555 

since  the  appointment  of  the  receiver  does  not  impair  the  juris- 
diction of  the  court  over  the  defendant  company,  or  over  the 
subject-matter  of  the  action.'^^ 

§  397a.  Suit  against  company  after  surrender  of  posses- 
sion by  receiver.  One  who  sustains  injuries  by  the  negli- 
gent operation  of  a  railway  while  in  the  hands  of  a  receiver  of 
a  federal  court  may  maintain  an  action  in  a  state  court  on  ac- 
count of  such  injury  against  the  railway  company  after  its 
property  has  been  restored  to  its  possession  by  the  federal  court, 
when  the  current  earnings  of  the  road,  while  operated  by  the 
receiver,  have  been  applied  to  permanent  improvements  and 
betterments  of  the  property  to  an  extent  exceeding  the  amount 
of  the  judgment  in  such  action.  And  this  may  be  done,  not- 
withstanding the  federal  court  has  discharged  the  receiver  and 
has  entered  an  order  barring  all  claims  which  were  not  presented 
to  that  court  within  a  given  period,  the  plaintifif  in  such  action 
not  having  presented  his  claim  or  intervened  under  the  order. 
In  such  case  the  order  requiring  claimants  to  intervene  and  to 
present  their  claims  within  a  given  time  does  not  affect  the 
rights  of  parties  in  interest  to  enforce  their  demands  in  any 
other  lawful  manner  and  within  such  time  as  the  law  may 
prescribe.'^2  And  when  in  such  case  a  judgment  has  been  re- 
covered against  the  receiver  prior  to  his  discharge,  it  may  be 

'''^  Ohio  &   Mississippi   R.   Co.  v.  court.     Texas  &   Pacific  R.   Co.  v. 

Nickless,  71  Ind.,  271.  Bloom,  164  U.  S.,  636,  17  Sup.  Ct. 

72  Texas  &  Pacific  R.  Co.  v.  John-  Rep.,  216,  41  L.  Ed.,  580,  affirming 

son,  76  Tex.,  421,   13   S.  W.,  463 ;  s.  C,  9  C.  C.  A.,  300,  60  Fed.,  979, 

Texas   &   Pacific   R.    Co.   v.    Over-  23  U.  S.  App.,  143.    See,  also,  Texas 

heiser,    76    Tex.,    437,    13    S.    W.,  ^  paj.iflj,  r   q^   ^   Johnson,  151  U. 

468;    Texas    &    Pacific    R.    Co.    v.  g^  g^^  ^4  ^^^    q   j^^p^  250.  which 

Geiger,    79    Tex..    13,    IS    S     W.,  ^^^  ^  ^^.^  ^^  ^^^^^  ^^  ^^^^^^^  ^^^ 

^^'^'  '^'^f  i'  ^^'If'  ,?■  c  „r  judgment  of  the  supreme  court  of 
Miller,    79    Tex.,    78,    15     S.    W.,      L  ■     ,u  7/;  t 

...      '  '  00    T  Texas   m  the   same  case,   76    lex.. 


421,  13  S.  W.,  463.     In  this  case  it 


264;    Boggs    v.    Brown,    82    Tex., 

41,  17  S.  W.,  830;  Texas  &  Pacific  .    ,,  ,       , 

R    Co    z;    Brick,   83   Tex.,  526,    18  ^'^^  held  by  the  supreme  court  of 

S.  W,  947;  Texas  &  Pacific  R.  Co.  the  United  States,  that  m  the  case 

V.  Comstock,  83  Tex.,  537,  18  S.  W.,  as  decided  by  the  supreme  court  of 

946.     And  in  such  case  the  action  Texas   there    was   no   error   m   the 

may    be    maintained    in    a    federal  disposition  of  the  federal  questions 


556 


RECEIVERS. 


[chap.  XL 


enforced  against  the  railway  company  after  its  property  has 
been  restored  to  its  possession.'^^  But  since  the  raihvay  com- 
pany is  not  in  such  cases  hable,  ipso  facto,  for  the  neghgence 
of  its  receiver,  but  only  upon  the  ground  of  a  diversion  of  the 
receiver's  income  in  betterments  upon  the  property  afterward 
surrendered  to  the  company,  in  the  absence  of  proof  of  such 
diversion,  judgment  should  not  be  rendered  against  the  com- 
pany.'^'* But  where  a  railway  company  has  been  allowed  to 
resume  possession  of  its  road,  which  had  been  in  the  hands  of 
a  receiver  in  a  foreclosure  suit,  under  an  order  of  the  court 
which  directed  the  receiver  to  turn  over  the  possession  of  the 


involved,  and  its  judgment  was, 
therefore,  affirmed.  And  see  Hous- 
ton &  Texas  C.  Ry.  Co.  v.  Craw- 
ford, 88  Tex.,  277,  31  S.  W.,  176, 
28  L.  R.  A.,  761,  53  Am.  St.  Rep., 
752;  San  Antonio  &  A.  P.  Ry.  Co. 
V.  Bowles,  88  Tex.,  634,  32  S.  W., 
880. 

73  Texas  &  Pacific  R.  Co.,  v.  Grif- 
fin, 76  Tex.,  441,  13  S.  W.,  471. 

74  Texas  &  Pacific  R.  Co.  v.  Huff- 
man, 83  Tex.,  286,  18  S.  W.,  741. 
The  cases  cited  in  support  of  the 
foregoing  section  arose  under  the 
receivership  of  the  Texas  &  Pacific 
Railway  Company,  whose  road  ex- 
tended through  the  state  of  Texas, 
the  receiver  being  originally  ap- 
pointed by  the  United  States  circuit 
court  for  the  eastern  district  of 
Louisiana,  and  the  principal  admin- 
istration of  the  receivership  being 
had  in  that  court.  No  part  of  the 
road  was  located  in  the  state  of 
Louisiana,  but  the  same  receiver 
was  afterward  appointed  in  a  sim- 
ilar action  in  the  United  States  cir- 
cuit court  for  the  eastern  district  of 
Texas.  While  in  some  of  the  cases 
above  cited  the  supreme  court  of 
Texas    criticised    the    propriety    of 


such  a  receivership,  it  seems  to  have 
conceded  that  the  circuit  court  of 
the  United  States  in  Louisiana  had 
jurisdiction  and  that  its  order  ap- 
pointing the  receiver  was,  therefore, 
valid,  and  could  not  be  questioned 
in  a  collateral  proceeding.  But  in 
a  later  case  in  the  same  court,  Texas 
&  Pacific  R.  Co.  V.  Gay,  86  Tex., 
571,  26  S.  W.,  599,  it  was  held  in 
an  elaborate  and  exhaustive  opinion, 
in  the  case  of  the  same  railway  com- 
pany, incorporated  under  an  act 
of  congress,  its  road  extending 
through  Texas  with  its  eastern 
terminus  in  that  state,  and  no 
part  of  its  line  extending  into  the 
state  of  Louisiana,  that  the  federal 
court  in  the  latter  state  had  no  ju- 
risdiction to  appoint  a  receiver  over 
the  property  and  that  its  order  was, 
therefore,  void.  It  was  further  held 
that  the  receiver,  acting  under  a 
void  order,  occupied,  in  effect,  the 
position  of  an  agent  of  the  com- 
pany, and  that  after  his  discharge 
th,e  company  itself  might  be  held 
liable  for  injuries  occurring  while 
the  railway  was  operated  by  him,  in 
like  manner  as  if  operated  by  an 
ordinary  agent. 


CHAP.  XI.]  RAILWAYS.  557 

property  and  to  render  a  report  of  receipts  and  disbursements, 
but  reserved  the  settlement  of  all  claims  against  the  receiver, 
and  provided  that  the  company  should  take  possession  upon 
condition  that  it  should  pay  off  all  obligations  incurred  by  the 
receiver,  it  was  held  that  the  company  was  liable  as  a  defendant 
to  an  intervening  petition  filed  in  the  receivership  proceeding 
for  injuries  resulting  from  the  negligent  operation  of  the  road 
in  the  hands  of  the  receiver. '^^  And  where  a  railway  company 
is  organized  under  a  statute  which  provides  that  it  shall  pur- 
chase the  property  of  an  insolvent  railway  company  in  the 
hands  of  a  receiver  and  further  provides  that  such  purchasing 
company  shall  take  the  property  subject  to  all  suits  and  claims 
for  damages  against  the  receiver,  the  purchasing  corporation 
becomes  liable  for  damages  for  personal  injuries  resulting 
from  the  operation  of  the  road  by  the  receiver,  and  judgment 
is  properly  rendered  against  such  company  regardless  of  the 
question  of  betterments.'^^ 

§  397b.  Receiver's  liability  official,  not  personal;  may 
be  enforced  against  his  successor.  The  liability  of  the  re- 
ceiver of  a  railway  for  the  negligence  or  torts  of  his  servants 
and  employees  in  operating  the  road  is  not  a  personal  one,  and 
he  is  only  liable  in  his  official  capacity  as  receiver  or  agent  of 
the  court,  the  proceeding  being  analogous  to  a  proceeding  in 
rem,  and  binding  the  property  or  estate,  rather  than  the  person 
of  the  receiver.'^'^  It  is,  therefore,  error  to  render  judgment 
against  a  receiver  in  his  individual  capacity  and  to  award 
execution  thereon,  and  the  judgment  should  be  against 
the  receiver  as  such,  to  be  paid  out  of  the  funds  held  by 
him  in  that  capacity  in  due  course  of  the  administration  of  his 
receivership.'^^     So  when  the  receiver  resigns  and  a  successor 

75  Baltimore  &  O.  R.  Co.  v.  Bur-  affirmed  in  141  U.  S.,  327.  12  Sup. 
ris,  50  C.  C.  A.,  48,  111  Fed.,  882.  Ct.  Rep.,   11;   Erskine  v.   Mcllrath, 

76  Cross  V.   Evans,  29  C.   C.   A.,  60  Minn.,  485,  62  N.  W.,  1130;  Gray 
523,  86  Fed.,  1,  52  U.  S.  App.,  720.  v.  Grand  Trunk  W.  Ry.  Co.,  84  C. 

77  McNulta  V.  Ensch,  134  III.,  46,  C.  A.,  392,  156  Fed.,  736. 

24  N.   E.,  631 ;    McNulta  v.   Lock-  78  McNulta  v.  Ensch,  134  111.,  46, 

ridge,   137  111.,  270,  27  N.   E.,  452,      24  N.  E.,  631. 


558  RECEIVERS.  [chap.  XI. 

is  appointed,  an  action  may  be  maintained  against  such  suc- 
cessor and  a  recovery  had  against  him  for  damages  sustained 
by  an  injury  occurring  during  the  administration  of  the  former 
receiver,  the  judgment  being  payable  out  of  the  funds  in  the 
hands  of  the  successor  in  due  course  of  administration. "^^  And 
since  the  habihty  of  a  receiver  in  this  class  of  cases  is  an  offi- 
cial and  not  a  personal  liability,  it  constitutes  no  defense  to 
such  an  action  that  a  defect  in  the  road  which  caused  the  in- 
jury existed  when  the  property  came  into  the  receiver's  pos- 
session, and  that  he  had  not  had  sufficient  time  to  repair  or  to 
remedy  such  defect.^^  And  an  action  against  the  receivers  of 
a  railway  company  for  the  death  of  plaintiff's  intestate  is  not 
abated  or  barred  by  an  order  of  the  court  in  the  receivership 
proceeding  directing  that  the  property  in  the  hands  of  the  re- 
ceivers should  be  turned  back  to  the  company,  but  providing 
that  it  should  be  accepted  upon  condition  that  the  company 
should  pay  all  obligations  incurred  by  the  receivers  which 
should  be  adjudged  to  be  valid  debts  and  obligations  of  the 
receivers,  the  court  retaining  jurisdiction  for  the  adjustment 
of  such  claims,  but  not  providing  for  the  discharge  of  the  re- 
ceivers.^i  But  an  action  can  not  be  maintained  against  the 
receiver  of  a  railway  company  to  recover  damages  for  injuries 
sustained  as  the  result  of  the  alleged  negligence  of  the  company 
prior  to  the  appointment  of  the  receiver.^^  Sq  an  action  will 
not  lie  against  the  receiver  individually  to  hold  him  liable  for 
negligence  of  servants  employed  by  him  as  receiver.^^ 

§  398.  Receivers  liable  to  action  for  breach  of  duty  as 
common  carriers.  It  has  already  been  shown  that  receiv- 
ers of  railways  are  liable  to  actions  for  personal  injuries  in- 
curred during  their  management  and  operation  of  the  road, 

"!■!>  McNulta  V.  Lockridge,  137  III.,  81  Cowen   v.    Merriman,    17   App. 

270,  27  N.  E.,  452,  affirmed  in  141  D.  C,  186.     And  see,  ante,  §  395. 
U.  S.,  327,  12  Snp.  Ct.  Rep.,  11.  82  McDermott  v.  Crook,  20  App. 

80  Texas    &    Pacific    R.     Co.    v.  D.  C,  465. 
Geiger,  79  Tex.,  13,  15  S.  W.,  214;  83  Erskine  v.  Mcllrath,  60  Minn., 

Bonner  v.    Mayfield,   82   Tex.,   234,  485.  62  N.  W.,  1130. 
18  S.  W..  305. 


CHAP.  XI.]  RAILWAYS.  559 

leave  of  court  being  had  to  bring  the  action.^^  It  is  not 
to  be  understood  that  their  Habihty  is  confined  to  this  class  of 
actions,  and  it  may  be  affirmed,  generally,  that  they  are  liable 
as  common  carriers  for  negligence  in  the  performance  of  their 
duties,  and  an  action  for  damages  sustained  by  such  negligence 
will  lie  against  them  in  their  official  capacity.  The  fact  that 
they  were  acting  as  receivers,  under  appointment  from  a  court 
of  chancery,  can  not  be  recognized  as  a  defense  to  a  suit  at  law 
for  breach  of  any  obligation  or  duty  voluntarily  assumed  by 
them  in  conducting  their  business  as  such  receivers.  And  their 
assumption  of  the  duties  and  responsibilities  of  common  car- 
riers is  not  regarded  as  incompatible  with  any  duty  or  respon- 
sibility imposed  upon  them  as  receivers.^^  Being  thus  held 
liable  as  common  carriers  in  the  state  of  their  appointment, 
such  receivers  may  be  held  to  the  same  liability  in  another  state. 
And  in  an  action  brought  against  them  in  another  state  to  re- 
cover damages  for  loss  of  freight,  the  court  will  not  concede 
to  the  defendants  an  exemption  from  the  ordinary  liabilities  of 
common  carriers  more  extensive  than  is  allowed  them  in  the 
state  of  their  appointment,  and  in  which  the  loss  occurred. 
And  in  such  a  case,  the  ordinary  rule,  that  receivers  are  amen- 
able solely  to  the  court  appointing  them,  has  been  held  to  be  in- 
applicable.^^ But  while  the  cases  supporting  this  doctrine  are 
believed  to  state  the  correct  rule  as  to  the  liability  of  railway  re- 
ceivers as  common  carriers,  they  are  not  to  be  accepted  as  au- 
thoritative upon  the  right  to  institute  such  actions  without 
leave  of  the  court  appointing  the  receiver,  since,  as  we  have  al- 
ready seen,  the  better  considered  doctrine,  and  that  supported 
by  the  clear  weight  of  authority,  in  the  absence  of  legislation 
to  the  contrary,  requires  such  permission  before  the  action  may 
be  brought.^"^ 

84  See,  ante,  §  395.  that  when  a  citizen  of  New  Jersey 

85  Blumenthal  v.  Brainerd,  38  Vt,  is    appointed    receiver    over    a    rail- 
402;  Ex  parte  Brown,  15  S.  C,  518.  way  corporation  of  that  state,  and 

86  Paige  v.  Smith,  99  Mass.,  395.  afterward,  by  an  ancillary  proceed- 

87  See  §  395a,  ante.    In  Davies  v.  ing  in  New  York,  he  is  appointed 
Lathrop,  20  Blatchf.,  397,  it  is  held  receiver   over   the   property   of   the 


560  RECEIVERS.  [chap.  XI. 

§  39Sa.  Right  of  way;  contract  with  express  company; 
personal  contracts  of  company  not  binding  on  receiver. 

An  action  may  be  maintained  against  the  receiver,  by  leave  of 
court,  to  recover  damages  sustained  by  plaintiff  by  the  construc- 
tion of  the  railway  through  his  premises  without  making  com- 
pensation therefor,  prior  to  the  receiver's  appointment,  the 
judgment,  when  recovered,  to  be  satisfied  out  of  the  assets  in 
the  receiver's  hands  under  the  orders  of  the  court  appointing 
hini.^^  But  a  contract  by  which  a  railway  company  gives  to 
an  express  company  the  exclusive  right  to  transact  all  express 
business  over  the  road  for  a  given  period,  can  not  be  enforced 
against  a  receiver  afterward  appointed  in  foreclosure  proceed- 
ings against  the  railroad.  Such  a  contract  gives  no  lien  upon 
the  property  of  the  company,  and  its  specific  performance  by 
the  receiver  would  be  only  a  form  of  payment  or  satisfaction 
which  he  can  not  be  required  to  make.^^  So  the  receiver  is 
not  bound  by  contracts  of  the  railway  company  which  are  of 
a  personal  character  and  which  he  has  not  adopted  or  affirmed. 
Thus,  a  contract  by  which  the  company  agrees  to  maintain  a 
switch  upon  the  land  of  a  property  owner  is  regarded  as  of  a 
personal  nature,  and  if  receivers  of  the  company  discontinue 
such  switch,  they  will  not  be  liable  in  an  action  brought  by  the 
property  owner.^^  So  when  a  railway  company  has  contract- 
ed with  a  marble  company  to  carry  marble  from  its  quarries 
to  a  given  point,  allowing  it  to  be  stopped  at  an  intermediate 

company  in  that  state,  and  an  ac-  89  Express  Co.  v.  Railroad  Co.,  99 

tion  is  brought  by  citizens  of  New  U.  S.,  191.     And  see,  ante,  §§  273 

York,    in    a    court    of    that    state,  and  393c. 

against  the  receiver,  to  recover  for  ^0  Brown  v.  Warner,  78  Tex.,  543, 

the    death     of    plaintiff's    intestate  14  S.  W.,  1032.    As  to  the  right  of 

upon    a   train   operated   by   the    re-  an  abutting  property  owner  to  main- 

ceiver  in   New  Jersey,  the  receiver  tain  an  action  against  a  receiver  of 

will  be  regarded  as  a  citizen  of  New  a     railway    for    damages    resulting 

Jersey,   and  the  cause  may,   there-  from  the  improper  use  of  a  street 

fore,    be    removed    to    the    United  occupied  by  the  tracks  of  the  com- 

States  court  in  New  York.  pany,    see    Frankle   v.   Jackson,    30 

88  Combs  V.   Smith,  78  Mo.,  32 ;  Fed.,  398. 
Ratcliff  V.  Adler,  71  Ark.,  269,  72 
S.  W.,  896. 


CHAP.  XI.]  RAILWAYS. 


561 


station  to  be  prepared  for  market,  and  a  considerable  quantity 
of  marble  upon  which  the  freight  has  been  prepaid  under  the 
contract  is  at  such  intermediate  point  at  the  date  of  appointing 
a  receiver  over  the  railway  company,  an  action  can  not  be 
maintained  against  the  receiver  for  the  specific  performance  of 
the  contract,  or  the  refunding  of  the  freight  already  paid,  the 
shipper  having  no  lien  for  the  amount  thus  paid.^^ 

§  398&.  Receiver  not  liable  after  discharge;  liability  of 
purchasers  of  road.  After  the  discharge  of  the  receiver,  no 
action  can  be  maintained  against  him  to  recover  for  personal 
injuries  sustained  by  the  negligence  of  his  employees,  since  he 
can  not  be  made  personally  liable  for  their  torts.92  if^  how- 
ever, the  purchaser  at  the  foreclosure  sale  acquires  the  property 
subject  to  all  demands  against  the  receiver,  the  court  still  re- 
taining jurisdiction  of  the  cause  for  the  purpose  of  enforcing 
payment  of  such  demands,  it  may  entertain  a  petition  against 
the  purchaser  to  recover  for  personal  injuries  sustained  during 
the  receiver's  operation  of  the  road.^S  And  in  such  case,  a 
judgment  for  such  cause  of  action  being  by  the  laws  of  the 

01  Central  Trust  Co.  v.  Marietta  afterward  the  property  was  sold  to 

&  N.  G.  R.  Co.,  51  Fed.,  15.  another  company^  the  order  of  the 

92  Davis  V.  Duncan,  19  Fed.,  477;  court  providing  that  the  sale  should 
Farmers'  Loan  &  Trust  Co.  v.  Cen-  be  upon  the  express  condition  that 
tral  Railroad,  7  Fed.,  537;  McGhee  the  purchaser  should  pay  all  obliga- 
V.  Willis,  134  Ala.,  281,  32  So.,  301 ;  tions  and  indebtedness  legally  con- 
Archamb'cau  v.  Piatt,  173  Mass.,  tracted  by  the  receiver  before  the 
249,  53  N.  E.,  816;  Tobin  v.  Central  delivery  of  the  possession  of  the 
Vermont  Ry.  Co.,  185  Mass.,  337.  property  and  that  the  receiver 
70  N.  E.,  431.  And  see  Thompson  should  be  discharged  but  that  his 
V.  Northern  Pac.  R.  Co.,  35  C.  C.  discharge  should  not  operate  to  pre- 
A.,  357,  93  Fed.,  384.  And  see,  ante,  vent  him  from  defending  any  suit 
§  255.  brought    against    him    as    such    re- 

93  Farmers'  Loan  &  Trust  Co.  v.  ceiver  still  undetermined  or  any  suit 
Central  Railroad,  17  Fed.,  758.  In  that  might  thereafter  be  brought 
Denver  &  R.  G.  R.  Co.  v.  Gunning,  against  him  as  such  receiver,  it  was 
33  Colo.,  280,  80  Pac,  727,  where  a  held  that  both  the  receiver  and  the 
claim  for  damages  had  arisen  as  the  purchaser  were  proper  parties  de- 
result  of  the  death  of  the  plaintiff's  fendant  to  an  action  brought  to  en- 
wife   through   the   negligent   opera-  force  the  claim. 

tion  of  the  road  by  the  receiver,  and 
Receivers — 36. 


562  RECEIVERS.  [chap.  XI. 

State  made  a  lien  upon  the  railway,  the  judgment  may  be  estab- 
lished as  a  lien  after  the  road  has  passed  into  the  hands  of 
purchasers.^'*  But  when  the  road  is  sold,  subject  to  the  pay- 
ment of  all  liabilities  incurred  by  the  receiver  in  its  operation, 
a  bill  in  equity  can  not  be  maintained  against  the  purchasers 
to  recover  damages  for  injuries  sustained  during  the  receiver- 
ship, since  equity  will  not  assume  jurisdiction  of  a  controversy 
for  the  recovery  of  unliquidated  damages  in  tort.^^  Such  a 
purchaser,  however,  having  purchased  subject  to  all  liabilities 
growing  out  of  the  receiver's  operation  of  the  road,  is  liable 
in  an  action  at  law  for  the  recovery  of  such  damages,  the  injury 
having  been  caused  by  the  negligence  of  the  receiver's  employ- 
ees.^^ So  where  a  proceeding  has  been  instituted  against  the  re- 
ceivers of  a  railway  company  to  recover  a  statutory  penalty  for 
failure  to  maintain  cattle  guards,  and,  pending  the  proceeding, 
the  receivers  are  discharged  and  the  property  is  sold  to  another 
company  under  a  decree  which  provides  that  the  purchasers 
shall  pay  any  unpaid  obligations  or  liabilities  incurred  by  the 
receivers,  the  action  against  the  receivers  is  properly  revived 
against  the  purchasing  company  and  the  latter  may  be  held 
liable  for  the  statutory  penalty  in  question.^'^  And  when  a 
foreclosure  sale  is  had  expressly  subject  to  all  indebtedness  in- 
curred by  the  receiver,  which  is  declared  to  be  a  lien  vipon  the 
property  prior  to  that  of  the  mortgagees,  the  purchasers  cov- 
enanting to  pay  all  damages  and  liabilities  incurred  by  the  re- 
ceiver, or  which  should  have  been  paid  out  of  the  property, 
the  purchasers  are  liable  for  the  payment  of  a  judgment  recov- 
ered against  the  receiver  on  account  of  the  death  of  plaintiff's 
intestate  while  the  road  was  operated  by  the  receiver.  In 
such  case,  the  judgment  creditor  may  maintain  an  action 
against  the  purchasers  for  the  recovery  of  the  judgment,  or 

04  Farmers'  Loan  &  Trust  Co.  v.  em  Pac.  R.  Co.,  35  C.  C.  A.,  357, 

Central  Railroad,   17  Fed.,  758;   S.  93  Fed.,  384.    But  the  contrary  view 

C,  5  McCrary,  421.  has    been    taken    in    Massachusetts. 

95  Brown  v.   Wabash   R.   Co.,   96  Tobin  v.  Central  Vermont  Ry.  Co., 
111.,  297.  185  Mass.,  337,  70  N.  E..  431. 

96  Sloan  V.  Central  Iowa  R.  Co.,  ^7  Memphis  &  Charleston  R.  Co. 
62  Iowa,  728;  Thompson  v.  North-  v.  Glover,  78  Miss.,  467,  29  So.,  89. 


CHAP.  XI.]  RAILWAYS.  563 

to  establish  a  lien  upon  the  property  and  for  its  sale  in  satisfac- 
tion of  the  judgment.^^  So  when  property  is  purchased  and 
paid  for  out  of  the  receiver's  income,  and  is  delivered  to  the 
company  upon  the  surrender  back  of  the  road  at  the  termina- 
tion of  the  receivership,  such  property  is  liable  in  equity  for 
damages  sustained  by  injuries  while  the  road  was  operated  by 
the  receiver,  when  the  rights  of  third  persons  have  not  inter- 
vened, the  liability,  in  such  case,  being  based  upon  the  diver- 
sion of  income  by  the  receiver.^^  But  since  the  liability  of  a 
receiver  of  a  railway  for  damages  sustained  during  his  man- 
agement of  the  road  is  an  official  and  not  a  personal  liability, 
it  terminates  with  his  discharge,  and  after  he  has  been  dis- 
charged and  the  property  has  been  delivered  pursuant  to  the 
order  of  the  court,  no  judgment  can  be  rendered  against  him 
for  such  injuries,  even  in  an  action  which  is  pending  at  the 
time  of  his  discharge.  If  the  property  has  been  delivered  back 
to  the  railway  company  without  sale  it  is  proper  to  substitute 
the  company  as  a  defendant  rather  than  to  abate  the  action 
itself.  In  such  case  an  amendment  to  the  petition  or  com- 
plaint making  the  railway  company  a  defendant  after  the  dis- 
charge of  the  receiver  is  not  the  beginning  of  a  new  action, 
but  merely  a  continuation  of  the  former  suit,  and  the  statute 
of  limitations  as  to  the  cause  of  action  is  suspended  by  the 
bringing  of  the  original  action  against  the  receiver.^  And  when 
a  receiver,  appointed  by  a  federal  court,  has  been  discharged 
by  that  court  and  the  property  delivered  over  according  to  the 
orders  of  the  court,  the  official  existence  of  the  receiver  ceases, 
and  suits  pending  in  the  state  courts,  upon  a  plea  of  the  dis- 
charge, must  be  abated. ^ 

98  Schmid  v.  N.  Y.,  L.  E.  &  W.  1  Brown,    Receiver,    v.    Gay,    76 

R.  Co.,  32  Hun,  335.    And  see  Ryan  Tex.,  444,  13  S.  W.,  472;  Boggs  v. 

V.  Hays,  62  Tex.,  42;   Hicks  v.   I.  Brown,  82  Tex.,  41,  17  S.  W.,  830; 

&  G.  N.  R.  Co.,  62  Tex.,  38;  I.  &  Texas   &    Pacific    R.    Co.    v.    Com- 

G.  N.  R.  Co.  V.  Ormond,  62  Tex.,  stock,  83  Tex.,  537,  18  S.  W.,  946. 

274;  Brockert  v.  Iowa  Central  Ry.  And  see  Texas  &  Pacific  R.  Co.  v. 

Co.,  93  Iowa,  132,  61  N.  W.,  405.  Adams,  78  Tex.,  372,  14  S.  W.,  666. 

09  Mobile  &  Ohio  R.  Co.  v.  Davis,  2  Fordyce   v.   Du   Bose,   87  Tex., 

62  Miss.,  271.  78,  26  S.  W.,  1050. 


564  RECEIVERS.  [chap.  XL 


VI.  Receivers'  Certificates. 

§  39Sc-.  Receivers'  certificates  sustained  by  authority;  not  invalid  because 
bill  is  demurrable. 

398c?.  Purposes  for  which  issued;  order  strictly  construed;  priorities; 
notice. 

398^.  Not  commercial  paper;  innocent  holders  not  protected;  pur- 
chasers charged  with  notice  of  order. 

398/.  When  bondholder  estopped  from  questioning  validity;  when 
bondholder  not  estopped;  consent  of  trustee  to  certificates; 
order  for  certificates  appealable. 

298g.  Sale  of  road  subject  to  certificates;  purchaser  concluded;  me- 
chanic's lien. 

398h.  Certificates  for  construction;  when  new  company  liable  for 
certificates. 

398i.    Case  of  Illinois  Midland  Railway  Company. 

398/.  Priority  as  between  compensation  of  receiver  and  that  of 
trustee;  same  as  to  counsel  fees. 

§  398c.  Receivers'  certificates  sustained  by  authority; 
not  invalid  because  bill  is  demurrable.  In  actions  for  the 
foreclosure  of  raihvay  mortgages,  a  practice  has  grown  up  in 
recent  years  of  authorizing  the  receiver  appointed  in  the  fore- 
closure proceedings  to  issue  debentures  or  certificates  of  in- 
debtedness for  the  purpose  of  raising  money  to  procure  ma- 
terials, labor,  supplies  and  rolling  stock,  for  the  maintenance 
and  repair  of  the  road,  and  in  some  instances  for  completing 
an  unfinished  line  or  for  making  extensions  of  an  existing  line 
of  road.  These  certificates  are,  by  the  order  of  the  court,  de- 
clared to  be  a  first  lien  upon  the  entire  property,  income  and 
franchises  of  the  railway  company,  and  such  order  is  usually 
recited  in  the  body  of  the  certificate  itself.  In  cases  where  re- 
sort is  had  to  this  method  of  raising  money,  the  income  of  the 
receivership  being  generally  inadequate  to  the  payment  of  the 
certificates,  they  are  usually  paid  out  of  the  proceeds  of  fore- 
closure, before  distribution  among  the  mortgage  bondholders. 
The  power  to  thus  create  a  new  lien  or  mortgage  upon  the 
property,  and  to  give  it  priority  over  existing  mortgages,  marks 
the  extreme  limit  which  courts  of  equity  have  thus  far  attained 
in  the  exercise  of  their  extraordinary  jurisdiction.  It  can 
hardly  be  questioned  that  the  exercise  of  such  a  power  impairs 


CHAP.   XI.]  RAILWAYS.  565 

the  obligation  of  the  mortgage  contract,  and  frequently  results 
in  the  diversion  of  a  large  portion  of  the  mortgage  security. 
A  power  so  dangerous  because  so  boundless  can  not  be  sus- 
tained upon  any  just  principles  of  legal  reasoning.  Neverthe- 
less, as  was  said  upon  the  question  of  preferring  payment  of 
operating  expenses  prior  to  the  receivership,  as  against  the 
lien  of  mortgage  bondholders,  this  branch  of  the  jurisdiction 
is  so  well  established  upon  authority  that  its  existence  is  no 
longer  open  to  question.^  The  exercise  of  the  jurisdiction  is 
justified  upon  the  principle  that  the  court  having  taken  under 
its  charge  the  property  of  the  railway  company  as  a  trust  fund 
for  the  payment  of  incumbrances,  it  may  authorize  its  receiv- 
ers to  raise  money  necessary  for  the  preservation  and  manage- 
ment of  the  property,  and  may  charge  the  same  as  a  lien  there- 
on, when  necessary  for  the  preservation  of  the  trust  estate."* 
The  exercise  of  the  power  is  also  justified  from  the  peculiar 
nature  of  railway  property  and  from  the  necessity  of  continu- 
ing it  in  operation  as  a  "going  concern,"  pending  foreclosure 
proceedings,  as  well  as  for  the  preservation  and  protection  of 
the  interests  of  the  public.^  The  jurisdiction  is  to  be  exercised 
with  extreme  caution,  and,  if  possible,  with  the  consent  or 
acquiescence  of  the  parties  in  interest.^  And  when  the  cer- 
tificates have  thus  been  issued,  either  with  the  consent  of  the 
bondholders,  or  without  objection  on  their  part,  they  will  be 

3  Wallace   v.    Loomis,   97   U.    S.,  as    against    mortgage    bondholders, 

146;    Meyer   v.   Johnston,    S3    Ala.,  to    issue    receivers'   certificates   and 

237;  Hoover  v.  M.  &  G.  L.  R.  Co.,  to    make    them    a    prior    lien    and 

29  N.  J.  Eq.,  4;  Taylor  v.  P.  &  R.  charge   upon  the  mortgaged  prem- 

R.  Co.,  7  Fed.,  377;  Bank  of  Mont-  ises,  for  the  payment  of  wages  due 

real  v.  C,  C.  &  W.  R.  Co.,  48  Iowa,  to  operatives  prior  to  the  receiver- 

518;  Kennedy  v.  St.  Paul  &  Pacific  ship. 

R.  Co.,  2  Dill.,  448;  S.  C,  5  Dill.,  4  Wallace   v.    Loomis,   97   U.    S., 

519;  Illinois  Trust  &  Savings  Bank  146.    But  see  Street  v.  Maryland  C. 

V.  Pacific  Ry.  Co.,  115  Cal.,  285,  47  R.  Co.,  59  Fed.,  25. 

Pac,  60.     See,  contra,  Metropolitan  ^  Meyer  v.  Johnston,  53  Ala.,  237. 

Trust  Co.  V.  Tonawanda  Valley  &  6  Wallace   v.    Loomis,   97   U.    S., 

C.  R.  Co.,  103  N.  Y.,  245,  8  N.  E.,  146;  Investment  Co.  v.  Ohio  &  N. 

488,  where  it  was  held  in  a  well-  W.  R.  Co.,  36  Fed.,  48. 
considered  opinion  to  be  improper, 


S66 


RECEIVERS. 


[chap.  XI. 


enforced  as  a  prior  Hen  upon  the  property,  and  will  be  paid  out 
of  the  proceeds  of  foreclosure,  before  payment  to  the  bond- 
holders.''' Nor  are  receivers'  certificates  which  are  otherwise 
valid  rendered  invalid  by  the  fact  that  the  bill  in  the  proceed- 
ing in  which  they  are  issued  is  bad  upon  demurrer.^ 

§  398(/.  Purposes  for  which  issued;  order  strictly  con- 
strued; priorities;  notice.  No  limit  has  been  fixed  to  the 
purposes  for  which  receivers'  certificates  may  be  issued,  other 
than  that  they  shall  be  germane  to  the  objects  of  the  receiver- 
ship and  necessary  to  the  proper  administration  of  the  trust. 
Thus,  they  have  been  authorized  for  the  preservation,  manage- 
ment and  repair  of  the  road,  and  for  the  purchase  of  rolling 
stock;  ^  for  the  making  of  repairs  only;  ^^  for  the  further  con- 
struction, equipment  and  final  completion  of  the  road ;  ^^  to 


7  Wallace  v.  Loomis,  97  U.  S., 
146.  Mr.  Justice  Bradley,  deliver- 
ing the  opinion  of  the  court,  says, 
p.  162:  "The  receivers  were  au- 
thorized by  the  order  appointing 
them,  amongst  other  things,  to  put 
the  road  in  repair  and  operate  the 
same,  and  to  procure  such  rolling 
stock  as  might  be  necessary;  and, 
for  these  purposes,  to  raise  money 
by  loan  to  an  amount  named  in  the 
order,  and  issue  their  certificates  of 
indebtedness  therefor;  and  the  or- 
der declared  that  such  loan  should 
be  a  first  lien  upon  the  property, 
payable  before  the  first  mortgage 
bonds.  The  power  of  a  court  of 
equity  to  appoint  managing  receiv- 
ers of  such  property  as  a  railroad, 
when  taken  under  its  charge  as  a 
trust  fund  for  the  payment  of  in- 
cumbrances, and  to  authorize  such 
receivers  to  raise  money  necessary 
for  the  preservation  and  manage- 
ment of  the  property,  and  make  the 
same  chargeable  as  a  lien  thereon 
for  its  repayment,  can  not,  at  this 
day,  be  seriously  disputed.     It  is  a 


part  of  that  jurisdiction,  always  ex- 
ercised by  the  court,  by  which  it  is 
its  duty  to  protect  and  preserve  the 
trust  funds  in  its  hands.  It  is,  un- 
doubtedly, a  power  to  be  exercised 
with  great  caution ;  and,  if  possible, 
with  the  consent  or  acquiescence  of 
the  parties  interested  in  the  fund. 
In  this  case  it  appears  that  the  par- 
ties most  materially  interested  either 
expressly  consented  to  the  order,  or 
offered  no  objection  to  it." 

8  Farmers'  Loan  &  Trust  Co.  v. 
Centralia  &  C.  R.  Co.,  37  C.  C  A., 
528,  96  Fed.,  636. 

9  Wallace  v.  Loomis,  97  U.  S., 
146;  Union  Trust  Co.  v.  Illinois 
Midland  R.  Co.,  117  U.  S.,  434,  6 
Sup.  Ct.  Rep.,  809,  affirming  in  part 
and  reversing  in  part  S.  C,  28  Fed., 
169. 

10  Hoover  v.  M.  &  G.  L.  R.  Co., 
29  N.  J.  Eq.,  4. 

11  Bank  of  Montreal  v.  C,  C.  & 
W.  R.  Co.,  48  Iowa,  518;  Bank  of 
Montreal  v.  Thayer,  7  Fed.,  622; 
First  National  Bank  v.  Ewing,  43 
C.   C.   A.,   150,   103   Fed.,   168.     In 


CHAP.   XI.] 


RAILWAYS. 


567 


complete  an  unfinished  portion  of  the  road  within  the  time 
fixed  by  law,  and  thus  to  prevent  the  lapsing  of  valuable 
land  grants  and  franchises  of  the  company ;  ^^  for  the  im- 
provement, repair  and  operation  of  the  road ;  ^^  to  procure 
rolling  stock,  machinery  and  necessary  supplies,  and  to  repair 
and  operate  the  road,^^  and  in  payment  for  labor,  materials, 
supplies  and  taxes  due  prior  to  the  receivership.^^  So  they  have 
been  issued  in  payment  for  the  construction  of  a  line  of  railway 
which,  while  not  a  part  of  the  mortgaged  system,  yet  formed 
a  part  of  the  continuous  line  or  system  made  up  of  different  di- 
visions operated  by  the  receiver  as  an  entirety,  and  the  use  by 
the  receiver  of  the  branch  in  question  being  necessary  to  pre- 
vent the  dismemberment  of  such  system. ^^  And  when  an  iron 
company  has  constructed  a  railroad  for  the  transportation  of 
ore  from  its  mines,  upon  the  appointment  of  a  receiver  over 
the  company,  certificates  have  been  issued  for  rebuilding  a 
bridge  upon  such  railroad,  for  paying  taxes  and  expenses  of 


Bibber-White  Co.  v.  White  River 
V.  E.  R.  Co.,  53  C.  C.  A.,  282,  115 
Fed.,  786,  it  was  held  to  be  an  er- 
roneous exercise  of  judicial  discre- 
tion for  the  court  to  authorize  re- 
ceivers' certificates  for  the  comple- 
tion of  a  line  of  railroad  of  which 
only  one-third  was  already  com- 
pleted, and  to  give  such  certificates 
preference  over  other  certificates 
previously  issued,  especially  where 
the  bondholders  were  given  no  op- 
portunity to  be  heard.  But  in 
Rutherford  v.  Penn.  M.  R.  Co.,  178 
Pa.  St.,  38,  35  Atl.,  926,  it  was  held 
that  while  ordinarily  receivers'  cer- 
tificates should  not  be  issued  for 
the  completion  of  an  unfinished  line 
of  railroad,  yet  it  was  proper  to 
issue  them  where  it  was  done  with 
the  approval  of  96  per  cent,  of  the 
bondholders  and  was  without  pre- 
judice to  the  non-assenting  bond- 
holders. 


12  Kennedy  v.  St.  Paul  &  Pacific 
R.  Co.,  2  Dill.,  448;  S.  C,  5  Dill., 
519. 

13  Turner  v.  P.  &  S.  R.  Co.,  95 
111.,  134;  Stanton  v.  A.  &  C.  R.  Co., 
2  Woods,  506. 

14  Swann  v.  Clark,  110  U.  S.,  602, 
4  Sup.  Ct.  Rep.,  241. 

15  Humphreys  v.  Allen,  101  111.. 
490;  Taylor  v.  P.  &  R.  R.  Co.,  7 
Fed.,  377;  Union  Trust  Co.  v.  Illi- 
nois Midland  R.  Co.,  117  U.  S.,  434, 
6  Sup.  Ct.  Rep.,  809,  affirming  in 
part  and  reversing  in  part  S.  C,  28 
Fed.,  169;  First  National  Bank  v. 
Ewing,  43  C.  C.  A.,  150,  103  Fed., 
168;  Bank  of  Commerce  v.  Central 
C.  &  C.  Co.,  53  C.  C.  A.,  334,  115 
Fed.,  878. 

i6Kneeland  v.  Luc-?,  141  U.  S., 
491,  12  Sup.  Ct.  Rep.,  32. 


568  RECEIVERS.  [chap.  XI. 

condemnation  suits  and  for  other  purposes  necessary  to  put 
the  property  in  a  salable  condition ;  and  such  certificates  have 
been  preferred  in  payment  out  of  the  proceeds  of  a  sale  of  the 
property  over  the  claims  of  mortgage  bondholders.^"^  So  the 
court  may  properly  authorize  the  issuing  of  receivers'  certifi- 
cates for  the  purpose  of  raising  funds  to  defray  the  costs  and 
expenses  of  a  proposed  litigation,  and  the  fact  that  the  result 
of  such  litigation  is  uncertain  constitutes  no  objection.^^  As 
between  receivers'  certificates  issued  to  pay  debts  incurred  for 
labor,  materials  and  supplies  prior  to  the  appointment  of  the 
receiver,  and  those  issued  to  pay  for  repairs  and  other  expenses 
incurred  by  the  receiver  himself  in  the  operation  of  the  road, 
the  latter  are  to  be  regarded  as  the  debts  of  the  court  rather 
than  of  the  company  and  are  therefore  entitled  to  a  preference 
in  payment  over  the  former,  which  are  to  be  considered  as  the 
debts  of  the  company.^^  The  issue  of  certificates  is,  however, 
confined  strictly  to  the  purposes  expressed  in  the  order,  and 
these  purposes  will  not  be  extended  by  implication.  And  when 
the  receiver  is  authorized  to  issue  certificates  as  material  is  fur- 
nished and  labor  performed  in  extending  the  road,  not  to  ex- 
ceed a  given  amount  per  mile,  he  can  not  issue  them  in  advance 
of  the  actual  performance  of  the  labor  or  furnishing  of  the 
materials.20  Nor  will  they  be  issued  without  notice  to  all 
parties  in  interest,  nor  without  a  full  hearing  as  to  the  necessity 
for  the  proposed  expenditure,^^  nor  at  a  higher  rate  of  interest 
than  that  allowed  by  law.22  But  notice  to  the  trustee  of  mort- 
gage bondholders,  of  the  application  for  leave  to  issue  the  cer- 
tificates, will  be  treated  as  notice  to  the  bondholders,  the  trustee 
being  regarded  for  such  purposes  as  the  representative  of  the 

l7Karn  v.  Rorer,  86  Va.,  754,  11  20  Bank  of  Montreal  v.  C,  C.  & 

S.  E.,  431.  W.  R.  Co.,  48  Iowa,  518. 

18  Town  of  Vandalia  v.  St.  L.,  V.  21  Ex  parte  Mitchell,  12  S.  C,  83; 
&  T.  H.  R.  R.  Co.,  209  111.,  73,  70  Meyer  v.  Johnston,  53  Ala.,  237; 
N.  E.,  662.  Osborne  v.  Big  Stone  G.  C.  Co.,  96 

19  Bank  of  Commerce  v.  Central  Va.,  58,  30  S.  E.,  446. 

C.  &  C.  Co.,  53  C.  C  A.,  334,  115  22  Meyer  v.  Johnston,  53  Ala.,  237. 

Fed.,  878. 


CHAP.   XI.]  RAILWAYS.  569 

bondholders. 23  But  the  bondholders  are  not  to  be  treated  as 
represented  by  the  trustee  in  the  matter  of  notice  when  the  trus- 
tee, although  named  as  a  defendant  in  the  proceeding,  was  not 
in  fact  a  party,  and  in  such  case  the  trustee,  when  finally  made 
a  party,  may  contest  the  validity  of  the  certificates. ^4 

§  398^.  Not  commercial  paper ;  innocent  holders  not  pro- 
tected; purchasers  charged  with  notice  of  order.  Receiv- 
ers' certificates,  being  merely  evidence  of  indebtedness  issued 
for  a  special  purpose,  under  a  judicial  order,  and  payable  out 
of  a  special  fund,  are  not  negotiable  instruments  or  commercial 
paper  in  the  sense  that  innocent  purchasers  for  value  will  be 
protected  as  against  the  equities  existing  between  the  original 
parties.  And  while  they  may  be  transferred  by  assignment, 
or  even  by  delivery  if  payable  to  bearer,  the  purchaser  or  as- 
signee may  only  recover  upon  them  to  the  extent  that  the 
original  payee  might  have  recovered. ^5  It  follows,  therefore, 
that  the  assignor  or  indorser  of  such  certificates  is  not  liable 
as  a  guarantor  or  indorser  of  commercial  paper,  nor  does  the 
assignment  import  a  warranty  that  the  certificates  are  collect- 
ible and  will  be  paid. 26  So  it  is  held  that  the  negotiation  and 
sale  of  the  certificates  is  a  trust  personal  to  the  receiver,  which 
he  can  not  delegate  to  an  agent.  And  when  one  has  purchased 
the  certificates  from  an  agent  or  broker  of  the  receiver  at  a 
large  discount,  the  agent  not  accounting  to  the  receiver  for  the 
proceeds,  the  purchaser  can  not  enforce  the  certificates. ^'7  So  the 
certificates  referring  upon  their  face  to  the  order  under  which 
they  are  issued,  a  purchaser  is  chargeable  with  notice  of  the 
terms  of  such  order,  and  is  bound  to  know  at  his  peril  whether 

23  Wallace  v.  Loomis,  97  U.  S.,  H.  R.  Co.,  7  Fed.,  513;  McCurdy  v. 
146.  Bowes,    88    Ind.,    583;    Stanton    v. 

24  Farmers'  Loan  &  Trust  Co.  v.  Alabama  &  C.  R.  Co.,  31  Fed.,  585; 
Centralia  &  C.  R.  Co.,  37  C.  C.  A.,  Bernard  v.  Union  Trust  Co.,  86  C. 
528,  96  Fed.,  636.  C.  A.,  610,  159  Fed.,  620. 

25  Turner  v.  P.  &  S.  R.  Co.,  95  26  McCurdy  v.  Bowes,  88  Ind., 
111.,   134;   Bank  of  Montreal  v.   C,  583. 

C.    &    W.    R.    Co.,    48    Iowa,    518 ;  27  Union  Trust  Co.  v.  C.  &  L.  H. 

Stanton  v.  A.  &  C.  R.  Co.,  2  Woods,      R.  Co.,  7  Fed.,  513. 
506;   Union  Trust  Co.  v.  C.  &  L. 


570  RECEIVERS.  [chap.  XI. 

they  are  issued  in  accordance  with  its  terms  and  conditions.28 
Anil  although  the  order  of  the  court  authorizing  the  issuing 
of  certificates  has  described  them  as  being  negotiable,  one  who 
takes  such  certificates  can  not  claim  to  hold  as  an  innocent 
purchaser  without  notice,  since  they  have  not  the  quality  of  ne- 
gotiable instruments  in  the  law  merchant,  and  the  purchaser  is 
put  upon  inquiry  of  all  which  is  done  in  the  cause  in  which 
they  have  been  issued. ^9  And  certificates  issued  in  excess  of 
the  amount  authorized  by  the  court  are  void,  even  in  the  hands 
of  innocent  holders,  and  will  not  be  awarded  priority  of  pay- 
ment out  of  the  funds  of  the  receivership.  But  when  money 
is  advanced  in  good  faith  upon  such  an  overissue  of  certificates, 
and  is  used  by  the  receiver  in  payment  of  overdue  coupons 
for  interest  upon  the  mortgage  indebtedness,  the  persons  ad- 
vancing such  money  may  be  subrogated  to  the  rights  of  the 
coupon  holders,  and  may  receive  the  proportion  due  to  such 
coupons  out  of  the  proceeds  of  the  foreclosure  sale,  upon  final 
distribution. ^0  If,  however,  a  receiver  executes  and  places 
upon  the  market  certificates  containing  false  and  fraudulent  rep- 
resentations intended  to  deceive  purchasers,  the  receiver  is 
personally  liable  in  an  action  for  damages  brought  by  one  who 
purchases  the  certificates  in  good  faith  and  relying  upon  such 
representations.^^ 

§  398/.  When  bondholder  estopped  from  questioning 
validity;  vi^hen  bondholder  not  estopped;  consent  of  trus- 
tee to  certificates;  order  for  certificates  appealable.  Al- 
though, as  has  already  been  shown,  receivers'  certificates 
are  not  negotiable  instruments,  yet  when  a  receiver  in 
foreclosure  proceedings  is  authorized  to  issue  them  in 
payment  for  operating  expenses,  rentals,  taxes  and  im- 
provements incurred  before  his  appointment,  a  bondholder 
desiring  to   question   their   validity   and   priority   of   lien 

28  Bank  of  Montreal  v.  C,  C.  &  30  Newbold  v.  P.  &  S.  R.  Co.,  5 
W.  R.  Co.,  48  Iowa,  518.  Bradw.,  367. 

29  Bernard   v.    Union   Trust    Co.,  ^i  Bank  of  Montreal  v.  Thayer,  7 
86  C.  C  A.,  610,  159  Fed.,  620.  Fed.,  622. 


CHAP.  XI.]  RAILWAYS.  571 

should  do  so  before  they  are  issued  and  sold.  And  if, 
with  full  knowledge  of  all  the  facts,  he  permits  them 
to  be  sold  without  objection,  he  and  those  claiming  under  him 
with  full  notice  of  such  facts,  can  not  afterwards  be  heard  to 
question  the  payment  of  such  certificates  in  full  out  of  the  pro- 
ceeds of  the  foreclosure  sale,  before  distribution  among  the 
bondholders. ^2  g^t  where,  in  an  action  brought  to  foreclose  a 
trust  deed  securing  bonds,  one  of  the  bondholders  filed  his  peti- 
tion of  intervention  asking  to  be  made  a  party  plaintiff  and  to 
adopt  the  allegations  of  the  bill  except  so  far  as  modified  by 
his  ownership  of  the  bonds,  but  the  court  refused  to  grant  the 
petition  and  it  was  afterwards  withdrawn  and  the  bondholder 
thereupon  appeared  as  a  defendant  in  the  action,  it  was  held 
that  the  bondholder  was  not  estopped  to  deny  the  validity  of 
receivers'  certificates  previously  issued. ^^  So  where  a  trustee 
for  mortgage  bondholders  consents  that  receivers'  certificates 
shall  issue  and  shall  be  a  first  lien  upon  the  mortgaged  property 
prior  to  the  lien  of  the  trust  deed,  such  action  by  the  trustee 
is  a  gross  breach  of  trust  and  the  mortgage  bondholders  will 
not  be  estopped  from  objecting  to  the  validity  of  the  certifi- 
cates.^* But  when,  after  a  final  decree  of  foreclosure  against 
a  railway  company  and  pending  an  appeal  and  supersedeas 
therefrom,  the  court  below  orders  an  issue  of  receivers'  cer- 
tificates as  a  paramount  lien  upon  the  mortgaged  property, 
an  appeal  will  lie  from  such  order,  since  it  is  a  final  determina- 
tion of  the  rights  of  the  parties,  which  changes  the  relation  of 
the  company  to  its  property  and  displaces  rights  already  de- 
termined and  established  by  the  foreclosure  decree.^^ 

32  Humphreys  v.  Allen,  101  111.,  Petitioner,  129  U.  S.,  206,  9  Sup. 
490.  See,  also,  Langdon  v.  Ver-  Ct.  Rep.,  265.  To  the  same  effect, 
mont  &  Canada  R.  Co..  53  Vt.,  228.  see    Bibber-White     Co.     v.     White 

33  Belknap  Savings  Bank  v.  La-  River  V.  E.  R.  Co.,  53  C.  C.  A.,  282, 
mar  L.  &  C.  Co.,  28  Colo.,  326,  64  115  Fed.,  786.  See  Farmers'  Loan 
Pac,  212.  &  Trust  Co.  v.   Centralia  &  C.   R. 

34  Belknap  Savings  Bank  v.  La-  Co.,  Z7  C.  C.  A.,  528,  96  Fed.,  636. 
mar  L.  &  C.  Co.,  28  Colo.,  326,  64  as  to  the  effect  upon  the  validity  of 
Pac,  212.  receivers'  certificates   of  the  assent 

35  Farmers'    Loan    &   Trust    Co.,  of  a  bondholders'  committee. 


572  RECEIVERS.  [chap.  XI. 

§  398°:.  Sale  of  road  subject  to  certificates;  purchaser 
concluded;  mechanic's  lien.  When  receivers'  certificates 
are  issued  in  foreclosure  proceedings  as  a  first  lien  upon  all  the 
property  of  a  railway  company,  to  be  paid  before  payment  to 
mortgage  bondholders  out  of  the  proceeds  of  sale,  and  the 
property  is  sold  expressly  subject  to  such  liens  and  to  all  lia- 
bilities incurred  by  the  receiver,  a  decree  in  a  subsequent  suit 
brought  by  the  holders  of  the  certificates,  declaring  them  to  be 
a  first  lien  upon  the  property  to  the  extent  of  the  money  actually 
advanced  to  the  receiver  thereon,  will  be  upheld  as  against  a 
purchaser  at  the  foreclosure  sale,  and  in  an  action  by  the  hold- 
ers of  the  certificates  to  enforce  their  lien  by  a  sale  of  the  road, 
such  purchaser  will  not  be  heard  to  question  the  validity  of  the 
certificates. 2^  In  such  case,  the  purchaser  having  acquired  his 
title  subject  to  all  such  liens  and  priorities  as  may  be  allowed 
by  the  court  prior  to  the  mortgage  indebtedness,  he  can  not, 
after  such  liens  have  been  established  in  the  foreclosure  pro- 
ceedings, maintain  a  new  action  to  dispute  their  validity,  the 
parties  in  interest  in  the  former  suit  having  been  fully  heard 
in  the  proceeding  to  establish  the  validity  and  priority  of  such 
prior  liens. 3"^  If,  however,  the  railway  is  sold  to  satisfy  the  cer- 
tificates, such  sale  will  not  divest  a  mechanic's  lien  claimed  by  a 
creditor  for  the  construction  of  the  road,  who  has  instituted 
proceedings  to  enforce  his  lien  before  the  appointment  of  the 
receiver,  and  who  was  not  made  a  party  to  the  suit  in  which 
he  was  appointed  and  in  which  the  property  was  sold.  In  such 
case,  the  receiver  in  no  manner  represents  the  creditor  claim- 

36  Swann  v.  Clark,  110  U.  S.,  602,  certificates,  and  as  to  the  effect  of 

4  Sup.   Ct.  Rep.,  241;  Central  Na-  laches   by  the   certificate  holder  in 

tional    Bank    v.    Hazard,    30    Fed.,  asserting  his  rights  against  the  pur- 

484,    24    Blatch.,    310.      See,    also,  chasers  at  the  foreclosure  sale,  Mer- 

Central  Trust  Co.  v.  Sheffield  &  B.  cantile  Trust  Co.  v.  Kanawha  &  O. 

C.  I.  &  R.  Co.,  44  Fed.,  526.     But  R.  Co.,  7  C.  C.  A.,  3,  58  Fed.,  6,  16 

see,  as  to  the  effect  of  a  final  de-  U.  S.  App.,  37. 

tree  confirming   a    foreclosure    sale  37  Swann   v.    Wright's    Executor, 

and  divesting  the  lien  of  receivers'  110  U.  S.,  590,  4  Sup.  Ct.  Rep.,  235. 


CHAP.  XI.]  RAILWAYS.  573 

ing  such  Hen,  and  the  property  is,  therefore,  regarded  as  hav- 
ing been  sold  subject  to  his  hen.^^ 

§  398/z.  Certificates  for  construction;  when  new  com- 
pany liable  for  certificates.  When  certificates  are  issued, 
with  the  consent  of  the  mortgage  trustee,  to  pay  for  the  con- 
struction of  a  line  not  a  part  of  the  mortgaged  system,  but 
forming  a  part  of  a  continuous  system  operated  by  the  receiver 
and  necessary  for  its  continuous  operation,  the  creditors  re- 
ceiving such  certificates  surrendering  the  shares  of  stock  which 
represent  the  ownership  of  the  line  so  constructed,  such  shares 
passing  to  the  purchaser  at  the  foreclosure  sale  as  part  of  his 
purchase,  the  bondholders  and  purchaser  are  estopped  from 
questioning  the  lien  of  the  certificates,  or  their  right  to  be  pre- 
ferred in  payment  out  of  the  proceeds  of  sale.^^ 

§  398/.  Case  of  Illinois  Midland  Railway  Company.  Re- 
ceivers' certificates  issued  for  necessary  repairs  and  better- 
ments, for  the  payment  of  tax  liens,  for  wages  of  employees  six 
months  prior  to  the  receivership,  for  debts  due  to  other  railway 
companies  for  track  rentals,  materials,  labor  and  traffic  bal- 
ances, for  supplies  and  damages  and  to  replace  earnings  which 
have  been  diverted  from  operating  expenses  and  ordinary  re- 
pairs to  pay  for  betterments,  while  debts  to  a  larger  amount  for 
operating  expenses  and  ordinary  repairs  have  been  incurred, 
have  been  allowed  priority  out  of  the  proceeds  of  a  foreclosure 
sale  as  against  mortgage  bondholders.  And  such  priorities 
have  been  allowed  although  the  receivership  was  instituted 
upon  a  judgment  creditor's  bill,  bills  for  foreclosure  being 
afterward  filed  which  were  consolidated  with  the  creditor's 
suit,  although  no  order  was  entered  in  the  foreclosure  suits 
appointing  a  receiver.  In  such  case,  the  express  consent  of  the 
bondholders  or  trustee  to  the  issuing  of  certificates  is  not  nec- 
essary when  the  road  has  been  operated  for  a  considerable  time 
by  the  receiver  with  their  knowledge  and  without  objection, 
and  when  the  trustee  has  failed  to  avail  itself  of  its  rights  un- 

3S  Snow    V.    Winslow,    54    Iowa,  29  Kneeland   v.   Luce,   141   U.   S., 

200,  6  N.  W.,  191.  491,  12  Sup.  Ct.  Rep.,  32. 


574 


RECEIVERS. 


[chap.  XI. 


der  the  mortgage.  And  such  certificates  having  been  sold  at 
a  discount  by  order  of  the  court,  the  holders  may  be  allowed 
payment  of  their  face  value  with  interest,  the  discount  having 
been  within  the  limit  fixed  by  the  order.^O  And  the  road  con- 
sisting of  three  separate  divisions  or  sections  covered  by  sep- 
arate mortgages,  the  line  being  operated  by  the  receiver  as  an 
entirety,  it  is  proper  to  apportion  claims  thus  allowed  priority 
among  the  different  sections  or  divisions  according  to  their 
length.  But  when  the  receiver  has  borrowed  large  sums  of 
money  without  authority  of  the  court,  priority  will  not  be  al- 
lowed to  such  obligations,  even  though  the  money  has  been 
expended  for  necessary  expenses  of  the  receivership,  for  re- 
pairs, pay-rolls  and  supplies.'*^ 


40  Union  Trust  Co.  v.  Illinois 
Midland  R.  Co.,  117  U.  S.,  434,  6 
Sup.  Ct.  Rep.,  809.  But  in  Stanton 
V.  A.  &  C.  R.  Co.,  2  Woods,  506,  it 
is  held  that  while  persons  who  ad- 
vance money  upon  the  faith  of  re- 
ceivers' certificates  are  not  bound 
to  see  to  its  application,  they  may 
only  enforce  their  certificates  out 
of  the  proceeds  of  foreclosure  to 
the  extent  of  their  actual  advances 
to  the  receiver.  But  see  Alabama 
Iron  &  R.  Co.  v.  Anniston  L.  &  T. 
Co.,  6  C.  C.  A.,  242,  57  Fed., 
25,  13  U.  S.  App.,  506. 

41  Union  Trust  Co.  v.  Illinois 
Midland  R.  Co.,  117  U.  S.,  434,  6 
Sup.  Ct.  Rep.,  809.  The  case  of  the 
Illinois  Midland  Railway  Company 
here  cited  may  be  regarded  as  fix- 
ing the  extreme  limit  thus  far 
reached  by  courts  of  equity  in  the 
exercise  of  their  extraordinary 
jurisdiction  in  divesting  mortgage 
liens  and  in  giving  preference  to 
the  rights  of  general  and  unsecured 
creditors.  In  the  progress  of  the 
litigation  in  the  circuit  court  of  the 
United  States  for  the  seventh  cir- 


cuit, eighteen  different  series  of  re- 
ceiver's certificates  were  issued,  in 
satisfaction  of  claims  of  almost 
every  character  incurred  by  the 
railway  company  and  by  its  receiv- 
ers. Each  series  of  certificates  was, 
by  the  order  authorizing  its  issue, 
decreed  to  be  a  prior  and  paramount 
lien  upon  the  entire  property  of  the 
railway  company.  Many  of  these 
certificates  were,  by  the  action  of 
the  circuit  court,  afterward  held 
invalid,  others  were  so  held  by  the 
judgment  of  the  supreme  court, 
while  the  validity  of  still  others  was 
affirmed  by  that  court.  The  history 
of  railway  foreclosures  and  receiv- 
erships may  be  searched  in  vain  for 
a  more  instructive  commentary  up- 
on the  dangers  which  result  from 
the  exercise  of  a  jurisdiction  which, 
in  effect,  impairs  the  obligation  of 
the  mortgage  contract  by  divesting 
its  lien  in  favor  of  the  demands  of 
inferior  and  unsecured  creditors. 
Well  might  the  court  call  a  halt  up- 
on the  exercise  of  this  extraordi- 
nary jurisdiction,  in  the  language 
of  Mr.  Justice  Brewer  in  Kneeland 


CHAP.  XI.] 


RAILWAYS. 


575 


§  398/.  Priority  as  between  compensation  of  receiver 
and  that  of  trustee;  same  as  to  counsel  fees.  It  has  been 
held,  where  the  receiver  of  a  street  railway  company  has  issued 
certificates  which  were  declared  to  be  a  first  lien  upon  the 
property  of  the  company  prior  to  the  lien  of  the  mortgage, 
that  such  certificates  were  entitled  to  priority  over  the  com- 
pensation of  the  trustee  named  in  the  trust  deed  and  of  the  trus- 
tee's counsel;  but  it  was  held  that  they  were  not  entitled  to  a 
preference  over  the  compensation  of  the  receiver  and  his  coun- 
sel, since  such  items  were  to  be  regarded  as  part  of  the  costs  of 
the  suit.42 


V.  American  L.  &  T.  Co.,  136  U.  S., 
89,  10  Sup.  Ct.  Rep.,  950,  as  fol- 
lows, page  97:  "Upon  these  facts 
we  remark,  first,  that  the  appoint- 
ment of  a  receiver  vests  in  the  court 
no  absolute  control  over  the  prop- 
erty, and  no  general  authority  to 
displace  vested  contract  liens.  Be- 
cause in  a  few  specified  and  limited 
cases  this  court  has  declared  that 
unsecured  claims  were  entitled  to 
priority  over  mortgage  debts,  an 
idea  seems  to  have  obtained  that  a 
court  appointing  a  receiver  acquires 
power  to  give  such  preference  to 
any  general  and  unsecured  claims. 
It  has  been  assumed  that  a  court 
appointing  a  receiver  could  right- 
fully burden  the  mortgaged  prop- 
erty for  the  payment  of  any  unse- 
cured indebtedness.  Indeed,  we  are 
advised  that  some  courts  have  made 
the  appointment  of  a  receiver  con- 
ditional upon  the  payment  of  all 
unsecured  indebtedness  in  pref- 
erence to  the  mortgage  liens  sought 
to  be  enforced.  Can  anything  be 
conceived  which  more  thoroughly 
destroys  the  sacredness  of  contract 
obligation?  One  holding  a  mort- 
gage debt  upon  a  railroad  has  the 
same   right  to  demand   and   expect 


of  the  court  respect  for  his  vested 
and  contracted  priority  as  the  hold- 
er of  a  mortgage  on  a  farm  or  lot. 
So,  when  a  court  appoints  a  receiv- 
er of  railroad  property,  it  has  no 
right  to  make  that  receivership  con- 
ditional on  the  payment  of  other 
than  those  few  unsecured  claims 
which,  by  the  rulings  of  this  court, 
have  been  declared  to  have  an  equit- 
able priority.  No  one  is  bound  to 
sell  to  a  railroad  company  or  to 
work  for  it,  and  whoever  has  deal- 
ings with  a  company  whose  prop- 
erty is  mortgaged  must  be  assumed 
to  have  dealt  with  it  on  the  faith  of 
its  personal  responsibility,  and  not 
in  expectation  of  subsequently  dis- 
placing the  prioritiy  of  the  mort- 
gage liens.  It  is  the  exception  and 
not  the  rule  that  such  priority  of 
liens  can  be  displaced.  We  empha- 
size this  fact  of  the  sacredness  of 
contract  liens,  for  the  reason  that 
there  seems  to  be  growing  an  idea, 
that  the  chancellor,  in  the  exercise 
of  his  equitable  powers,  has  unlim- 
ited discretion  in  this  matter  of  the 
displacement  of  vested  liens." 

42  Petersburg  Sav.  &  Ins.  Co.  v. 
Dellatorre,  17  C.  C.  A.,  310,  70  Fed., 
643,  30  U.  S.  App.,  504. 


CHAPTER  XII. 
OF  RECEIVERS  IN  AID  OF  JUDGMENT  CREDITORS. 

I.  Principles  Upon  Which  the  Relief  is  Granteb §  399 

II.  Of  the  Receiver's  Title  440 

III.  Of  the  Receiver's  Functions  and  Rights  of  Action 453 

I.  Principles  Upon  Which  the  Relief  is  Granted. 

§  399.     The  jurisdiction  of  English  origin;  inadequacy  of  legal  remedy 
the  ground  for  relief. 

400.  American    law   shaped   by    New   York   courts;    no   answer   to 

application   that   defendant   has   no   property;   duty  of  creditor 
to  apply  for  receiver. 

401.  Supplementary  proceedings   under  New  York  code;   receiver 

granted  almost  as  of  course. 

402.  Judgment  c  editor  must  be  diligent  in  assertion  of  his  rights; 

effect  of  delay  as  a  bar  to  relief. 

403.  Plaintiff  must  fully  exhaust  his  remedy  at  law;  receiver  not 

granted   when    execution   may   be   satisfied   in   the   ordinary 
way;    receiver   appointed   where   debtor's   interest   is   purely 
equitable. 
403a.  Receiver  not  appointed  to  collect  municipal  tax  in  aid  of  judg- 
ment creditor. 

404.  Receiver  can  not  be  appointed  on   sheriff's   return  of  execution 

nulla  bona  before  its  return  day. 

405.  Receiver  of  joint  property  of  two  defendants  on  judgment  ren- 

dered   against    one;    omission    in    direction    of    execution   to 
sheriff. 

406.  Receiver  not  granted  in  aid  of  general  creditor  before  judg- 

ment;  illustrations   of  the  rule;   attaching  creditors. 

407.  Apparent    exception    to    the    rule    in    New    York    in    cases    of 

partnerships;  receiver  allowed  before  judgment. 

408.  Lien    of    creditors    who    have    advanced    money    for    repairing 

vessel,  when  protected  by  receiver. 

409.  Receiver    over   effects    of  married    woman   doing   business    as 

trader,  in  action  to  charge  her  individual  property. 

410.  Creditor  holding  annuity  which  is  a  charge  on  real  estate  may 

have  receiver  when  annuity  is  in  arrears. 

576 


CHAP.  XII.]  CREDITORS.  577 

§  411.     Fraudulent   assignment  by   debtor  ground    for   receiver;   appoint- 
ment of  receiver  does  not  determine  rights  of  assignee. 

412.  Receiver  granted  to  carry  out  assignment  by  debtor  for  bene- 

fit of  creditors,  on  refusal  of  assignee  to  act,  or  on  his  mis- 
conduct; right  to  receiver  not  affected  by  subsequent  assign- 
ment by  debtor. 

413.  No  bar  to  the  relief  that  property  is  claimed  by  adverse  claim- 

ants; or  beyond  jurisdiction  of  court. 

414.  Answer  denying  property  no  bar  to  reference  to  master  to  ap- 

point; receiver  not  appointed  to  attack  fraudulent  assign- 
ment which  creditor  can  set  aside. 

415.  Practice  on  reference  to  master  to  appoint  under  New  York 

system;  assignment  to  receiver;  examination  of  debtor,  pur- 
pose and  extent  of. 

416.  Courts  averse  to  interfering  when  contest  is  as  to  title  of  real 

estate  claimed  by  third  persons. 

417.  Buildings  erected  by  debtor  with  his  own  funds,  receiver  ap- 

pointed over  rents. 

418.  Receiver  allowed  over  realty  in  first  instance   under  English 

practice;  infant  heirs;  rights  of  judgment  creditors  in  posses- 
sion not  affected. 

419.  Receiver  not   appointed   on   creditors'  bill,   as   against   mortgagee 

in  possession;  different  mortgages;  inadequate  security. 

420.  Receiver  in  aid  of  judgment  creditors  as  against  mortgagee  of 

chattels. 

421.  Judgment  creditors  may  maintain  action  to  set  aside  fraudu- 

lent mortgage;  rights  of  judgment  creditor  in  England. 

422.  Real    estate    in    receiver's   possession    can   not   be   sold    under 

another  judgment. 

423.  Priority  as  between  purchasers  of  real  estate  at  receiver's  sale 

and  at  sheriff's  sale. 

424.  The  same;  receiver  acquires  real  property  subject  to  judgment 

liens. 

425.  Discharge    in    bankruptcy,    when   no    defense    to    creditors'    bill 

seeking  receiver. 

426.  Receiver  under  English  bankrupt  act  of  1861. 

427.  Receiver  refused  on  creditors'  bill  when  his  appointment  would 

interfere  with  administration  of  estate  of  deceased. 

428.  Relief    granted    against    judgment    debtor    doing    business    in 

name  of  wife;  error  to  pay  creditors  before  priority  de- 
termined. 

429.  Discretion  of  court  as  to  amount  of  defendant's  property  over 

which  receiver  will  be  extended;  discretion  as  to  sale;  re- 
ceiver extended   for  other  creditor. 

430.  Creditor  not  entitled  to  priority  over  interest  due  on  mort- 

gages prior  to  his  judgment. 

431.  Appointment  after  bill   dismissed   on   demurrer. 

Receivers — Zl . 


578  RECEIVERS.  [chap.  XII. 

§  432.  Nature  of  property  subject  to  receivership;  rings  and  jewelry; 
notes  and  interest  in  firm;  benefice  of  clergyman;  seats  in 
stock  and  produce  exchange. 

433.  Relief  refused  when  answer  alleges  nothing  due  to  plaintiff; 

delay  to  determine  regularity  of  proceedings. 

434.  Waiver  of  answer  under  oath  no  ground  of  objection. 

435.  When  defendant  directed  to  pay  fund  into  court. 

436.  Courts  averse  to  interfering  on  ex  parte  application. 

437.  Prior  creditors  protected,  notwithstanding  dismissal  of  bill. 

438.  Receiver  in  divorce  proceedings  to  enforce  decree  for  alimony. 

439.  Relief  granted  when  only  security  for  judgment  is  a  life  estate. 
439a.  Supreme  Court  of  Judicature  Act  in  England. 

439&.  No  preference  allowed  as  between  creditors  of  the  same  class. 

§  399.  The  jurisdiction  of  English  origin;  inadequacy 
of  legal  remedy  the  ground  for  relief.  No  branch  of  the 
law  of  receivers  is  more  frequently  invoked  in  this  country 
than  that  which  governs  the  jurisdiction  as  exercised  in  behalf 
of  judgment  creditors,  for  the  enforcement  of  their  judgments 
in  cases  where  the  usual  legal  remedies  have  been  exhausted, 
and  when  the  aid  of  equity  is,  therefore,  necessary  for  the 
protection  of  the  creditor.  The  jurisdiction  of  equity  by  the 
appointment  of  receivers,  in  this  class  of  cases,  while  deriving 
its  origin  from  the  English  Court  of  Chancery,  has  been  more 
largely  shaped  and  developed  by  the  decisions  of  American 
courts,  than  has  any  other  branch  of  the  law  under  considera- 
tion. The  fundamental  principle  upon  which  it  rests  is  the 
inadequacy  of  the  legal  remedy,  and  the  consequent  necessity 
for  the  aid  of  equity  to  supplement  the  remedy  at  law.  This 
principle  may  be  traced  back  through  all  the  adjudications  upon 
the  subject,  and  it  was  said  by  Lord  Eldon,  to  have  been  long 
settled,  that  when  a  judgment  creditor  took  out  execution,  and 
found  the  estate  of  his  debtor  protected  by  circumstances  re- 
specting a  prior  title,  he  might  apply  for  a  receiver,  and  that  the 
fact  that  the  creditor  could  not  execute  his  judgment  at  I'aw 
would  entitle  him  to  a  receiver  of  the  debtor's  estate.^  The 
same  principle,  it  is  believed,  will  be  found  to  underlie  most  of 
the  decisions  in  this  country  upon  this  topic,  and  it  may  be 

1  See  Curling  v.  Marquis  Townshend,  19  Ves.,  628, 


CHAP.  XII.] 


CREDITORS. 


579 


regarded  as  the  foundation  of  the  entire  jurisdiction  of  equity 
in  appointing  receivers  in  creditors'  suits.^ 

§  400.  American  law  shaped  by  New  York  courts;  no 
answer  to  application  that  defendant  has  no  property; 
duty  of  creditor  to  apply  for  receiver.  The  American  law 
upon  this  subject  has  been  very  largely  shaped  by  the  deci- 
sions of  the  New  York  courts,  both  under  the  former  chancery 
practice  in  that  state,  and  under  the  code  of  procedure  by  which 
the  former  system  was  superseded.  Under  the  practice  of  the 
New  York  Court  of  Chancery,  the  appointment  of  receivers 
on  creditors'  bills,  after  return  of  execution  unsatisfied,  was 
almost  a  matter  of  course,  for  the  preservation  of  the  debtor's 
property  pending  the  litigation.^  And  it  was  held  that  when 
the  sworn  bill,  filed  by  the  judgment  creditor,  showed  that  he 
had  an  equitable  right  to  all  the  funds  and  property  of  the  de- 
fendant to  satisfy  his  debt,  if  this  right  was  not  denied  by  de- 
fendant in  answer  to  the  application  for  a  receiver,  no  reason 


2  As  to  the  power  of  a  court  of 
equity  to  appoint  a  receiver  to  col- 
lect taxes  due  to  a  municipal  cor- 
poration and  to  apply  them  in  pay- 
ment of  the  indebtedness  of  such 
corporation,  at  the  suit  of  its  cred- 
itors, its  charter  having  been  re- 
voked by  the  legislature,  see  Meri- 
wether V.  Garrett,  102  U.  S.,  472; 
Garrett  v.  City  of  Memphis,  5  Fed., 
860. 

3  See  Bloodgood  v.  Clark,  4 
Paige,  574;  Osborn  v.  Heyer,  2 
Paige,  342;  Fitzburgh  v.  Evering- 
ham,  6  Paige,  29;  Bank  of  Monroe 
V.  Schermerhorn,  Clarke  Ch.,  214. 
And  see  Johnson  v.  Tucker,  2  Tenn. 
Ch.,  398.  Indeed,  the  practice 
seems  to  have  been  more  liberal 
than  was  at  all  times  consistent 
with  the  established  principles  of 
equity;  so  much  so,  at  least,  as  to 
provoke  the  criticism  of  Vice-Chan- 


cellor Sandford,  in  Iddings  v. 
Bruen,  4  Sandf.  Ch.,  424.  "Most 
of  our  notions  of  a  receiver  at  this 
day,"  says  the  learned  judge,  "are 
derived  from  the  course  and  prac- 
tice in  judgment  creditors'  suits, 
where  they  are  principally  used,  and 
in  which  many  things  have  occurred 
to  render  them  the  mere  puppets  of 
the  complainant  in  the  particular 
suit.  One  cause  of  this  has  been  the 
difficulty  of  procuring  persons  to 
accept  the  appointment,  and  give 
the  security  requisite,  where  the 
prospect  of  assets  and  of  corre- 
sponding compensation  was  often 
doubtful,  if  not  desperate.  And  an- 
other cause  was  the  practice  of  lim- 
iting the  assets  to  be  handed  over, 
to  the  amount  of  complainant's  debt, 
and  probable  costs,  where  he  had 
the  good  fortune  to  discover  more 
than  his  own  debt  required." 


580 


RECEIVERS. 


[chap.  XII. 


existed  why  the  appointment  should  not  be  made*  And  it  was 
not  a  sufficient  answer  to  the  appHcation  to  say  that  there  was 
no  property  to  protect  belonging  to  defendant,  since,  in  such 
case,  he  could  suffer  no  injury,  and  plaintiff  proceeded  at  the 
peril  of  his  costs.^  The  court  proceeded  upon  the  theory  that, 
after  the  defendant  debtor  was  enjoined  from  interfering  with 
or  disposing  of  his  property  himself,  he  could  have  no  honest 
motive  in  resisting  the  appointment  of  a  receiver,  since,  if  he 
had  property,  it  was  for  his  own  interest  that  it  should  be  pre- 
served pending  the  litigation,  and  if  he  had  none,  there  was 
nothing  for  the  receiver  to  do,  and  plaintiff  was  liable  for 
costs.6  And  it  was  held  to  be  the  duty  of  the  judgment  credi- 
tor, after  filing  his  bill  to  reach  the  equitable  assets  of  his 
debtor,  and  obtaining  an  injunction  to  restrain  the  debtor  from 
interfering  therewith,  to  apply  to  the  court  within  a  reasonable 


4  Bloodgood  V.  Clark,  4  Paige, 
574. 

5  Bloodgood  V.  Clark,  4  Paige, 
574;  Browning  v.  Bettis,  8  Paige, 
568.  The  practice  which  obtained 
under  the  New  York  Court  of 
Chancery  was  stated  by  Chancellor 
Walworth  in  Bloodgood  v.  Clark, 
as  follows,  p.  577:  "In  these  cases 
of  creditors'  bills,  where  the  return 
of  the  execution  unsatisfied  presup- 
poses that  the  property  of  the  de- 
fendant, if  any  he  has,  will  be  mis- 
applied, and  entitles  the  complainant 
to  an  injunction  in  the  first  instance, 
it  seems  to  be  almost  a  matter  of 
course  to  appoint  a  receiver  to  col- 
lect and  preserve  the  property  pend- 
ing the  litigation.  And  where  the 
sworn  bill  of  the  complainant  shows 
that  he  has  an  equitable  right  to  all 
the  funds  and  property  of  the  de- 
fendant to  satisfy  his  debt,  if  the 
right  of  the  complainant  is  not  de- 
nied by  the  defendant,  in  answer  to 
the  application  for  a  receiver,  there 
can  be  no  good  reason  why  the  com- 


plainant should  not  have  a  receiver 
appointed  to  preserve  the  property 
from  waste  or  loss.  Indeed,  this 
court  has  already  declared  that  it 
is  the  duty  of  a  complainant  who 
has  obtained  an  injunction  upon 
such  a  bill,  restraining  the  defend- 
ant from  collecting  his  debts  or 
disposing  of  property  which  might 
be  liable  to  waste  or  deterioration, 
to  apply  to  the  court  and  have  a 
receiver  appointed  without  any  un- 
reasonable delay.  (See  Osborn  v. 
Heyer,  2  Paige,  343.)  It  is  no  suf- 
ficient answer  to  such  an  applica- 
tion to  say  there  may  not  be  any 
property  to  protect,  as  the  com- 
plainant proceeds  at  the  peril  of 
costs,  if  there  is  no  property.  And 
if  there  is  nothing  for  the  receiver 
to  take,  the  defendant  can  not  be 
injured  by  the  appointment."  See, 
also,  Fuller  v.  Taylor,  2  Halst.  Ch., 
301.  But  see,  contra,  Dollard  v. 
Taylor,  33  N.  Y.  Supr.  Ct.  R.,  496. 

6  Fitzburgh     v.     Everingham,     6 
Paige,  29. 


CHAP.  XII.]  CREDITORS.  581 

time  for  a  receiver  of  the  debtor's  assets,  in  order  to  prevent 
their  being  wasted,  and  to  secure  the  collection  of  the  debts.'' 
And  in  such  case,  when  the  bill  made  out  a  prima  facie  case  for 
a  receivei,  it  was  regarded  as  no  objection  to  the  appointment 
that  the  defendant  had  not  yet  answered.^ 

§  401.  Supplementary  proceedings  under  Nev^r  York 
code ;  receiver  granted  almost  as  of  course.  Under  the  New 
York  code  of  procedure,  as  well  as  in  many  of  the  states 
which  have  adopted  the  code  practice  from  New  York,  pro- 
vision is  made  for  the  appointment  of  receivers  on  proceedings 
by  judgment  creditors  "supplementary  to  execution,"  which 
proceedings  have  taken  the  place  of  the  former  creditors'  bill. 
Indeed,  the  appointment  of  a  receiver  on  supplementary  pro- 
ceedings under  the  code  of  procedure,  is  regarded  merely  as  a 
substitute  for  the  proceedings  had  for  the  same  purpose  under 
the  former  chancery  practice.^  And  an  examination  of  the 
New  York  decisions,  in  this  class  of  cases,  will  show  that  the 
courts  of  that  state  are  still  governed  by  the  principles  estab- 
lished under  the  former  practice,  in  administering  this  %ecies 
of  relief  in  behalf  of  judgment  creditors.  Under  the  present 
system,  the  appointment  of  a  receiver  of  the  effects  of  a  judg- 
ment debtor,  upon  supplementary  proceedings,  has  become  al- 
most a  matter  of  course ;  as  much  so,  indeed,  as  it  formerly  was 
on  creditors'  bills  under  the  chancery  practice.^^     The  object 

7  Bank  of  Monroe  v.  Schermcr-  ceivers,  of  the  principles  governing 
horn,  Clarke  Ch.,  214;  Osborn  v.  the  courts  in  appointing  them,  and 
Heyer,  2  Paige,  342.  See,  also,  of  the  practice  and  procedure  under 
Bloodgood  V.  Clark,  4  Paige,  574.  the    code    of    procedure    of    North 

8  Bank  of  Monroe  v.   Schermer-  Carolina. 

horn,  Clarke  Ch..  214.  10  Heroy  v.  Gibson,  10  Bosw.,  591. 

9  Spencer  v.  Cuyler,  9  Ab.  Pr.,  See,  also,  Coates  v.  Wilkes,  92  N. 
382;  People  v.  Mead,  29  How.  Pr.,  C,  376;  Flint  v.  Webb,  25  Minn., 
360.  And  see  this  case,  generally,  263.  But  see,  contra,  Rodman  v. 
for  a  statement  of  the  practice  and  Harvey,  102  N.  C,  1,  8  S.  E.,  888, 
procedure  in  appointing  receivers  where  it  is  held  that  the  appoint- 
in  this  class  of  proceedings  under  ment  of  a  receiver  in  such  proceed- 
the  code.  And  see  Coates  v.  ings  is  not  as  of  course,  and  that  it 
Wilkes,  92  N.  C,  376.  for  a  full  dis-  will  be  allowed  only  when  it  ap- 
cussion  of  the  functions  of  such  re-  pears    probable    that    the    relief    is 


582  RECEIVERS.  [chap.  XII. 

of  the  proceeding  under  the  code  is  to  compel  the  apphcation 
of  property  concealed  by  the  debtor,  or  which  from  its  nature 
can  not  be  levied  upon  under  execution,  to  the  payment  of  the 
creditor's  judgment.  And  the  remedy  is  regarded  as  a  cumu- 
lative one,  and  would  seem,  therefore,  to  extend  to  property 
which  might  be  the  subject  of  levy  and  sale  under  execution.^l 
So  in  Minnesota,  upon  proceedings  supplementary  to  execu- 
tion, a  receiver  may,  in  the  discretion  of  the  court,  be  appointed 
immediately  upon  the  granting  of  an  order  for  the  examination 
of  the  judgment  debtor,  this  being  regarded  as  the  better  prac- 
tice, since  the  judgment  creditor  thereby  acquires  that  priority 
of  lien  upon  his  debtor's  property  to  which  his  vigilance  entitles 
him. 12  And  under  proceedings  supplementary  to  execution 
in  Minnesota,  a  receiver  may  be  appointed  over  the  estate  of  a 
judgment  debtor,  with  power  to  collect  a  debt  due  to  him  from 
a  municipal  corporation. ^^ 

§  402.  Judgment  creditor  must  be  diligent  in  assertion 
of  his  rights;  effect  of  delay  as  a  bar  to  relief.  The  first 
general  principle  to  be  observed  as  governing  this  branch  of 
the  extraordinary  jurisdiction  of  equity  is,  that  a  judgment 
creditor,  seeking  the  aid  of  the  court  by  the  appointment  of  a 
receiver,  must  have  used  due  diligence  in  the  assertion  of  his 
rights. 1"*  The  bill  must,  therefore,  be  filed  within  a  reasonable 
time  after  the  return  of  execution  unsatisfied.  And  while  it  is 
impossible  to  fix  any  precise  period  of  limitation,  within  which 

necessary    to    properly    apply    the  property   of   the    judgment    debtor, 

debtor's  property  to  the  payment  of  but  which  stand  upon  the  books  of 

the  judgment,   and  that  a  receiver  the  corporation  in  the  name  of  the 

should  not  be  appointed  to  receive  wife,    see    State    Bank    v.    Gill,    23 

and  collect  notes  which  are  in  fact  Hun,  410. 

the  property  of  the   debtor's   wife,  12  Flint  v.  Webb,  25  Minn.,  263. 

although  executed  to  the  debtor  as  13  Knight  v.  Nash,  22  Minn.,  452. 

payee.  14  Gould  v.  Tryon,  Walk.  (Mich.), 

11  Heroy  v.  Gibson,  10  Bosw.,  591.  353.     See,  also,  Fogarty  v.  Bourke, 

.\s  to  the  right  to  a  receiver,  under  2  Dr.  &  War.,  580;   National   Me- 

the   New  York  code,   in   an  action  chanics     Banking     Association     v. 

by  a  judgment  creditor  to  recover  Mariposa  Co.,  60  Barb.,  423. 
shares   of  stock   alleged   to   be   the 


CHAP,  XII.]  CREDITORS.  583 

the  judgment  creditor  must  assert  his  right  to  the  aid  of  equity, 
it  has  been  held  that  when  he  has  suffered  a  period  of  nine  years 
to  elapse,  after  the  return  of  his  execution  nulla  bona,  without 
taking  any  steps  for  the  enforcement  of  his  demand,  and  then 
files  a  creditors'  bill  on  which  he  moves  for  a  receiver,  his  long 
delay  is  of  itself  sufficient  ground  for  refusing  the  relief.^^ 
And  when,  after  moving  for  a  receiver  of  the  debtor's  prop- 
erty, the  judgment  creditor  permitted  the  proceedings  to  lie 
dormant,  and  took  no  further  steps  to  procure  the  appointment 
for  a  perisd  of  more  than  a  year,  and  until  another  creditor 
had  procured  an  order  for  a  receiver,  the  court  refused  to  allow 
the  receiver  appointed  on  the  second  application  to  be  displaced, 
but  removed  the  other  one.  Such  a  case,  it  was  held,  should  be 
governed  by  the  principles  applicable  to  dormant  executions, 
and  the  vigilant  creditor  should  be  allowed  priority.^^  And 
when  the  creditor  had  acquiesced  in  the  debtor's  possession  of 
his  property  and  estate  for  a  long  period  of  years,  and  had 
recognized  the  debtor's  title  by  accepting  from  him  a  lease  of  a 
portion  of  the  property,  it  was  held  sufficient  ground  for  refus- 
ing a  receiver,  when  the  answer  positively  alleged  that  the  in- 
debtedness had  been  paid  in  full.!"^ 

§  403.  Plaintiff  must  fully  exhaust  his  remedy  at  law; 
receiver  not  granted  when  execution  may  be  satisfied  in 
the  ordinary  way ;  receiver  appointed  where  debtor's  inter- 
est is  purely  equitable.  Another  leading  principle,  and  one 
of  equal  importance  with  that  just  stated,  by  which  courts  of 
equity  are  governed  in  the  appointment  of  receivers  in  behalf 
of  judgment  creditors,  is,  that  the  plaintiff  must  have  fully 
and  completely  exhausted  his  remedy  at  law  for  the  collection 
of  his  judgment,  before  he  is  entitled  to  the  aid  of  a  receiver 
in  equity.i^    And  when  the  bill  itself  shows  that  defendant  is 

15  Gould  r.  Tryon,  Walk.  (Mich.).  17  Pogarty  v.  Bourke,  2  Dr.  & 
353.  War.,  580. 

16  National  Mechanics  Banking  18  Smith  v.  Thompson,  Walk. 
Association  v.  Mariposa  Co.,  60  (Mich.),  1;  Thayer  v.  Swift, 
Barb.,  423.  Harring.   (Mich.),  430;  Steward  v. 


584  RECEIVERS.  [chap.  XII. 

in  possession  of  property  which  is  subject  to  levy  and  sale  un- 
der execution,  and  that  there  is  no  obstacle  or  impediment  in 
the  way  of  enforcing  the  judgment  by  the  usual  process  at 
law,  no  ground  is  presented  for  the  appointment  of  a  receiver.^^ 
And  when  it  is  apparent  that  the  defendant  debtor  has  such  an 
interest  in  real  estate  as  may  be  reached  by  execution,  his 
title  being  clear  and  there  being  no  obstacle  in  the  way  of  en- 
forcing the  judgment  by  execution,  an  additional  reason  for 
refusing  a  receiver,  and  for  leaving  the  plaintiff  to  sell  the 
property  under  execution,  is  found  in  the  fact  that  by  this 
course  the  defendant  will  not  be  deprived  of  the  redemption 
allowed  by  law.  For,  while  it  would  be  possible  to  reserve  the 
right  of  redemption  on  a  sale  by  the  receiver,  it  is  regarded  as 
the  safer  course  to  follow  the  method  prescribed  by  law  for 
sales  under  execution.^o  So  when  both  the  judgment  creditor 
and  the  sheriff  to  whom  his  execution  was  delivered  were  ap- 
prised of  defendant's  ownership  of  particular  real  estate, 
which  had  been  offered  in  satisfaction  of  the  debt  before  judg- 
ment obtained,  and  there  was  no  impediment  to  its  sale  under 
execution,  the  court  was  of  opinion  that  the  legal  remedy  had 
not  been  sufficiently  exhausted  to  give  the  judgment  creditor  a 
standing  in  a  court  of  equity,  or  the  right  to  a  receiver  of  the 
rents  and  profits  of  such  real  estate.^l    And  when  the  bill  itself 

Stevens,  id.,  169;  Parker  v.  Moore,  gine  Co.  v.  Donau  Brewing  Co.,  47 

3  Edw.  Ch.,  234;   Congdon  v.  Lee,  Fed.,  6. 

id.,  304;  Starr  v.  Rathbone,  1  Barb.,  20  Second  Ward  Bank  z'.  Upmann, 

70;   Cassidy  v.   Meacham,  3   Paige,  12  Wis.,  499. 

311;   Poppitz  V.   Rognes,  76   Minn.,  21  Congdon  v.   Lee,  3   Edw.   Ch., 

109,    78    N.    W.,    964;    Minkler    v.  304.    This  was  a  motion  on  the  part 

United    States    S.    Co.,   4    N.    Dak.,  of  plaintiffs  in  a  creditor's  bill,  that 

507,  62  N.  W.,  594,  33  L.  R.  A.,  546,  the  tenants  of  certain  real  estate  on 

and  note;   Morris  v.  Taylor,  32  L.  which  their  judgment  was  a  lien  be 

R.    Ir.,    14.     And    see    Whilden    v.  required    to    attorn    and    pay    their 

Chapman,   80   S.    C,   84,   61    S.   E.,  rents    to    the    receiver,    before    ap- 

249.    And  see,  ante,  §  301.  pointed     in    the    cause.       McCoun, 

19  Parker  v.  Moore,  3   Edw.  Ch.,  Vice-Chancellor,  says,  p.  308:    "The 

234;  Starr  v.  Rathbone,  1  Barb.,  70;  facts,   as   they   now   appear  by   the 

Second  Ward  Bank  v.  Upmann,  12  answer   and   by   the   affidavits    read 

Wis.,  499.     See,  also,  Buckeye  En-  in  opposition  to  the  motion  of  the 


CHAP.  XII.] 


CREDITORS. 


585 


showed  the  possession  of  a  large  amount  of  property  in  the 
defendant,  which  could  be  taken  on  execution,  and  that  no  ex- 
ecution had  been  issued  on  the  judgment  for  a  period  of  three 
years,  and  that  defendant  was  doing  business  as  a  merchant 
in  his  own  name,  it  was  held  that  there  was  no  obstacle  in  the 
way  of  enforcing  plaintiff's  remedy  at  law,  and  he  was  refused 


complainants,  show  that  there  was 
no  necessity  for  the  complainants 
coming  into  this  court  for  a  discov- 
ery of  the  defendant's  real  estate 
now  sought  to  be  reached.  The 
complainants  were  informed  be- 
forehand of  this  particular  prop- 
erty, and  knew  all  about  it.  It 
was  offered  to  them  in  satisfaction 
of  their  debt,  before  the  judgment 
was  obtained.  When  the  sheriff 
called  with  the  execution  and  in- 
quired for  property,  he  was  referred, 
by  the  defendant,  to  the  records  of 
deeds  for  a  description  of  the  prop- 
erty which  he  could  levy  on  and 
sell ;  and  there  was  no  impediment 
to  such  a  sale.  This  must  be  sup- 
posed to  have  been  well  known, 
both  to  the  complainants  and  the 
sheriff,  who  nevertheless  returned 
the  execution  unsatisfied,  without 
taking  any  step  toward  a  levy  or 
sale.  There  is  no  direct  proof  of 
collusion  in  this  case  between  the 
complainants  and  the  sheriff,  but 
there  is  enough  to  show  that  the 
legal  remedy  had  not  been  fairly 
exhausted  when  the  bill  was  filed. 
The  sheriff  made  a  false  return,  or, 
at  least,  a  return  which  he  could 
not  vouch  for  the  truth  of,  until  he 
had  exposed  the  property  for  sale; 
and  the  complainants  knew  it  to 
be  so,  yet  immediately  filed  their 
bill  founded  upon  it.  With  respect 
to  the  property  in  question,  they 
stood  in  no  need  of  a  discovery  or 


of  any  aid  of  this  court  to  effect  a 
sale.  What  right,  then,  have  the 
complainants  to  a  standing  in  this 
court,  with  respect  to  this  property? 
To  give  them  a  right  to  the  rents 
through  the  medium  of  the  receiver, 
they  should  be  honestly  and  fairly 
in  court,  either  for  the  purpose  of 
discovery  or  relief,  or  both.  True, 
the  sheriff's  return  of  an  execution 
unsatisfied,  prima  facie  gives  the 
right  to  file  a  bill  of  this  sort ;  and 
in  Stoors  v.  Kelsey,  2  Paige,  418,  a 
receiver  was  appointed,  though  it 
appeared  that  the  defendant  owned 
a  lot  of  ground  and  gave  the  sheriff 
notice  of  the  fact,  and  requested 
him  to  advertise  it,  which  he  re- 
fused to  do;  but  there  it  did  not 
pppear  that  the  plaintiff  had  any 
knowledge  or  information  of  the 
fact  of  the  defendant's  ownership 
or  interest  in  the  land;  and  there 
was  nothing  from  which  to  infer 
collusion  between  the  plaintiff  and 
sheriff  in  making  the  return.  Here 
the  case,  in  that  respect,  is  differ- 
ent; and  I  think,  under  the  circum- 
stances and  the  law  and  practice  of 
this  court  in  respect  to  these  cred- 
tors'  bills,  that  the  complainants 
are  bound  to  pursue  their  legal 
remedy  for  a  sale  of  the  property; 
and,  not  being  legitimately  in  court 
for  the  purpose  of  discovery,  and  it 
not  appearing  how  far,  if  any,  the 
property  will  be  deficient  toward 
satisfying    the    judgment    upon    a 


586 


RECEIVERS. 


[chap.  XII. 


the  aid  of  a  receiver.22  So  when  it  appeared  by  the  bill  that 
the  defendant  debtor  was  the  proprietor  of  a  hotel,  having  a 
large  amount  of  furniture  and  other  property  in  his  hotel,  a  re- 
ceiver was  denied,  the  remedy  at  law  by  execution  not  having 
been  exhausted. ^3  And  when  defendant  showed  by  his  affi- 
davit that  the  proceedings  under  the  creditors'  bill  had  been 
precipitated  against  him,  without  necessity  and  with  no  pre- 
vious notice  of  the  amount  of  the  judgment,  or  how  much  he 
was  required  to  pay,  and  that  he  would  have  paid  the  judgment 
forthwith,  had  he  been  notified  thereof,  the  court  refused  to  ap- 
point a  receiver.24  But  where  the  debtor's  interest  in  the  prop- 
erty over  which  a  receiver  is  sought  is  purely  equitable  and  for 
this  reason  can  not  be  reached  by  the  ordinary  process  of  the  law 
by  execution  under  the  plaintiff's  judgment,  a  receiver  may 
properly  be  appointed. ^5  So  where  the  property  of  the  debtor 
which  it  is  sought  to  subject  to  plaintiff's  claim  is  an  equitable 
reversionary  interest  in  the  proceeds  of  the  sale  of  real  estate 
which  can  not  be  reached  by  execution,  a  receiver  is  properly 
appointed. 26  And  where  a  creditor  has  obtained  judgment 
against  an  insolvent  corporation  and  another  and  each  is  bound 
to  pay  the  whole  debt,  he  is  entitled  in  the  proper  case  to  a  re- 
ceiver over  the  corporation,  although  he  has  not  exhausted  his 
legal  remedies  against  the  judgment  debtor.27 

§  403a.  Receiver  not  appointed  to  collect  municipal  tax 
in  aid  of  judgment  creditor.    It  is,  however,  to  be  borne  in 


sheriff's  sale,  the  court  has  not 
jurisdiction  to  lay  hold  of  the  rents 
in  the  meantime,  and  prevent  the 
defendant  from  receiving  them. 
The  result  is,  that  the  complain- 
ants' motion  must  be  denied,  and 
the  defendant's  motion  to  dissolve 
the  injunction  be  granted,  so  far  as 
it  restrains  the  defendant  from  in- 
terfering with  the  real  estate  or  the 
rents  and  profits  of  it.  With  the 
injunction  thus  removed,  the  de- 
fendant can  do  no  act  to  prejudice 


the  lien  of  the  judgment,  or  em- 
barrass a  sale  under  a  new  execu- 
tion to  be  issued." 

22  Parker  v.  Moore,  3  Edw.  Ch., 
234. 

23  Starr  v.  Rathbone,  1  Barb.,  70. 

24  Hart  V.  Tims,  3  Edw.  Ch.,  226. 

25  Cadogan     v.     Lyric     Theatre, 
(1894)  3  Ch.,  338. 

26  Tyrrell  v.  Painton,  (1895)  1  Q. 
B.,  202. 

27Davelaar   v.    Blue    M.    I.    Co., 
110  Wis.,  470,  86  N.  W.,  185. 


CHAP.  XH.]  CREDITORS.  587 

mind  that  the  fact  that  the  remedy  at  law  has  proved  ineffectual 
in  the  particular  case,  does  not  confer  jurisdiction  upon  a  court 
of  equity  to  appoint  a  receiver  if  the  legal  remedy  is  adequate 
and  complete  in  itself,  its  inefficiency  being  wholly  due  to  the 
actions  of  the  persons  or  officers  whose  duty  it  is  to  afford  the 
desired  relief.  Thus,  when  plaintiff  obtains  judgment  against 
a  county  upon  its  obligations  issued  in  aid  of  a  subscription  to 
a  railway  company,  and  in  obedience  to  a  writ  of  mandamus  a 
tax  is  levied  by  the  county  authorities  to  pay  the  judgment, 
but  the  person  selected  as  collector  of  the  tax  refuses  to  qualify 
or  to  act  as  such  collector,  equity  has  no  jurisdiction  to  appoint 
a  receiver  for  the  purpose  of  collecting  the  tax,  even  though  it 
is  shown  that  no  person  may  be  found  who  will  undertake  such 
collection.  The  power  of  collecting  taxes  being  wholly  foreign 
to  courts  of  equity,  its  exercise  will  not  be  assumed  by  such 
courts  merely  because  the  appropriate  legal  remedy  has  failed 
to  afford  relief. ^8 

§  404.  Receiver  can  not  be  appointed  on  sheriff's  return 
of  execution  nulla  bona  before  its  return  day.  Intimately 
connected  with  the  doctrine  requiring  the  creditor  to  first  ex- 
haust his  remedy  at  law,  is  the  question  whether  the  aid  of 
a  receiver  may  properly  be  extended  to  a  judgment  creditor, 
upon  the  sheriff's  return  of  an  execution  nulla  bona  before  the 
return  day  thereof.  While  this  question  has  given  rise  to  some 
conflict  of  authority,  and  has  not  been  wholly  free  from  doubt, 
the  doctrine  may  now  be  regarded  as  established,  both  upon 
principle  and  authority,  that  the  return  of  an  execution  un- 
satisfied, before  its  return  day  and  in  the  life-time  of  the  writ, 
does  not  lay  the  foundation  for  a  receiver  upon  a  bill  in  be- 
half of  the  judgment  creditor.     The  rule  is  founded  upon  the 

28  Thompson  v.  Allen  County,  115  poration  and  to  apply  them  in  pay- 
U.  S.,  550,  6  Sup.  Ct.  Rep.,  140;  ment  of  its  indebtedness,  its  charter 
S.  C,  18  Chicago  Legal  News,  127.  having  been  revoked  by  the  legisla- 
See  Supervisors  v.  Rogers,  7  Wal.,  ture,  see  Meriwether  v.  Garrett,  102 
175.  As  to  the  power  of  a  court  of  U.  S.,  472;  Garrett  v.  City  of  Mem- 
equity  to  appoint  a  receiver  to  col-  phis,  5  Fed.,  860. 
lect  taxes  due  to  a  municipal  cor- 


588 


RECEIVERS. 


[chap,  XII. 


fundamental  principle,  that  equity  never  lends  its  aid  for  the 
enforcement  of  rights  which  may  be  remedied  in  the  usual 
course  of  proceedings  at  law,  and  the  courts  will  not  permit  a 
judgment  debtor  to  be  harassed  with  a  suit  in  chancery,  until 
the  creditor  has  availed  himself  of  all  his  rights  at  law  for  the 
collection  of  his  judgment.  The  court  can  not  know,  until 
the  return  day  of  the  execution  has  elapsed,  that  the  debtor 
may  not  have  had  property  with  which  to  satisfy  the  judgment ; 
and  if  it  may  dispense  with  a  legal  and  sufficient  return  to  the 
execution,  it  may  dispense  with  the  execution  entirely,  and  thus 
assume  a  jurisdiction  not  given  by  law.  It  is,  therefore,  requi- 
site that  the  execution  shall  remain  in  the  hands  of  the  sheriff 
the  full  period  of  its  life-time.29 


29  Thayer  v.  Swift,  Harring. 
(Mich.),  430;  Spencer  v.  Cuyler,  9 
Ab.  Pr.,  382.  See,  also,  Cassidy  v. 
Aleacham,  3  Paige,  311;  Smith  v. 
Thompson,  Walk.  (Mich.),  1;  Wil- 
liams V.  Hubbard,  id.,  28;  Beach  v. 
White,  id.,  495;  Steward  v.  Stev- 
ens, Harring.  (Mich.),  169;  Beck  v. 
Burdett,  1  Paige,  305;  McElwain  v. 
Willis,  9  Wend.,  548.  But  see,  con- 
tra, Williams  v.  Hogeboom,  8  Paige, 
469:  Tyler  v.  Willis,  33  Barb.,  327; 
S.  C,  suh  noni.  Tyler  v.  Whitney, 
12  Ab.  Pr.,  465;  Bowen  v.  Park- 
hurst,  24  111.,  257;  First  National 
Bank  v.  Gage,  79  111.,  207.  The  doc- 
trine of  the  text  is  forcibly  stated  in 
Thayer  v.  Swift,  Harring.  (Mich.), 
430,  where  the  execution  had  been 
returned  by  the  sheriff  some  days 
before  its  return  day,  as  follows: 
"That  there  was  no  goods  and  chat- 
tels, lands  and  tenements  to  be 
found  in  his  bailiwick  to  secure  or 
pay  the  sum  due  the  complainant, 
or  any  part  thereof,  to  his  knowl- 
edge, after  diligent  search."  The 
motion  for  a  receiver  was  denied. 
Farnsworth,     Chancellor,     observes 


as  follows,  p.  431 :  "The  founda- 
tion of  the  jurisdiction  of  this  court 
in  this  class  of  cases  is,  that  the 
judgment  creditor  shall  have  fully 
exhausted  his  remedy  at  law.  It 
has  been  repeatedly  held  that  the 
court  will  not  retain  a  bill  as  a  judg- 
ment creditor's  bill  merely,  filed 
before  the  return  day  of  the  execu- 
tion. In  the  absence  of  any  author- 
ity or  dicta  upon  the  subject,  I 
should  have  as  little  doubt  upon  a 
case  where  the  execution  was  actu- 
ally returned  before  the  return  day, 
although  the  bill  was  not  filed  un- 
til after  the  return  day  had  elapsed. 
Courts  of  chancery  have  held  the 
judgment  creditor  in  every  ad- 
judged case,  before  administering 
this  harsh  remedy  of  depriving  the 
debtor  absolutely  of  all  control  over 
every  part  and  portion  of  his  prop- 
erty, to  bring  himself  strictly  and 
rigidly  within  this  rule.  No  case 
can  be  found  where  this  remedy 
has  been  afforded  without  a  strict 
compliance  with  all  the  forms. 
What  is  the  reason  of  the  rule?  It 
is  that  a  judgment  debtor  shall  not 


CHAP.  XII.] 


CREDITORS. 


585 


§  405.  Receiver  of  joint  property  of  two  defendants  on 
judgment  rendered  against  one;  omission  in  direction  of 
execution  to  sheriff.  Where  an  execution  was  issued 
against  the  joint  property  of  two  defendants,  upon  a  judgment 
rendered  against  one  of  the  two,  personal  service  having  been 
had  only  upon  the  one,  and  the  sheriff  returned  to  the  execu- 
tion that  the  defendants  had  no  goods  or  chattels,  lands  or 


be  harassed  with  a  suit  in  chancery 
until  the  creditor  has  availed  him- 
self of  all  his  common-law  rights 
to  collect  his  judgment.  The  only 
dictum  to  be  found  which  has  ever 
led  to  any  doubt  upon  this  subject, 
is  to  be  found  in  the  opinion  of 
Chancellor  Walworth,  in  the  case 
of  Cassidy  v.  Meacham,  3  Paige, 
312.  This  idea  is  thrown  out  as  a 
perhaps,  and  rather  as  a  specula- 
tion than  as  a  decision.  He  says, 
perhaps  a  return  made  before  the 
return  day  may  be  good  by  rela- 
tion. But  if  we  once  depart  from 
the  well-settled  rule,  that  the  cred- 
itor shall  fairly  and  fully  first  ex- 
haust his  remedy  at  law,  where 
shall  we  stop?"  See,  also,  opinion 
of  the  same  court  in  Steward  v. 
Stevens,  Harring.  (Mich.),  169, 
where  the  same  doctrine  is  an- 
nounced with  regard  to  creditors' 
bills,  although  it  does  not  appear 
from  the  reported  case  whether 
any  motion  was  made  for  a  re- 
ceiver. In  Spencer  v.  Cuyler,  9  Ab. 
Pr.,  382,  which  was  under  the  New 
York  code  of  procedure,  the  sheriff 
had  returned  the  executions,  at 
plaintiff's  request,  before  maturity. 
The  supreme  court,  at  general  term, 
say,  Johnson,  J.,  delivering  the 
opinion :  "A  return  thus  procured 
is,  for  this  purpose,  to  be  regarded 
as  the  act  of  the  party,  and  not  the 
official    act    of    the    sheriff.      The 


remedy  by  execution,  in  such  case, 
has  not  been  exhausted,  as  the  stat- 
ute obviously  intended  it  should  be 
before  these  supplementary  pro- 
ceedings could  be  instituted.  If  the 
practice  adopted  in  the  cases  before 
us  is  to  prevail,  the  issuing  and  re- 
turn of  an  execution  would  become 
a  mere  empty  form,  and  might  as 
well  be  dispensed  with  altogether; 
and  besides,  it  would  naturally,  if 
not  inevitably,  lead  to  the  most  in- 
tolerable favoritism  and  abuse.  If 
we  allow  a  sheriff  to  yield  to  the 
persuasion  or  dictation  of  a  friendly 
or  influential  creditor,  and  fix  at  his 
own  discretion  or  caprice  different 
return  days  for  different  execu- 
tions in  his  hands  at  the  same  time, 
we  at  once  invest  him  with  the 
dangerous  powers  of  discriminat- 
ing between  creditors,  and  giving 
one  a  preference  over  another  in 
respect  to  all  the  equitable  assets 
of  the  debtors,  capable  of  being 
reached  by  these  proceedings.  This 
consideration  alone  seems  to  us  a 
sufficient  objection  to  the  practice, 
without  adverting  to  the  hardship 
and  oppression  to  which  a  defend- 
ant may  be  so  readily  and  so  sum- 
marily subjected  under  it."  But  in 
Williams  v.  Hogeboom,  8  Paige, 
469,  it  was  held  that  the  objection 
that  the  complainant  had  not  ex- 
hausted his  remedy  at  law,  because 
the  sheriff  did  not  wait  until  after 


590  RECEIVERS.  [chap.  XII. 

tenements,  out  of  which  to  satisfy  the  execution,  without  in 
express  terms  negativing  the  fact  that  either  of  the  two  had 
any  separate  property,  such  return  was  held  sufficient  founda- 
tion for  a  creditor's  bill  and  a  receiver  of  the  joint  property  of 
the  two  defendants  and  of  the  separate  property  of  the  defend- 
ant who  was  served  with  process. ^^  But  the  objection  that  the 
bill  did  not  allege  that  the  execution  was  directed  to  the  sheriff 
of  the  county  where  the  defendant  resided  when  it  was  issued, 
although  an  objection  of  form,  was  held  to  be  sufficient  ground 
for  refusing  a  receiver,  but  the  application  was  denied  without 
costs,  and  the  plaintiff  was  given  leave  to  amend  and  to  renew 
the  application  after  amendment.^^ 

§  406.  Receiver  not  granted  in  aid  of  general  creditor 
before  judgment ;  illustrations  of  the  rule ;  attaching  cred- 
itors. Having  already  shown  that  the  aid  of  a  receiver 
is  extended  only  in  behalf  of  creditors  who  have  fully  ex- 
hausted their  remedy  at  law,  it  follows  necessarily  that  the 
jurisdiction  will  not  be  exercised  in  favor  of  mere  general 
creditors,  whose  rights  rest  only  in  contract  and  are  not  yet  re- 
duced to  judgment,  and  who  have  acquired  no  lien  upon  the 
property  of  the  debtor.  Courts  of  equity  will  not  permit  any 
interference  with  the  right  of  a  debtor  to  control  his  own  prop- 
erty, at  the  suit  of  creditors  who  have  acquired  no  lien  thereon, 
and  whatever  embarrassment  the  creditor  may  experience, 
by  reason  of  the  slow  procedure  of  the  courts  of  law,  must  be 

return  day  of  the  execution  before  its  return  day,  constituted  no  ob- 
making  his  return,  was  not  well  jection  to  the  appointment  of  a  re- 
taken, although  it  was  said,  follow-  ceiver,  in  the  absence  of  any  collu- 
ing  the  dictum  of  Chancellor  Wal-  sion  or  fraud  on  the  part  of  plaintiff 
worth  in  Cassidy  v.  Meacham,  3  to  prevent  a  levy  on  the  debtor's 
Paige,  311,  that  the  court  would  property.  And  it  is  held  in  Illinois, 
not  permit  a  creditor's  bill,  founded  that  a  creditor's  bill  will  lie  upon 
upon  such  a  return,  to  be  filed  the  return  of  an  execution  nulla 
until  after  the  return  day  of  the  bona  before  the  return  day.  Bowen 
execution  had  passed.  And  in  v.  Parkhurst,  24  111.,  257. 
Tyler  v.  Willis,  33  Barb.,  327;  S.  C,  30  Austin  v.  Figueira,  7  Paige,  56. 
sub  nom.  Tyler  v.  Whitney,  12  Ab.  31  Williams  v.  Hogeboom,  8 
Pr.,  465,  it  was  held  that  the  return  Paige,  469. 
of  the  execution  unsatisfied,  before 


CHAP.  XII.] 


CREDITORS. 


591 


remedied  by  legislative  and  not  by  judicial  authority.  And 
while  there  are  a  few  instances  where  the  courts  have  main- 
tained a  contrary  doctrine,  the  great  weight  of  authority  sup- 
ports the  rule,  that,  in  the  absence  of  statutory  provisions  to 
the  contrary,  a  general  contract  creditor,  before  judgment, 
is  not  entitled  either  to  an  injunction  or  a  receiver  against  his 
debtor,  upon  whose  property  he  has  acquired  no  lien.^^     ^^y 


32  Hollins  V.  Iron  Co.,  150  U.  S., 
371,  14  Sup.  Ct.  Rep.,  127;  Uhl  v. 
Dillon,  10  Md.,  500;  Niisbaum  v. 
Stein,  12  Md.,  315;  Hubbard  v. 
Hubbard,  14  Md.,  356;  Rich  v.  Levy,  . 
16  Md.,  74;  Hulse  v.  Wright, 
Wright,  61 ;  McGoIdrick  v.  Slevin, 
43  Ind.,  522;  Bayaud  v.  Fellows,  28 
Barb.,  451;  May  v.  Greenhill,  80 
Ind.,  124;  Adee  v.  Bigler,  81  N.  Y., 
349;  Smith  v.  Superior  Court,  97 
Cal.,  348;  Johnson  v.  Farnum,  56 
Ga.,  144;  Dodge  v.  Pyrolusite  Man- 
ganese Co.,  69  Ga.,  665;  Guilmartin 
V.  Middle  G.  &  A.  R.  Co.,  101  Ga., 
565,  29  S.  E.,  189;  Virginia-Carolina 
Chemical  Co.  v.  Provident  S.  L.  A. 
Society,  126  Ga.,  50,  54  S.  E.,  929; 
International  Trust  Co.  v.  United 
Coal  Co.,  27  Colo.,  246,  60  Pac,  621, 
83  Am.  St.  Rep.,  59,  and  note;  Klee 
V.  Steele  Co.,  60  Minn.,  355,  62  N. 
W.,  399;  Thompson  v.  Adams,  60 
West  Va.,  463,  55  S.  E.,  668;  Temple 
V.  Glasgow,  25  C.  C.  A.,  540,  80 
Fed.,  441,  42  U.  S.  App.,  417,  affirm- 
ing S.  C,  7Z  Fed.,  709;  Texas  Con- 
solidated C.  &  M.  Assn.  V.  Storrow, 
34  C  C.  A.,  182,  92  Fed.,  5 ;  Leary 
V.  Columbia  R.  &  P.  S.  N.  Co.,  82 
Fed.,  775 ;  Tompkins  Co.  v.  Catawba 
Mills,  82  Fed.,  780.  And  see  Blond- 
heim  v.  Moore,  11  Md.,  365;  Wig- 
gins V.  Armstrong,  2  Johns.  Ch., 
144;  Hoidrege  v.  Gwynne,  3  C.  E. 
Green,  26 ;  Young  v.  Frier,  1  Stockt., 
465;  Phelps  v.  Foster.  18  111.,  309; 


Bigelow  V.  Andress,  31  III.,  322; 
Rhodes  v.  Cousins,  6  Rand.,  188; 
Falmouth  National  Bank  v.  Cape 
Cod  S.  C.  Co.,  166  Mass.,  550,  44 
N.  E.,  617.  But  see,  contra,  Hag- 
garty  v.  Pittman,  1  Paige,  298; 
Cohen  v.  Meyers,  42  Ga.,  46;  Cohen 
V.  Morris,  70  Ga.,  313;  Crittenden 
V.  Coleman,  70  Ga.,  293;  Oliver  v. 
Victor,  74  Ga.,  543;  Orton  v.  Mad- 
den, 75  Ga.,  83;  Wolfe  v.  Claflin, 
81  Ga.,  64,  6  S.  E.,  599;  Thompsen 
V.  Diffenderfer,  1  Md.  Ch.,  489; 
Rosenberg  v.  Moore,  11  Md.,  376; 
Wachtel  v.  Wilde,  58  Ga.,  50;  Mor- 
rison V.  Shuster,  1  Mackey,  190. 
See,  also,  Kehler  v.  Jack  Mfg.  Co., 
55  Ga.,  639.  Under  the  statutes  of 
Minnesota,  a  receiver  may  be  ap- 
pointed over  the  estate  of  an  in- 
solvent debtor  at  the  suit  of  cred- 
itors before  judgment,  and  such  re- 
ceiver may  maintain  an  action  to  set 
aside  fraudulent  transfers  of  his 
property  by  the  debtor.  Chamber- 
lain V.  O'Brien,  46  Minn.,  80,  48  N. 
W.,  447.  So  by  statute  in  South 
Carolina  creditors  without  judg- 
ment may  maintain  an  action  for  a 
receiver  over  property  of  a  debtor 
which  has  been  transferred  in  fraud 
of  his  creditors.  Regenstein  zi. 
Pearlstein,  30  S.  C,  192;  Meinhard 
V.  Strickland,  29  S.  C,  491.  And 
see  Pelzer  v.  Hughes,  27  S.  C,  408; 
Whilden  v.  Chapman,  80  S.  C,  84, 
61  S.  E.,  249.    And  see,  ante.  §  301. 


592 


RECEIVERS. 


[chap.  XII. 


interference  with  the  debtor's  property,  or  with  his  right  of 
disposing  of  it,  before  judgment,  is  beyond  the  judicial  power, 
and  courts  of  equity  will  not  extend  their  extraordinary  juris- 
diction beyond  the  limits  fixed  by  the  authorities.^^  Nor  is  the 
rule  affected  or  varied  by  reason  of  fraud  on  the  part  of  the 
debtor,  and  a  receiver  will  not  be  granted  in  favor  of  a  creditor 


Under  the  statute  of  Washington, 
it  is  held  that  a  simple  contract 
creditor  of  a  corporation  is  entitled 
to  a  receiver  over  the  corporation 
upon  the  mere  showing  of  its  in- 
solvency. Davis  V.  Edwards,  41 
Wash,  480,  84  Pac,  22.  In  Joseph 
Dry  Goods  Co.  v.  Hecht,  57  C.  C. 
A.,  64,  120  Fed,  760,  where  plaintiff 
had  apparently  never  obtained  a 
judgment  against  the  debtor,  it  was 
held  that  a  receiver  should  not  be 
appointed  pendente  lite  where  there 
was  no  showing  that  the  debtor  was 
insolvent  or  that  he  was  without 
property  sufficient  to  satisfy  a  final 
decree.  As  to  the  right  of  a  surety 
upon  the  official  bond  of  a  tax  col- 
lector, upon  default  by  the  latter,  to 
have  a  receiver  for  the  purpose  of 
preventing  a  fraudulent  transfer  of 
his  property,  see  Sanford  v.  United 
States  F.  &  G.  Co.,  116  Ga,  689,  43 
S.  E,  61.  As  to  the  right  to  a 
receiver  in  aid  of  an  action  of  debt 
under  the  code  of  Montana,  see 
State  V.  District  Court,  14  Mont., 
577,  37  Pac,  969.  As  to  the  right 
of  a  debtor  to  waive  the  objection 
that  the  plaintiff  has  never  recovered 
a  judgment  against  him,  see  In  re 
Konrad,  208  U.  S,  90,  28  Sup.  Ct. 
Rep,  219,  52  L.  Ed,  403. 

SSUhlz'.  Dillon,  10  Md,  500.  This 
was  a  bill  for  an  injunction  and  a 
receiver  by  a  creditor  upon  an  open 
account,  alleging  that  the  defend- 
ant   was    largely    indebted    for    his 


stock  in  trade;  that  he  was  dis- 
posing of  his  stock,  had  sold  his 
real  estate,  and  was  collecting  debts 
due  him,  with  intent  to  defraud  his 
creditors,  and  that  he  intended  to 
abscond  to  parts  unknown  for  the 
purpose  of  hindering,  delaying  and 
defrauding  his  creditors.  An  in- 
junction was  granted  and  a  receiver 
was  appointed  by  the  court  below, 
but  on  appeal  the  decree  was  re- 
versed and  bill  dismissed.  The 
court,  Bartol,  J.,  say,  p.  503 :  "The 
bill  filed  by  the  appellees  in  this 
cause  states  no  sufficient  case  en- 
titling them  to  the  relief  prayed. 
No  authority  has  been  shown  to 
this  court,  nor  can  any  be  pro- 
duced, entitled  to  consideration, 
which  sanctions  the  exercise  of  the 
high  and  extraordinary  power  of  a 
court  of  chancery  to  interpose,  by 
writ  of  injunction,  in  a  case  like 
the  one  before  us,  restraining  a 
debtor  in  the  enjoyment  and  power 
of  disposition  of  his  property.  The 
appellees  (the  complainants  below) 
are  merely  general  creditors  of  the 
appellant,  who  have  not  prosecuted 
their  claim  to  judgment  and  ex- 
ecution, nor  in  any  other  manner 
acquired  a  lien  upon  the  debtor's 
property,  and  were  not  entitled  to 
the  writ  of  injunction  nor  to  the 
appointment  of  a  receiver.  What- 
ever may  be  the  supposed  defects 
of  the  existing  laws  of  the  state, 
in  leaving  to  the  debtor  the  abso- 


CHAP.  XII.] 


CREDITORS. 


593 


before  judgment,  even  though  the  bill  alleges  that  the  debtor 
has  made  fraudulent  transfers  and  mortgages  of  his  property.^* 
Thus,  where  the  bill  alleged  that  the  debtor  was  wasting  his 
resources  and  sending  his  goods  beyond  the  reach  of  his  credi- 
tors; that  he  was  utterly  insolvent  and  had  executed  a  mort- 
gage of  his  effects,  without  consideration  and  for  the  purpose 
of  hindering  and  defrauding  his  creditors;  and  that  plaintiff 
had  brought  suit  upon  his  demand,  but  would  not  be  able  to 
obtain  judgment  and  execution  before  defendant's  assets  would 
be  wasted,  the  court  refused  an  injunction  and  a  receiver.^^ 
So  it  is  held  that  the  fact  of  the  debtor  having  entered  his  ap- 
pearance and  consented  to  judgment  in  certain  actions,  brought 
by  other  creditors  upon  demands  which  were  justly  due,  will 
not  warrant  the  court  in  granting  a  receiver  upon  the  applica- 
tion of  a  creditor  without  judgment,  since  it  is  a  debtor's  right 
to  prefer  any  creditor  whom  he  may  choose.^^    Nor  will  a  re- 


lute  power  of  disposing  of  his 
property,  and  leaving  the  creditor 
to  the  slow  and  very  inadequate 
legal  remedies  now  provided,  if 
such  defects  exist,  it  is  solely  in  the 
power  of  the  legislature  to  correct 
them.  It  is  not  within  the  province 
of  the  chancery  courts  to  stretch 
their  power  beyond  the  limits  of 
the  authorities  of  the  law,  for  the 
purpose  of  remedying  such  defects. 
Such  a  course  would  be  productive 
of  great  mischief,  and  make  the 
rights  of  the  citizen  depend  upon 
the  vague  and  uncertain  discretion 
of  the  judges,  instead  of  the  safe 
and  well-defined  rules  of  law.  The 
learned  Chancellor  Kent,  in  the  de- 
cision of  the  case  of  Wiggins  v. 
Armstrong,  2  Johns.  Ch.  Rep.,  144, 
has  stated,  most  clearly  and  forci- 
bly, the  principles  which  govern 
the  case  before  us,  and  we  adopt  its 
reasoning  as  applicable  here." 
.34Hulse  V.  Wright,  Wright,  61; 
Receivers — 38. 


Rich  V.  Levy,  16  Md.,  74;  Nusbaum 
V.  Stein,  12  Md.,  315.  But  in  the 
latter  case,  the  court  seem  to  base 
their  decision  somewhat  upon  the 
fact  that  it  appeared  from  the  bill 
that  the  debtor's  assets  were  suffi- 
cient to  discharge  his  liabilities. 
See,  contra,  Haggarty  v.  Pittman, 
1  Paige,  298;  Cohen  v.  Meyers,  42 
Ga.,  46;  Rosenberg  v.  Moore,  11 
Md.,  376. 

35  Rich  V.  Levy,  16  U^  74. 

36  McGoldrick  v.  Slevin,  43  Ind., 
522.  While  the  general  doctrine 
of  the  text  is  believed  to  be  sus- 
tained by  the  undoubted  weight  of 
authority,  there  are  several  cases 
in  which  a  contrary  doctrine  has 
been  announced.  In  Haggarty  v. 
Pittman,  1  Paige,  298,  an  injunc- 
tion and  a  receiver  were  allowed  in 
behalf  of  creditors  without  judg- 
ment, upon  a  bill  alleging  insolv- 
ency of  the  debtor,  and  that  he 
had    made    an    assignment    of    his 


594 


RECEIVERS. 


[chap.  XII. 


ceiver  be  appointed  at  the  instance  of  one  who  has  instituted  an 
action  at  law  in  tort,  for  the  purpose  of  taking  possession  of 
property  of  the  defendant  and  of  preventing  waste  in  order 
that  the  property  may  be  turned  over  to  the  plaintiff  in  satis- 
faction of  such  judgment  as  may  be  obtained  in  the  action  at 
law.3"  Even  under  a  statute  enacting  that  a  receiver  may  be 
had  in  an  action  by  a  creditor  to  subject  any  property  or  fund 
to  his  demand,  it  is  held  that  the  relief  will  be  allowed  only  as 
to  funds  or  property  upon  which  the  creditor  has  a  specific  lien, 
and  that  the  statute  does  not  apply  to  the  case  of  a  general  cred- 
itor upon  account,  who  has  acquired  no  lien  upon  the  property 
of  his  debtor.38  Nor  does  a  creditor,  by  attaching  real  prop- 
erty which  is  alleged  to  have  been  conveyed  by  the  debtor  in 
fraud  of  his  creditors,  acquire  such  a  lien  as  to  entitle  him  to 


property  to  one  of  his  creditors, 
who  was  himself  insolvent.  So  in 
Rosenberg  v.  Moore,  11  Md.,  376, 
an  injunction  and  a  receiver  were 
allowed  on  the  application  of  gen- 
eral creditors,  before  judgment, 
upon  the  ground  of  a  fraudulent 
conveyance  of  a  portion  of  his 
property  by  the  debtor,  in  trust  for 
his  creditors,  and  upon  the  further 
ground  that  the  property  was  in 
imminent  danger,  being  in  the  cus- 
tody of  a  person  of  notoriously  bad 
character.  But  it  does  not  appear 
from  the  case  as  reported,  that  any 
objection  was  urged  on  the  ground 
that  plaintiffs  had  no  judgment  or 
lien  upon  the  debtor's  property. 
In  Thompsen  v.  Diffenderfer,  1  Md. 
Ch.,  489,  the  court  inclined  to  hold 
that  creditors  without  judgment 
were  entitled  to  a  receiver,  upon  a 
bill  alleging  fraudulent  transfers 
of  his  property  by  the  debtor,  and 
that  he  was  in  insolvent  circum- 
stances, but  the  receiver  was  re- 
fused on  the  ground  that  the 
answers    fully    denied    the    equities 


of  the  bill.  In  Cohen  v.  Meyers,  42 
Ga.,  46,  where  the  bill  charged  in- 
solvency of  the  debtor,  and  that  he 
had  fraudulently  transferred  his 
goods  to  a  third  person,  who  was 
charged  with  complicity  in  the 
fraud,  and  that  the  debtor  had 
bought  the  goods  with  intent  to 
defraud  the  plaintiffs,  a  receiver 
was  allowed  before  judgment.  In 
this  case,  the  court  based  the  right 
of  the  creditors  to  the  relief  upon 
the  ground  that  the  goods  for 
which  the  indebtedness  sued  on 
was  incurred,  never  in  equity  be- 
longed to  the  defendant,  he  having 
obtained  them  by  fraudulent  in- 
tent, and  that  a  proper  case  was, 
therefore,  presented  for  the  action 
of  a  court  of  equity.  Notwithstand- 
ing these  cases,  however,  it  is  be- 
lieved that  the  weight  of  authority 
and  reasoning  supports  the  rule  as 
laid  down  in  the  text. 

37  Slover  v.   Coal   Creek   C.   Co., 
113  Tenn.,  421,  82  S.  W.,  1131. 

38  Carter  v.   Hightower,  79  Tex., 
135,  15  S.  W.,  223. 


CHAP.  XII.]  CREDITORS.  595 

a  receiver  over  the  property,  his  demand  not  having  been  re- 
duced to  judgment.29 

§  407.  Apparent  exception  to  the  rule  in  New  York  in 
cases  of  partnerships;  receiver  allowed  before  judgment. 
While,  as  is  thus  shown,  the  rule  denying  the  aid  of  a  receiver 
for  the  protection  of  contract  or  general  creditors,  before  judg- 
ment, is  well  established,  an  apparent  exception  to  the  rule  has 
been  recognized  under  the  code  of  procedure  in  New  York,  in 
cases  of  partnership  creditors,  the  exception,  however,  being 
based  upon  equitable  principles  not  inconsistent  with  the  spirit 
of  the  general  rule.  Thus,  in  the  case  of  an  indebtedness  due 
from  a  copartnership,  when  the  insolvency  of  the  firm  and  of  its 
individual  members  is  conceded,  and  the  indebtedness  is  ad- 
mitted to  be  justly  due,  the  creditor  may  have  an  injunction 
and  a  receiver,  as  against  the  partners  and  third  persons  to 
whom  they  have  attempted  to  assign  their  property  for  the  pur- 
pose of  hindering  and  delaying  their  creditors,  even  though 
his  demand  is  not  yet  reduced  to  judgment.  In  such  case,  the 
debt  not  being  disputed,  and  there  being  no  advantage  to  be  de- 
rived from  a  preliminary  judgment  and  execution,  it  is  deemed 
proper  to  extend  all  the  relief  desired  in  one  and  the  same  ac- 
tion, without  compelling  the  creditor  to  resort  to  the  delay  of 
obtaining  judgment  in  a  separate  suit.^^  The  doctrine,  how- 
ever, of  the  New  York  courts  upon  this  point,  would  seem  to  be 
limited  to  cases  where  the  indebtedness  is  not  disputed,  and 

39  Clark  v.  Raymond,  84  Iowa,  10  How.  Pr.,  461.  In  Mott  v.  Dunn, 
251,  50  N.  W.,  1068.  And  see  Clark  considerable  reliance  is  placed  by 
V.  Raymond,  86  Iowa,  661,  53  N.  the  court  upon  the  provision  of  the 
W.,  354.  As  to  the  right  to  a  re-  code  of  procedure,  that  "where, 
ceiver  in  aid  of  attaching  creditors  during  the  pendency  of  an  action, 
in  Alabama,  see  Pearce  v.  Jennings,  it  shall  appear  by  affidavit  that  the 
94  Ala.,  524,  10  So.,  511;  Dollins  v.  defendant  threatens  or  is  about  to 
Lindsey,  89  Ala.,  217,  7  So.,  234;  remove  or  dispose  of  his  property 
Sackhoff  V.  Vandegrift,  98  Ala.,  192.  with  intent  to  defraud  his  creditors, 

40  Mott  V.  Dunn,  10  How.  Pr.,  a  temporary  injunction  may  be 
225.  See,  also.  Levy  v.  Ely,  15  granted  to  restrain  such  removal 
How.  Pr.,  395 ;  Jackson  v.  Sheldon,  or  disposition." 

9  Ab.   Pr.,  127;  LaCliaise  v.  Lord, 


596  RECEIVERS.  [CIIAP.  XII. 

where  the  plaintiff  creditor  is  proceeding  not  merely  in  behalf 
of  himself  and  to  secure  his  individual  demand,  but  for  the 
benefit  of  all  creditors  of  the  firm.^^  And  in  the  case  of  a 
limited  or  special  partnership,  where,  upon  the  insolvency  of 
the  firm,  the  assets  become  a  trust  fund,  which  it  is  the  duty  of 
the  general  partners  to  assign  to  a  trustee  for  the  benefit  of  all 
the  firm  creditors,  if  the  general  partners  fail  to  perform  this 
duty,  the  court  may  interfere  by  appointing  a  receiver  of  the 
firm  assets  for  the  benefit  of  all  the  creditors,  in  an  action  insti- 
tuted by  a  general  creditor  for  himself  and  such  others  as  may 
elect  to  take  the  benefit  of  the  action.  The  relief,  in  such  case, 
would  seem  to  be  founded  upon  the  nature  of  the  firm  assets, 
as  a  trust  fund  upon  the  insolvency  of  the  partners,  the  credi- 
tor instituting  the  proceedings  being  regarded  as  a  cestui  que 
trust  of  such  fund,  even  though  he  has  not  yet  obtained  judg- 
ment.42 

§  408.  Lien  of  creditors  who  have  advanced  money  for 
repairing  vessel,  when  protected  by  receiver.  It  is  also  to 
be  noted  that  creditors,  even  before  judgment,  may  have  such  a 
special  or  equitable  lien  upon  the  debtor's  property  as  to  en- 
title them  to  the  aid  of  equity  and  to  the  protection  of  a  re- 
ceiver. For  example,  when  persons  have  advanced  money 
for  effecting  repairs  upon  a  vessel,  and  for  furnishing  supplies, 
and  have  received  from  the  master  of  the  vessel  an  assignment 
of  all  the  freight  money  and  earnings  of  the  vessel  upon  her 
voyage,  and  all  lien  and  interest  which  he  as  master  had  there- 
on on  account  of  such  advances  or  his  liability  therefor,  such 
creditors  are  entitled  to  an  injunction  to  prevent  any  interfer- 
ence with  the  collection  of  the  freight  money,  and  a  receiver 
to  collect  it,  upon  showing  that  the  owners  of  the  vessel  are 
insolvent,  and  that  the  relief  is  necessary  to  protect  their  lien 
acquired  by  assignment  from  the  master."*^ 

41  LaCliaise  v.  Lord,  10  How.  Pr.,  42  Jackson  v.  Sheldon,  9  Ab.  Pr., 

461;  Levy  v.  Ely,  15  How.  Pr.,  395.  127. 

See,  also,  Jackson  v.  Sheldon,  9  Ab.  43  Sorley  v.  Brewer,  18  How.  Pr., 

Pr.,  127.  276. 


CHAP.  XII.]  CREDITORS.  597 

§  409.  Receiver  over  effects  of  married  woman  doing 
business  as  trader,  in  action  to  charge  her  individual  prop- 
erty. In  Wisconsin,  it  is  held  to  be  competent  for  a  court 
of  general  equity  jurisdiction  to  appoint  a  receiver  over  the 
property  and  effects  of  a  married  woman,  doing  business  as  a 
trader,  in  an  equitable  action  by  her  creditors  to  charge  her 
individual  property  with  the  payment  of  her  liabilities,  when 
there  is  danger  of  the  assets  being  wasted  or  put  beyond  the 
reach  of  creditors.  Such  a  proceeding,  it  is  held,  bears  a  close 
resemblance  to  a  creditor's  bill  for  the  enforcement  of  a  judg- 
ment, and  there  would  seem  to  be  no  impropriety  in  granting 
an  injunction  and  a  receiver,  upon  the  same  grounds  as  in 
cases  of  creditors'  bills. ^'* 

§  410.  Creditor  holding  annuity  which  is  a  charge  on 
real  estate  may  have  receiver  when  annuity  is  in  arrears. 
It  is  also  held  that  a  creditor  holding  an  annuity,  which  is  a 
charge  upon  real  estate,  may  have  the  aid  of  a  receiver  when 
his  annuity  is  in  arrears  and  he  is  without  legal  remedy  for 
its  enforcement,  although  he  can  not  have  the  receiver  con- 
tinued when  his  arrears  are  paid  off.'^^  And  when  a  debtor  has 
conveyed  a  life  estate  in  certain  leasehold  premises,  in  trust 
for  the  purpose  of  securing  his  creditors  by  payment  annually 
out  of  the  rents  and  profits  until  the  indebtedness  shall  be  ex- 
tinguished, when  the  property  is  to  be  reconveyed,  the  creditors 
have  such  an  interest  as  to  entitle  them  to  a  receiver,  when 
the  payments  are  long  in  arrear,  even  though  they  do  not  oc- 
cupy the  position  of  mortgagees  and  have  no  power  to  sell  the 
>  property.'*^ 

§  411.  Fraudulent  assignment  by  debtor  ground  for  re- 
ceiver; appointment  of  receiver  does  not  determine  rights 
of  assignee.  Fraudulent  assignments  of  his  property  by 
a  judgment  debtor,  for  the  purpose  of  hindering  and  defeating 

44  Todd  V.  Lee,  15  Wis.,  365.  46  Taylor   v.    Emerson,   4   Dr.   & 

45  Sankey  v.  O'Maley,  2  Mol.,  491.      War.,  117. 
See,   also,    Beamish   v.   Austen,    Ir. 

Rep.,  9  Eq.,  361. 


598  RECEIVERS.  [chap.  XII. 

his  creditors,  are  frequently  made  the  foundation  for  proceed- 
ings in  equity  for  the  appointment  of  a  receiver  in  behalf  of 
judgment  creditors.'*'^  And  when  it  is  shown  upon  a  cred- 
itor's bill  that  the  judgment  debtor  has  made  an  assignment 
of  all  his  property  in  fraud  of  his  creditors,  to  an  assignee 
w'ho  is  known  to  be  insolvent,  such  a  breach  of  trust  is  pre- 
sented as  to  warrant  the  court  in  appointing  a  receiver  of  the 
property  assigned.  Especially  will  the  relief  be  granted,  in 
such  case,  when  the  debtor  himself  continues  in  possession  of 
the  property  and  exercises  acts  of  ownership,  there  being  no  ac- 
tual change  of  possession. ^^  But  while  it  is  regarded  as  a 
sufhcient  prima  facie  case  for  the  appointment  of  a  receiver, 
to  show  an  assignment  of  his  property  by  the  debtor  to  hinder 
and  delay  his  creditors,  to  an  assignee  who  is  irresponsible  and 
insolvent,  yet  when  defendant  satisfactorily  shows  to  the  court 
by  affidavit  that  the  plaintiff  is  in  error  as  to  the  pecuniary 
condition  of  the  assignee,  the  court  will  not  by  a  receiver  take 
the  property  out  of  the  hands  of  the  assignee  before  the  rights 
of  the  parties  are  finally  determined.*^  So  when  the  allega- 
tions of  fraud  in  the  assignment  by  the  debtor  are  fully  denied 
by  answer,  and  it  is  not  shown  that  the  assignee  is  insolvent, 
or  that  there  is  danger  of  loss  or  injury  to  the  property  pend- 
ing the  litigation,  it  is  improper  to  appoint  a  receiver  in  the 
first  instance.^^  And  the  appointment  of  a  receiver  in  behalf 
of  judgment  creditors,  over  the  property  of  their  debtor,  does 
not  of  itself  preclude  or  determine  the  rights  of  an  assignee 
of  the  debtor  claiming  his  assets  under  an  assignment  from 
him,  and  the  property  can  only  be  recovered  by  an  action 

47  See    Connah    v.    Sedgwick,    1  although    the    plaintiff    was    not    a 

Barb.,    210;    Goodyear   v.    Betts,    7  judgment  creditor. 

How.  Pr.,  187;  Shainwald  v.  Lewis,  48  Connah  v.   Sedgwick,  1  Barb., 

7  Sawyer,  148;  Hirsch,  Elson  &  Co.  210;  Hirsch,  Elson  &  Co.  v.  Israel, 

V.  Israel,  106  Iowa,  498,  76  N.  W.,  106  Iowa,  498,  76  N.  W.,  811. 

811;  Clark  v.   Bradley  Co.,  6  App.  49  Goodyear  v.  Betts,  7  How.  Pr., 

D.    C,    437.      See,    also,    Stern    v.  187. 

Austern,  120  N.  C,  107,  27  S.  E.,  50  Pdzer  v.  Hughes,  27  S.  C,  408. 
31,  where  a  receiver  was  appointed 


CHAP.  XII.]  CREDITORS.  599 

brought  by  the  receiver;  since  the  court  can  not  determine  a 
disputed  question  of  title  in  passing  upon  the  appHcation  for  a 
receiver,  especially  when  the  assignee  is  not  a  party  to  the  pro- 
ceeding.^! B^t  in  an  action  brought  by  a  judgment  creditor 
to  set  aside  a  conveyance  of  land  made  by  the  debtor  with 
intent  to  defraud  his  creditors,  the  grantees  being  made  par- 
ties, and  the  conveyance  being  found  to  be  fraudulent  as  against 
the  judgment  creditor,  it  is  proper  to  appoint  a  receiver  to 
sell  and  convey  the  property.^2  go  when  a  decree  in  equity 
is  obtained  against  defendant  requiring  him  to  pay  to  com- 
plainant certain  funds  obtained  by  fraud  and  collusion,  upon 
the  return  of  execution  unsatisfied,  complainant  is  entitled  to  a 
receiver,  upon  a  bill  alleging  that  defendant  has  disposed  and 
is  about  to  dispose  of  his  property  with  intent  to  evade  the  de- 
cree and  to  hinder  and  delay  complainant  in  its  enforcement. 
And  in  such  case,  it  is  not  necessary  to  specifically  describe 
the  property  which  it  is  sought  to  reach  by  the  creditor's  bill.^^ 
So  when  a  judgment  debtor  has  disposed  of  a  large  amount  of 
his  stock  in  trade,  without  accounting  for  the  proceeds,  and 
leaving  a  large  amount  of  indebtedness  unpaid,  a  receiver  has 
been  appointed  in  a  creditor's  suit,  although  the  debtor  denied 
any  fraudulent  disposition  of  his  property,  a  receiver  being 
necessary  to  institute  the  proper  suits  to  determine  what  dispo- 
sition was  made  of  the  property.^"* 

§  412.  Receiver  granted  to  carry  out  assignment  by 
debtor  for  benefit  of  creditors,  on  refusal  of  assignee  to 
act,  or  on  his  misconduct ;  right  to  receiver  not  affected  by 
subsequent  assignment  by  debtor.  Courts  of  equity  will 
also  extend  the  aid  of  a  receiver  for  the  protection  of  creditors 

51  Journeay  v.  Brown,  2  Dutch.,  53  Shainwald  v.  Lewis,  7  Sawyer, 
111.  And  see  this  case  for  the  148.  And  see  this  case  for  an  ex- 
practice  in  New  Jersey  in  appoint-  haustive  discussion  of  the  jurisdic- 
ing  receivers  in  behalf  of  judgment  tion  of  equity  by  creditors'  bills  to 
creditors.  reach    the    assets    of    a    judgment 

52  Shand  v.  Hanley,  71  N.  Y.,  319.  debtor,  and  of  the  right  to  a  re- 
And  see  this  case  as  to  the  effect  of  ceiver  in  such  cases. 

a  receiver's  sale  upon  prior  liens.  54  Strong  v.  Goldman,  8  Biss.,  552. 


600  RECEIVERS.  [CIIAP.  XII. 

under  assignments  made  by  the  debtor  in  good  faith  and  with- 
out fraud  for  the  benefit  of  his  creditors,  when  the  assignee 
refuses  to  accept  of  the  trust  created  by  the  assignment,  or 
when  he  does  not  act  in  good  faith  in  carrying  out  its  terms. ^^ 
Thus,  in  the  case  of  a  general  assignment  by  a  debtor  for  the 
benefit  of  his  creditors,  upon  the  refusal  of  the  trustee  named 
in  the  deed  of  assignment  to  proceed  with  the  execution  of  the 
trust,  a  receiver  may  be  allowed  upon  a  bill  filed  by  creditors 
for  whose  benefit  the  assignment  was  made.^^  And  when  an 
assignment  is  made  to  trustees  for  the  benefit  of  creditors,  a 
judgment  creditor  of  the  assignor,  who  files  his  bill  in  behalf 
of  himself  and  other  creditors  in  interest,  is  entitled  to  a  re- 
ceiver to  take  charge  of  the  effects  assigned,  upon  showing 
gross  mismanagement  on  the  part  of  the  trustees,  and  a  fail- 
ure on  their  part  to  comply  with  the  requirements  of  the 
trust,  and  that  there  is  imminent  danger  of  the  assets  being 
wasted  and  diverted  from  the  purposes  for  which  they  were 
assigned.^"^  So  where  real  estate  is  conveyed  by  a  debtor,  in 
trust  to  be  sold  for  the  payment  of  his  debts,  the  rents  to  be 
applied  for  the  same  purpose,  and  the  trustee  has  been  in  pos- 
session a  number  of  years  without  paying,  a  creditor  may  have 
a  receiver  appointed  until  answer,  when  the  trustee  resides 
beyond  the  jurisdiction  of  the  court  and  has  not  appeared  to 
the  action.58  But  where  an  action  for  a  receiver  has  been  in- 
stituted by  a  judgment  creditor,  the  right  to  the  appointment 

55  Suydam  v.  Dequindre,  Harring.  applied  for  a  receiver  of  the  debts 
(Mich.),  347.  And  see  Malcolm  v.  due  the  business,  Lord  Eldon  held 
Montgomery,  2  Mol.,  500.  that  the  case  was   such  that  if  the 

56  Suydam  v.  Dequindre,  Harring.  vice-chancellor,  before  whom  the 
(Mich.),  347.  And  where  a  share  in  application  was  pending,  was  about 
the  profits  of  a  business  had  been  to  appoint  a  receiver  to  collect  the 
assigned  to  a  person  in  considcra-  assets,  he  would  not  interfere, 
tion  of  money  advanced  for  the  Candler  v.  Candler,  Jac,  225. 
purpose  of  carrying  on  the  busi-  57  Jones  v.  Dougherty,  10  Ga., 
ness,   and   a   subsequent  assignment  273. 

was    made   to    a    third   party,    of   a  58  ]\Ialcolm     v.     Montgomery,     2 

share    of   the    profits    in    the    same       Mol.,  500. 
business,    and    the    prior    assignee 


CHAP.  XII.]  CREDITORS.  601 

of  the  receiver  can  not  be  defeated  by  a  general  assignment 
subsequently  made  by  the  debtor  for  the  benefit  of  his  cred- 
itors. ^^ 

§  413.  No  bar  to  the  relief  that  property  is  claimed  by 
adverse  claimants ;  or  beyond  jurisdiction  of  court.  In  pro- 
ceedings supplementary  to  execution,  under  the  New  York  code 
of  procedure,  it  is  no  sufficient  objection  to  placing  the  prop- 
erty and  effects  of  a  judgment  debtor  in  the  hands  of  a  re- 
ceiver, that  the  property  sought  to  be  reached  is  claimed  by 
adverse  claimants,  and  is  such  as  may  be  taken  on  execution, 
and  is  accessible  for  purposes  of  seizure  and  sale,  if  the  court 
is  satisfied  that  the  title  to  the  property  may  be  tried  with  as 
little  expense  in  an  action  by  the  receiver,  as  in  a  suit  brought 
by  the  adverse  claimants. ^^  And  in  such  proceedings  a  re- 
ceiver may  be  appointed  over  real  property  of  the  debtor  and 
he  may  be  required  to  convey  such  property  to  the  receiver, 
although  it  is  situated  beyond  the  jurisdiction  of  the  court 
and  in  another  state.^^  And  a  receiver  will  be  appointed  in 
such  case,  notwithstanding  the  debtor  has  made  an  assignment 
for  the  benefit  of  his  creditors  under  the  insolvent  laws  of  the 
state,  the  assignment  being  made  after  the  granting  of  an 
injunction  in  the  creditor's  suit  to  restrain  the  debtor  from 
making  any  disposition  of  his  property. ^^  Nor  does  the  fact 
that  the  bill  does  not  specifically  describe  the  property  or  in- 

59  Monarch  Co.  v.  Bank,  103  Ky.,  380.  See,  also,  Bailey  v.  Ryder,  10 
276,  44  S.  W.,  955,  46  S.  W.,  700.  N.  Y.,  363.  But  see,  contra,  Amy 
Where  a  statute  provides  that  a  re-  v.  Manning,  149  Mass.,  487,  21  N. 
ceiver  may  be  appointed  where  a  E.,  943,  where  it  is  held  that,  in 
corporation  is  dissolved  or  is  in-  the  absence  of  statutory  authority, 
solvent,  a  creditor  of  the  corpora-  a  court  of  equity  will  not,  under  its 
tion  can  not  be  deprived  of  his  right  general  equity  powers,  at  the  suit  of 
to  such  appointment  by  a  prior  as-  a  judgment  creditor,  appoint  a  re- 
signment  by  the  corporation  for  the  ceiver  to  collect  debts  and  choses  in 
benefit  of  its  creditors.  Olcson  v.  action  due  to  the  debtor  from  per- 
Bank,  15  Wash.,  148,  45  Pac,  734.  sons    residing    in    foreign    jurisdic- 

60  Todd  V.  Crooke.  4  Sandf.,  694.  tions. 

61  Towne  v.  Campbell,  35  Minn.,  62  Tomlinson  &  Webster  M.  Co. 
231,  28  N.  W.,  254;   Tomlinson  &  v.  Shatto,  34  Fed.,  380. 

Webster  M.  Co.  v.  Shatto,  34  Fed., 


602  RECEIVERS.  [chap.  XU. 

terests  of  the  debtor  which  it  is  sought  to  reach,  when  the 
same  are  not  definitely  known  to  complainant,  afford  a  vaHd 
objection  to  the  reHef.*^^ 

§  414.  Answer  denying  property  no  bar  to  reference  to 
master  to  appoint ;  receiver  not  appointed  to  attack  fraud- 
ulent assignment  which  creditor  can  set  aside.  It  has  al- 
ready been  shown,  that  the  denial  by  defendant  in  a  creditor's 
bill  that  he  has  any  property  or  effects  of  any  kind,  of  which 
a  receiver  could  take  possession  if  appointed,  is  no  bar  to  the 
exercise  of  the  jurisdiction  in  behalf  of  the  creditor  in  a  proper 
case.^^  And  in  conformity  with  the  same  principle,  it  is  held 
that  the  fact  of  the  debtor  having  filed  his  answer,  denying  that 
he  has  any  property  or  effects  of  any  kind,  presents  no  suffi- 
cient objection  to  a  motion  for  an  order  of  reference  to  a  mas- 
ter to  appoint  a  receiver,  and  requiring  the  debtor  to  transfer 
his  effects  to  such  receiver  under  oath.^^  So  it  would  seem 
to  be  no  objection  to  the  appointment  of  a  receiver  of  the  ef- 
fects of  a  judgment  debtor,  that  he  has  no  other  property 
than  an  equity  of  redemption  in  real  estate,  which  he  has  al- 
ways been  willing  to  have  sold  on  execution. ^^  But  it  has 
been  held  improper  to  appoint  a  receiver,  in  proceedings  sup- 
plementary to  execution,  merely  for  the  purpose  of  attacking 
an  alleged  fraudulent  assignment  made  by  the  debtor,  when 
the  judgment  creditor  himself  has  a  right  of  action  to  set  aside 
such  assignment.^"^ 

§  415.  Practice  on  reference  to  master  to  appoint  un- 
der New  York  system;  assignment  to  receiver;  examina- 
tion of  debtor,  purpose  and  extent  of.  Under  the  practice 
of  the  New  York  Court  of  Chancery,  it  was  customary,  upon 
applications  for  receivers  in  aid  of  creditors'  bills,  to  refer 

63  Dutton   V.   Thomas,  97    Mich.,  65  Fuller  v.  Taylor,  2  Halst.  Ch., 
93,  56  N.  W.,  229.  301. 

64  See     Browning    v.     Bettis.     8  66  Bailey  v.  Lane,  15  Ab.  Pr.,  373, 
Paige,  568;   Bloodgood  v.  Clark,  4  note. 

Paige,    574.      But    see    Dollard    v.  67  Bollard    v.    Taylor,   33    N.    Y. 

Taylor,  33  N.  Y.,  Supr.  Ct.  R.,  496.       Supr.  Ct.  R.,  496. 


CHAP.  XII.]  CREDITORS.  603 

the  case  to  a  master  in  chancery  to  make  the  appointment.  And 
it  was  held  that  the  order  of  reference  should  authorize  the 
master  to  appoint  a  receiver  of  all  the  property,  equitable  in- 
terests, things  in  action  and  effects  belonging  to  the  debtor, 
or  in  which  he  had  any  beneficial  interest  when  the  suit  was 
instituted,  except  such  articles  of  personal  property  as  were 
by  law  exempt  from  sale  on  execution,  and  should  require 
the  master  to  take  from  the  receiver  the  requisite  security  for 
the  faithful  performance  of  his  trust.  It  should  also  require 
the  defendant  to  assign  to  the  receiver,  under  the  direction  of 
the  master,  all  his  property  and  effects,  and  should  give  the 
plaintiff  leave  to  examine  the  debtor,  or  any  other  person,  on 
oath  before  the  master  for  any  of  the  purposes  of  the  refer- 
ence.^^ Under  such  an  order  of  reference,  however,  the  plain- 
tiff was  not  authorized  to  examine  the  defendant,  or  any  other 
person,  as  to  matters  not  connected  with  the  receivership,  or 
with  ascertaining  the  possession,  nature,  value  or  character  of 
the  property  which  was  to  be  assigned  to  the  receiver.  Plain- 
tiff could  not,  therefore,  examine  the  debtor  merely  for  the 
purpose  of  determining  whether  he  had  made  a  fraudulent  as- 
signment of  his  property  previous  to  the  commencement  of 
the  action,  when  such  property  was  no  longer  in  his  posses- 
sion. ^^  The  chief  purpose  of  such  an  examination  was  to  as- 
certain what  property  the  debtor  had  under  his  control  and  in 
his  possession,  in  order  that  it  might  be  delivered  to  the  re- 
ceiver for  the  benefit  of  the  creditor.  The  receiver  was  not 
»  authorized,  by  virtue  of  his  appointment,  to  seize  such  proper- 
ty as  he  might  upon  his  own  judgment  deem  that  of  the  debt- 
or, but  this  was  to  be  determined  by  the  examination  before  the 
master,  it  being  the  receiver's  duty  simply  to  take  such  prop- 

68  Green  v.   Hicks,   1    Barb.    Ch.,  also,  as  to  the  practice  on  such  ex- 

309.     And  see   this  case  as  to  the  aminations,  Dickerson  v.  Van  Tine, 

practice  under  such  orders  of  refer-  1  Sandf.,  724. 

ence,  and  as  to  the  extent  and  scope  69  Green  v.   Hicks,   1   Barb.    Ch., 

of   the   examination   of   the   debtor  309. 
permitted  under  the  reference.    See, 


604  RECEIVERS.  [chap.  XII. 

erty  as  might  be  specified  by  the  master,  thus  avoiding  colli- 
sions between  the  receiver  and  adverse  claimants. '^'^ 

§  416.  Courts  averse  to  interfering  when  contest  is  as 
to  title  of  real  estate  claimed  by  third  persons.  While,  as 
we  have  thus  seen  in  the  preceding  sections,  courts  of  equity 
are  inclined  to  a  liberal  exercise  of  their  jurisdiction  by  grant- 
ing receivers  over  the  estate  of  a  debtor  in  behalf  of  his  judg- 
ment creditors,  this  extraordinary  power  is  exercised  with  a 
considerable  degree  of  caution  when  the  contest  is  as  to  the  title 
to  real  estate,  which  is  in  possession  of  and  claimed  by  third 
parties.  Indeed,  courts  of  equity  are  always  averse  to  any  in- 
terference with  the  legal  title  in  limine,  and  when  a  creditor's 
judgment  is  not  of  itself  a  lien  upon  lands  which  have  been 
conveyed  by  the  debtor  to  third  parties,  and  the  only  equity 
of  the  judgment  creditor  is  a  right  to  resort  to  the  lands  by 
setting  aside  the  conveyance  from  the  debtor,  the  party  in  pos- 
session under  what  purports  to  be  the  legal  title  will  not  be 
deprived  of  his  possession  by  the  appointment  of  a  receiver, 
unless  upon  a  strong  case  of  danger  to  the  property  and  in- 
ability to  respond  to  a  decree  because  of  insolvency,''^!     And 

70Dickerson     v.     Van     Tine,     1  Rose,  Freem.  Ch.,  718,  to  the  effect 

Sandf.,  724.  that  the  plaintiff  must  show  a  clear 

"i^i  Vause  V.  Woods,  46  Miss.,  120.  right  to  the  property,  or  that  he 
This  was  an  appeal  from  an  order  has  some  lien  upon  it,  or  that  the 
of  the  chancellor,  appointing  a  re-  property  constitutes  a  special  fund, 
ceiver  upon  a  creditor's  bill,  to  take  to  which  he  may  resort  for  satis- 
into  possession  lands  alleged  to  faction,  or  that  the  property  is  ex- 
have  been  conveyed  in  fraud  of  posed  to  loss  or  waste.  It  was  said  * 
plaintiff,  an  administrator,  and  of  by  Lord  Eldon,  in  Jones  v.  Pugh,  8 
his  intestate  in  his  life-time.  The  Ves.,  71,  that  if  real  estate  is  as- 
court,  Simrall,  J.,  say,  p.  128:  "As  sets,  and  the  court  can  not  avoid 
against  the  legal  title,  the  interpo-  seeing  that  it  and  the  rents  and 
sition  is  with  reluctance ;  it  will  profits  must  be  responsible,  it  will 
only  be  done  in  case  of  fraud  put  a  receiver  on  the  estate.  Walker 
clearly  proved,  and  danger  to  the  v.  Denne,  2  Ves.  Jr.,  170.  By  the 
property.  Lloyd  v.  Passingham,  laws  of  this  state,  the  property  of 
16  Ves.  Jr..  68,  which  was  a  case  a  decedent  is  chargeable  with  his 
between  two  claimants  of  the  title.  debts,  primarily  the  personalty, 
A  summary  of  the  doctrine  is  and,  secondarily,  the  lands ;  not, 
stated  by  the  chancellor  in  Mays  v.  however,  in  the  sense  that  creditor? 


CHAP.   XII.] 


CREDITORS. 


605 


when  a  judgment  creditor  had  obtained  a  conditional  order 
for  a  receiver  over  certain  real  property,  alleged  to  belong  to 
the  debtor,  but  it  was  shown  that  the  debtor  had  no  such  estate 
in  the  lands  as  was  claimed  by  the  creditor  in  his  petition,  hav- 
ing at  the  most  but  an  equitable  interest  in  some  portion  of 
them,  it  was  regarded  as  sufficient  cause  for  refusing  to  make 
the  order  for  the  receiver  absolute,  the  order  having  covered 
the  entire  property.'^^ 

§  417.  Buildings  erected  by  debtor  with  his  own  funds, 
receiver  appointed  over  rents.  Where,  however,  a  debtor 
has  a  life  interest  in  certain  real  estate,  upon  which  he  has 


have  a  specific  lien,  but  in  the 
sense  that  creditors  can  subject 
both  to  their  debts.  The  descent 
to  the  heir,  or  the  right  of  the 
devisee,  is  Hable  to  be  divested,  if 
the  real  estate  is  required  to  pay 
debts.  The  gravamen  of  the  bill 
is,  that  the  deeds,  or  other  instru- 
mentalities by  which  the  real  es- 
tate of  William  G.  Vause  was 
passed  to,  and  vested  in,  the  de- 
fendants, or  some  of  them,  was 
prompted  by  covin  and  fraud,  to 
evade  the  debt  due  to  the  com- 
plainant's intestate;  and,  therefore, 
said  real  estate  is  as  much  bound 
for  the  debt  as  though  such  con- 
veyances had  never  been  made. 
The  judgment  conferred  no  lien  on 
these  lands.  The  equity  of  the 
complainants  is  a  right  to  resort  to 
the  lands,  by  setting  aside  these 
conveyances.  The  title  of  the  de- 
fendants is  a  valid,  legal  title,  as 
against  all  others  than  the  creditor. 
If  the  property  were  worth  more 
than  the  debt,  there  would  be  no 
reason  to  put  the  estate  in  the  cus- 
tody of  a  receiver,  unless  the  de- 
fendants were  committing  waste, 
and  deteriorating  its  value.  The 
court  will  not  interpose  for  a  mort- 


gagee, except  upon  the  ground  that 
the  property  is  insufficient  to  pay 
his  debt,  and,  therefore,  he  should, 
pending  litigation,  have  the  rents 
and  income.  Ligon  v.  Bishop  et  al., 
43  Miss.,  527.  Nor  will  a  receiver 
be  appointed  against  an  executor, 
on  slight  grounds.  There  must  be 
abuse  of  the  trust,  or  danger  of  in- 
solvency. Middleton  v.  Dodswell, 
13  Ves.,  266.  The  jurisdiction  is 
exerted  as  part  of  the  preventive 
justice  of  the  court,  mainly  in  order 
that  the  fund  or  property  exposed 
to  spoliation,  and  danger  of  loss, 
pending  the  litigation,  may  be  taken 
charge  of  by  the  court,  so  as  to 
abide  the  litigation.  Where  the 
contest  is  over  the  title,  the  defend- 
ant, if  he  has  apparently  and  osten- 
sibly the  legal  title,  will  not  be  de- 
prived of  possession  unless  upon  a 
very  strong  case  of  risk  of  loss  of 
the  property,  and  inability  to  re- 
spond from  insolvency  to  the  de- 
cree. We  have  thought  it  proper 
to  refer  to  these  general  principles 
which  govern  the  jurisdiction  of 
the  court." 

72  Tredennick  v.   Graydon,   1   Dr. 
&  War.,  316. 


606  RECEIVERS.  [chap.  XII. 

with  his  own  funds  erected  a  building  and  receives  the  rents 
thereof,  upon  a  bill  by  a  judgment  creditor  the  court  may  ap- 
point a  receiver  of  the  rents  to  apply  them  in  payment  of  the 
judgment,  although  the  real  estate  itself  is  held  by  trustees  and 
the  judgment  is  no  lien  thereon,  since  equity  will  not  permit  a 
debtor  to  thus  evade  the  payment  of  his  just  obligations."^^ 
Nor  will  the  courts  permit  a  judgment  debtor  who  occupies 
the  position  of  a  cesHii  que  trust  of  lands,  under  a  trust  created 
for  his  own  benefit,  to  invest  his  individual  property  by  build- 
ing upon  the  land,  and  thus  create  a  trust  in  his  own  property 
for  his  own  benefit,  to  the  prejudice  of  his  creditors.'^^ 

§  418.  Receiver  allowed  over  realty  in  first  instance  un- 
der EngHsh  practice ;  infant  heirs ;  rights  of  judgment  cred- 
itors in  possession  not  affected.  It  was  the  doctrine  of  the 
English  Court  of  Chancery,  that  upon  a  bill  by  creditors  claim- 
ing satisfaction  out  of  both  the  real  and  personal  estate  of 
their  debtor,  if  it  appeared  probable  from  defendant's  answer 
that  there  was  no  personal  estate,  and  both  the  realty  in  de- 
fendant's possession  and  its  rents  and  profits  must  become 
responsible  for  such  demands,  the  court  might  allow  a  receiver 
in  the  first  instance,  although  the  power  was  recognized  as  a 
delicate  one."^^  And  upon  a  bill  by  creditors  for  satisfaction 
out  of  the  personal  assets,  and,  if  these  should  prove  insuffi- 
cient, out  of  realty  which  had  descended  to  an  infant  heir,  a 
receiver  has  been  allowed  over  the  real  estate.'^^  So  upon  a 
bill  by  creditors  for  a  sale  of  real  estate  for  the  payment  of 
their  demands,  the  heir  at  law  being  an  infant,  a  receiver  was 
granted  on  application  of  the  plaintiffs. "^"^  But  when  an  in- 
cumbrancer seeks  the  aid  of  equity  by  a  receiver  over  real  es- 
tate of  a  defendant,  and  there  are  judgment  creditors  of  the 

73  Johnson  v.  WoodruflF,  4  Halst.  75  Jones  v.  Pugh,  8  Ves.,  71. 
Ch.,  120.  affirmed  on  appeal  to  the  76  Sweet  v.  Partridge,  Dick.,  696. 
Court   of  Errors  and   Appeals,   id.,          77  Sweet  v.  Partridge,  1  Cox,  433. 
729. 

74  Johnson  v.  Woodruff,  4  Halst. 
Ch.,  120. 


CHAP.  XII.]  CREDITORS.  607 

defendant  in  possession,  the  appointment  will  be  made  without 
prejudice  to  the  rights  of  such  judgment  creditors. '^^  And 
a  judgment  creditor  in  possession  will  not  be  ordered  to  attorn 
to  a  receiver  subsequently  appointed."^^ 

§  419.  Receiver  not  appointed  on  creditors'  bill,  as 
against  mortgagee  in  possession;  different  mortgages;  in- 
adequate security.  It  will  hereafter  be  shown,  in  discuss- 
ing the  subject  of  receivers  over  mortgaged  premises,  that  the 
courts  are  always  reluctant  to  interfere  w^ith  the  title  of  a  mort- 
gagee, the  general  rule  being  that  a  mortgagee  in  possession, 
to  whom  anything  is  due,  will  not  be  disturbed  by  a  receiver, 
the  rule  being  based  upon  the  reluctance  of  courts  of  equity 
to  interfere  with  the  legal  title.^*^  And  as  against  a  mortgagee 
in  possession  of  the  premises,  holding  them  as  security  for 
the  payment  of  his  debt,  the  court  will  not  appoint  a  receiver 
of  the  rents  and  profits,  upon  a  creditor's  bill  by  a  judgment 
creditor  of  the  mortgagor,  when  the  mortgagee  has  not  been 
paid  the  amount  due  him  and  is  able  to  account  and  respond 
for  whatever  he  may  receive.^!  So  when  a  mortgagee  or  trus- 
tee of  certain  property,  which  has  been  mortgaged  to  him  by 
the  debtor  to  secure  debts  due  to  the  mortgagee  and  other  cred- 
itors, is  proceeding  properly  in  the  discharge  of  his  trust  by 
selling  the  property  and  applying  the  proceeds  in  payment  of 
the  mortgage  indebtedness,  a  court  of  equity  will  not  inter- 
fere by  interposing  a  receiver,  upon  a  creditor's  bill  filed 
against  the  debtor  and  the  mortgagee.^2  gyf  \^  ^j^  action  by  a 
judgment  creditor  to  subject  the  debtor's  property  to  the  pay- 
ment of  his  debts,  if  the  property  is  incumbered  by  numerous 
mortgages  and  judgments  which  are  to  be  ascertained  and 
their  priorities  determined,  and  the  real  estate  is  insufficient 
to  pay  the  indebtedness,  a  receiver  may  be  appointed  to  take 

78  Davis  V.  Duke  of  Marlborough,  see    Brundage    v.    Home    S.    &    L. 

1  Swans.,  74.  Assn.,  11  Wash.,  277,  39  Pac,  666. 
7J>  Davis  V.  Duke  of  Marlborough,  81  Qninn  v.  Brittain,  3  Edw.  Ch., 

2  Swans.,  118.  314. 

80  See    chapter    XV,    post.     And  82  Furlong  v.  Edwards,  3  Md.,  99. 


60S  RECEIVERS.  [CIIAP.  XII. 

possession  of  and  to  rent  the  property,  and  to  collect  the  past 
due  rents. ^'^ 

§  420.  Receiver  in  aid  of  judgment  creditors  as  against 
mortgagee  of  chattels.  As  against  mortgagees  of  chattels, 
equity  will  extend  the  aid  of  a  receiver  upon  the  application  of 
judgment  creditors,  if  by  reason  of  the  fraudulent  conduct  of 
the  mortgagee,  or  otherwise,  such  interference  is  necessary  to 
protect  the  rights  of  all  parties  in  interest.84  For  example, 
when  creditors  have  reduced  their  demands  to  judgment  and 
have  levied  upon  a  stock  of  goods  in  the  debtor's  possession, 
they  are  entitled  to  an  injunction  and  a  receiver  to  take  charge 
of  the  stock,  as  against  the  debtor  and  a  third  person  claiming 
the  goods  as  mortgagee,  upon  a  bill  alleging  that  the  goods 
claimed  to  be  covered  by  the  mortgage  are  more  than  sufficient 
to  pay  the  mortgage  debt,  and  that  the  debtor  has  no  other 
property  out  of  which  the  judgment  may  be  satisfied ;  the  bill 
also  alleging  that  the  mortgagee  has  permitted  the  debtor  to 
use  and  dispose  of  the  goods  mortgaged,  and  that  a  portion  of 
tlie  stock  levied  upon  is  not  covered  by  the  mortgage.^^  So 
when  a  mortgagee  of  chattels  in  possession,  having  sold  a  part, 
and  occupying  as  to  the  residue  the  position  of  a  trustee  for 
other  creditors,  is  about  to  dispose  of  the  residue  to  the  preju- 
dice of  a  judgment  creditor  of  the  mortgagor  or  original 
debtor,  a  receiver  may  be  appointed  to  take  the  proceeds  of 
the  unsold  property,  for  the  purpose  of  protecting  the  rights 
of  all  parties  in  interest. ^^  But,  under  a  statute  authorizing 
a  receiver  when  the  property  is  in  danger  of  being  lost  or  ma- 
terially injured  or  impaired,  a  debtor  having  executed  a  chat- 
tel mortgage  of  his  stock  of  merchandise  to  creditors  having 
claims  nearly  equal  in  amount  to  the  value  of  the  stock,  and 
the  mortgagees  having  taken  possession  by  their  agent,  who 

83  Smith  v.  Butcher,  28  Grat,  144.  85  Rose  v.   Bevan,    10  Md.,  466. 
See.    also,    Grantham   v.   Lucas,    15  86  Gouthwaite  v.  Rippon,  8  L.  J, 
W.  Va.,  425.                                             N.  S.  Ch.,  139. 

84  Rose  V.  Bevan,  10  Md.,  466. 
And  see  Gouthwaite  v.  Rippon,  8 
L.  J.,  N.  S.  Ch.,  139. 


-CHAP.  XII.]  CREDITORS.  609 

is  selling-  the  goods  in  the  usual  course  of  trade,  an  attaching 
-creditor  who  has  garnished  such  agent  is  not  entitled  to  a 
receiver  over  the  property,  when  it  is  not  shown  that  it  will 
not  be  properly  accounted  for,  or  that  plaintiff's  interest  in 
the  proceeds  is  liable  to  be  impaired. ^'^ 

§  421.  Judgment  creditors  may  maintain  action  to  set 
aside  fraudulent  mortgage ;  rights  of  judgment  creditor  in 
England.  When  judgment  creditors  have,  by  their  judg- 
ments, obtained  a  lien  upon  the  real  estate  of  their  debtor, 
but  a  receiver  is  subsequently  appointed  over  his  effects  and 
estate,  such  creditors  may,  notwithstanding  the  receivership, 
themselves  maintain  an  action  to  set  aside  as  fraudulent  and 
void  a  mortgage  which  had  been  previously  given  by  the 
•debtor,  and  to  apply  the  proceeds  of  the  property  in  satisfac- 
tion of  their  judgments,  especially  when  it  is  alleged  that  the 
receiver  neglects  to  act  in  the  premises.  But  in  such  case,  it 
is  proper  to  make  the  receiver  a  party  defendant  to  the  ac- 
tion brought  by  the  creditors,  since  he  has  an  interest  in  the 
land  subject  to  the  lien  of  the  judgments,  and  is  entitled  to  the 
surplus  avails  of  a  sale  of  the  land,  if  any,  after  satisfaction  of 
the  judgments  which  were  liens  thereon. ^^  And  in  England, 
when  a  mortgagee  of  the  rates  and  tolls  of  a  corporation  has 
obtained  a  receiver  in  aid  of  the  enforcement  of  his  mortgage, 
a  judgment  creditor,  although  subsequent  to  the  mortgage, 
may  issue  an  elegit  upon  his  judgment,  but  without  prejudice 
to  the  rights  of  the  receiver  already  appointed,  or  of  any  other 
receiver  who  may  be  appointed  by  the  mortgagee.^^  But  a 
judgment  creditor  in  possession  will  not  be  ordered  to  attorn 
to  a  receiver  subsequently  appointed  in  behalf  of  an  incum- 
brancer.9*^ 

§  422.  Real  estate  in  receiver's  possession  can  not  be 
sold  under  another  judgment.    Real  estate  in  possession  of 

87  Silverman  v.  Kulin,  53  Iowa,  ingham  Canal  Navigation  Co..  Kay, 
436.  142. 

88  Gere  v.  Dibble,  17  How.  Pr.,  31.  90  Davis  v.  Duke  of  Marlborough, 

89  Potts   V.   Warwick   and   Birm-  2  Swans.,  118. 

Receivers — 39. 


610 


RECEIVERS. 


[chap.  XII. 


a  receiver,  appointed  upon  a  bill  by  a  judgment  creditor  to 
have  property  of  the  debtor  applied  in  satisfaction  of  his  judg- 
ment, is  regarded  as  being  strictly  in  custody  of  the  court,  to 
abide  the  final  decree  which  may  be  rendered  in  the  cause. 
And  in  order  that  the  court  may  be  enabled  properly  to  ad- 
minister the  fund,  no  sale  of  the  property  will  be  allowed  on 
execution  under  another  judgment,  without  leave  of  the  court 
first  obtained  for  that  purpose.  And  when  such  sale  was  at- 
tempted without  leave  of  court,  it  was  held  void,  and  that  it 
passed  no  title  to  the  purchaser.^l 


91  Wiswall  V.  Sampson,  14  How., 
52.  Air.  Justice  Nelson,  delivering 
the  opinion,  observes  as  follows,  p. 
65 :  "When  a  receiver  has  been  ap- 
pointed, his  possession  is  that  of  the 
court,  and  any  attempt  to  disturb 
it,  without  the  leave  of  the  court 
first  obtained,  will  be  a  contempt 
on  the  part  of  the  person  making 
it.  This  was  held  in  Angel  v. 
Smith,  9  Ves.,  335,  both  with  respect 
to  receivers  and  sequestrators. 
When,  therefore,  a  party  is  preju- 
diced by  having  a  receiver  put  in 
his  way,  the  course  has  either  been 
to  give  him  leave  to  bring  an  eject- 
ment, or  to  permit  him  to  be  ex- 
amined pro  interesse  suo.  1  J.  & 
W.,  176,  Brooks  v.  Greathed;  Dan- 
iell's  Pr.,  ch.  39,  §  4.  And  the  doc- 
trine that  a  receiver  is  not  to  be 
disturbed  extends  even  to  cases  in 
which  he  has  been  appointed  ex- 
pressly without  prejudice  to  the 
rights  of  persons  having  prior  legal 
or  equitable  interests.  And  the  in- 
dividuals having  such  prior  interests 
must,  if  they  desire  to  avail  them- 
selves of  them,  apply  to  the  court 
either  for  liberty  to  bring  eject- 
ment or  to  be  examined  pro  inter- 
esse suo:  and  this  though  their  right 
to  the   possession   is  clear.     1   Cox, 


422;  6  Ves.,  287.  The  proper  course 
to  be  pursued,  says  Mr.  Daniell,  in 
his  valuable  Treatise  on  Pleading 
and  Practice  in  Chancery,  by  any 
person  who  claims  title  to  an  es- 
tate or  other  property  sequestered, 
whether  by  mortgage  or  judgment, 
lease  or  otherwise,  or  who  has  a 
title  paramount  to  the  sequestration, 
is  to  apply  to  the  court  to  direct  the 
plaintiff  to  exhibit  interrogatories 
before  one  of  the  masters,  in  order 
that  the  party  applying  may  be  ex- 
amined as  to  his  title  to  the  estate. 
An  examination  of  this  sort  is  called 
an  examination  pro  interesse  suo; 
and  an  order  for  such  examination 
may  be  obtained  by  a  party  inter- 
ested as  well  where  the  property 
consists  of  goods  and  chattels,  or 
personalty,  as  where  it  is  real  es- 
tate. And  the  mode  of  proceeding 
is  the  same  in  case  of  the  receiver. 
6  Ves.,  287;  9  id.,  336;  1  J.  &  W., 
178;  Daniell's  Pr.,  ch.  39,  §  4.  A 
party,  therefore,  holding  a  judg- 
ment which  is  a  prior  lien  upon  the 
property,  the  same  as  a  mortgagee, 
if  desirous  of  enforcing  it  against 
the  estate  after  it  has  been  taken 
into  the  care  and  custody  of  the 
court  to  abide  the  final  determina- 
tion  of  the  litigation,   and   pending 


CHAP,  XII.] 


CREDITORS. 


611 


§  423.  Priority  as  between  purchasers  of  real  estate  at 
receiver's  sale  and  at  sheriff's  sale.  When  a  debtor  makes 
an  assig-nment  of  all  his  property,  real  and  personal,  for  the 
benefit  of  his  creditors,  and  upon  a  judgment  subsequently 
obtained  against  him  and  a  creditor's  bill  filed  thereon,  the  as- 
signment is  set  aside  as  fraudulent  and  void,  and  the  debtor 
and  his  assignees  are  directed  to  assign  and  deliver  all  the 
property  to  the  receiver  appointed  under  the  creditor's  bill,  up- 
on compliance  with  such  order  the  title  to  the  realty  becomes 
vested  in  the  receiver.  A  judgment,  therefore,  obtained 
against  the  debtor,  after  the  assignment  from  him  to  the  re- 


that  litigation,  must  first  obtain 
leave  of  the  court  for  this  purpose. 
The  court  will  direct  a  master  to 
inquire  into  the  circumstances, 
whether  it  is  an  existing  unsatisfied 
demand,  or  as  to  the  priority  of  the 
lien,  etc.,  and  take  care  that  the 
fund  be  applied  accordingly.  .  .  . 
It  has  been  argued  that  a  sale  of 
the  premises  on  execution  and  pur- 
chase, occasioned  no  interference 
with  the  possession  of  the  receiver, 
and  hence  no  contempt  of  the  au- 
thority of  the  court,  and  that  the 
sale,  therefore,  in  such  a  case, 
should  be  upheld.  But,  conceding 
the  proceedings  did  not' disturb  the 
possession  of  the  receiver,  the  ar- 
gument does  not  meet  the  objection. 
The  property  is  a  fund  in  court,  to 
abide  the  event  of  the  litigation,  and 
to  be  applied  to,  the  payment  of  t!ie 
judgment  creditor,  who  has  filed  his 
bill  to  remove  impediments  in  tlie 
way  of  his  execution.  If  he  has 
succeeded  in  establishing  his  right 
to  the  application  of  any  portion  of 
the  fund,  it  is  the  duty  of  the  court 
to  see  that  such  application  is  made. 
And  in  order  to  effect  this,  the 
court  must  administer  it  independ- 
ently of  any  rights  acquired  by  third 


persons,  pending  the  litigation. 
Otherwise,  the  whole  fund  may 
have  passed  out  of  its  hands  be- 
fore the  final  decree  and  the  litiga- 
tion become  fruitless.  It  is  true, 
in  administering  the  fund,  the  court 
will  take  care  that  the  rights  of 
prior  liens  or  incumbrances  shall 
not  be  destroyed ;  and  will  adopt 
the  proper  measures,  by  reference 
to  the  master  or  otherwise,  to  as- 
certain them,  and  bring  them  before 
it.  Unless  the  court  be  permitted 
to  retain  the  possession  of  the  fund, 
thus  to  administer  it,  how  can  it 
ascertain  the  interest  in  the  same 
to  which  the  prosecuting  judgment 
creditor  is  entitled,  and  apply  it 
upon  his  demand?  .  .  .  As  we 
have  already  said,  it  is  sufficient  for 
the  disposition  of  this  case,  to  hold, 
that  while  the  estate  is  in  the  cus- 
tody of  the  court,  as  a  fund  to  abide 
the  result  of  a  suit  pending,  no  sale 
of  the  property  can  take  place, 
either  on  execution  or  otherwise, 
without  the  leave  of  the  court  for 
that  purpose.  And  upon  this 
ground,  we  hold  that  the  sale  by 
the  marshal  on  the  two  judgments 
was  illegal  and  void,  and  passed  no 
title  to  the  purchaser." 


612  RECEIVERS.  [chap.  XII, 

ceiver,  does  not  become  a  lien  upon  the  land.  And  in  a  con- 
test between  purchasers  at  a  sheriff's  sale  under  such  subse- 
quently acquired  judgment,  and  purchasers  at  a  sale  of  the 
same  property  by  the  receiver,  the  latter  will  be  held  to  have  the 
title,  since  the  lien  of  the  judgment  never  having  attached  up- 
on the  property,  its  sale  under  execution  could  confer  no  title 
upon  the  purchaser.^2 

§  424.  The  same;  receiver  acquires  real  property  sub- 
ject to  judgment  liens.  The  rule  is  otherwise,  however, 
when  the  purchaser  at  the  sheriff's  sale  purchases  under  a  judg- 
ment recovered  against  the  debtor  prior  to  his  assignment  of 
his  property  to  the  receiver,  even  though  such  judgment  be  of 
a  later  date  than  that  on  which  the  creditor's  bill  was  filed  and 
the  receiver  appointed.  And  in  such  a  case,  as  between  the 
purchaser  at  the  sheriff's  sale,  and  a  purchaser  under  the  re- 
ceiver, the  former  will  acquire  the  title.  The  reason  for  the 
distinction  is  found  in  the  fact  that  the  purchaser  at  the  re- 
ceiver's sale  derives  his  title,  not  under  the  judgment  on  which 
the  receiver  was  appointed,  but  from  the  debtor's  own  convey- 
ance of  his  property  to  the  receiver  and  the  subsequent  sale  by 
that  officer.  And  since  the  debtor  can  only  convey  his  proper- 
ty to  the  receiver  subject  to  the  lien  of  existing  judgments,  a 
sale  under  an  existing  judgment  confers  a  better  title  than  can 
be  derived  through  the  debtor  and  the  receiver.  The  conclu- 
sion, therefore,  to  be  drawn  from  the  cases,  would  seem  to  be 
that  a  receiver  can  not  acquire  title  to  real  property  of  the 
debtor  free  from  the  liens  of  other  judgment  creditors,  when 
such  liens  had  attached  before  the  assignment  of  his  real  es- 
tate by  the  debtor  to  his  receiver.^^ 

§  425.  Discharge  in  bankruptcy,  when  no  defense  to 
creditors'  bill  seeking  receiver.  It  would  seem  that  a  dis- 
charge of  the  debtor  in  bankruptcy  is  not  a  sufficient  defense 
to  a  creditor's  bill  seeking  a  receiver  for  the  enforcement  of  a 

92  Chautauque    County    Bank    v.  93  Chautauque    County    Bank    v. 

White,  6  N.  Y.,  236,  reversing  S.  C,       Risley,    19   N.   Y.,    369.      See,    also, 
6  Barb.,  589.  Shand  v.  Hanley,  71  N.  Y.,  319. 


CHAP.  XII.]  CREDITORS.  613 

judgment  acquired  after  the  discharge  was  granted,  when  the 
defendant  appeared  and  contested  the  action  in  which  the 
judgment  was  obtained  and  did  not  plead  his  discharge  in  bar, 
and  when  no  apphcation  has  been  made  by  the  debtor  to  have 
the  execution  set  aside  because  issued  upon  a  judgment  re- 
covered subsequent  to  his  discharge.  Under  such  circum- 
stances, the  debtor  having  neglected  to  avail  himself  of  his 
opportunity  to  take  advantage  of  the  discharge  at  the  proper 
time,  he  will  not  be  allowed  to  urge  it  against  the  appointment 
of  a  receiver  upon  the  judgment  remaining  in  full  force.^^ 

§  426.  Receiver  under  English  bankrupt  act  of  1861. 
Under  the  English  bankrupt  act  of  1861,  when  an  insolvent 
debtor  has  executed  a  deed  of  inspectorship  for  the  benefit 
of  his  creditors,  covenanting  to  deal  with  his  property  accord- 
ing to  the  directions  of  the  inspectors,  upon  a  bill  filed  by 
them  alleging  that  he  is  violating  such  covenants  and  hinder- 
ing the  settlement  of  his  affairs  with  his  creditors,  and  that 
he  is  receiving  and  applying  funds  to  his  own  use,  a  receiver 
will  be  appointed  on  the  ground  of  preventing  irreparable  mis- 
chief to  the  creditors.  And  under  such  circumstances,  the  court 
may  properly  interfere  by  a  receiver,  even  though  the  property 
may  ultimately  have  to  be  distributed  in  bankruptcy,  and  al- 
though the  bankrupt  court  might  possibly  afford  the  same  re- 
lief.95 

§  427.  Receiver  refused  on  creditors'  bill  when  his  ap- 
pointment would  interfere  with  administration  of  estate 
of  deceased.  Equity  will  not  lend  its  aid  by  a  receiver 
when  the  granting  of  the  relief  would  have  the  effect  of  inter- 
fering with  the  administration  of  the  assets  of  a  deceased  debt- 
or, against  whom   judgment  was  obtained   in   his  life-time. 

9'*  Steward  v.  Green,  11  Paige,  selected,  to  appoint  a  receiver  for 
535.  the  temporary  custody  of  the  hank- 
y's Riches  v.  Owen,  L.  R.,  3  Ch.  rupt's  estate,  and  as  to  the  rights  of 
App.,  820.  As  to  the  power  of  a  action  of  such  a  receiver,  see  Lan- 
court  of  bankruptcy,  after  an  adju-  sing  v.  Manton,  14  Bank.  Reg.,  127. 
dication   and   before   an   assignee   is 


614  RECEIVERS.  [chap.  XII. 

Thus,  in  the  case  of  a  judgment  obtained  and  creditor's  bill 
filed  thereon  during  the  debtor's  life-time,  and  after  his  death 
the  creditor's  suit  is  revived  against  his  administrator,  the 
court  will  not  grant  a  receiver  of  the  effects  of  the  deceased 
upon  the  application  of  plaintiff  in  the  creditor's  suit,  since  the 
property  is  to  be  disposed  of  in  due  course  of  administration 
according  to  law,  and  any  priority  which  plaintiff  may  have 
gained  by  filing  his  bill  dies  with  the  death  of  defendant.^^ 

§  428.  Relief  granted  against  judgment  debtor  doing 
business  in  name  of  wife;  error  to  pay  creditors  before 
priority  determined.  When  a  judgment  debtor  is  conduct- 
ing a  business  in  the  name  of  his  wife,  and  ostensibly  as  her 
agent,  in  w^hich  he  is  aided  by  his  sons  who  are  minors,  the 
business  being  wholly  conducted  and  managed  by  the  debtor 
and  his  sons,  his  interest  is  regarded  as  sufficient  to  warrant 
a  court  of  equity  in  appointing  a  receiver  to  collect  and  preserve 
the  assets,  upon  a  bill  by  a  judgment  creditor  showing  that 
defendants  are  winding  up  the  business,  selling  the  property 
and  collecting  the  credits.  But  it  is  error,  in  such  a  case,  to 
direct  the  receiver  to  pay  the  creditors  of  defendants  out  of 
collections  and  sales  made  by  him,  before  it  is  finally  deter- 
mined whether  they  are  entitled  to  priority  of  payment  out  of 
the  funds ;  since,  even  if  they  are  entitled  to  priority,  it  is  pre- 
mature to  direct  the  payment  before  their  claims  have  been  as- 
certained and  allowed  by  the  court.  And  before  such  direction 
is  given,  an  account  should  be  taken  and  an  opportunity  afford- 
ed to  prove  the  claims  of  creditors  upon  the  one  hand,  and  to 
contest  them  upon  the  other.^"^ 

96  Sylvester  v.  Reed,  3  Edw.  Ch.,  possession  to   the   executor  or   ad- 

296;   Mathews  v.   Neilson,  id.,  346.  ministrator,    but    would    apply    the 

But  in  the  latter  case,  it  is  said  that  fund  in  payment  of  the  judgment, 

if  a  receiver  had  already  been  ap-  due  regard  being  had,  however,  to 

pointed  and  had  obtained  possession  the  statutory  rights  of  other  crcdit- 

of  property  or  money  of  the  debtor  ors. 

before  his  death,  the  court  appoint-  ^"^  Penn  v.  Whiteheads,  12  Grat., 

ing  him,  having  possession  through  74. 
its  officer,  would  not  part  with  that 


CHAP.   XII.]  CREDITORS.  615 

§  429.  Discretion  of  court  as  to  amount  of  defendant's 
property  over  which  receiver  will  be  extended;  discretion 
as  to  sale ;  receiver  extended  for  other  creditor.  Courts  of 
equity  sometimes  exercise  a  discretionary  power  as  to  the 
amount  of  the  debtor's  property  over  which  a  receiver  shall 
be  appointed,  or  as  to  ordering  an  immediate  sale  for  the  pur- 
pose of  satisfying  the  demands  of  judgment  creditors.  And 
when  a  receiver  was  appointed  of  the  effects  of  a  defendant 
debtor  in  several  creditors'  suits,  the  entire  amount  of  the 
judgments  being  about  $1,000,  and  the  receiver  took  possession 
of  the  debtor's  property,  amounting  to  about  $60,000,  the  court 
was  of  opinion  that  it  would  be  proper  for  the  receiver  to  for- 
bear selling  at  public  auction,  and  he  was  directed  to  stay  such 
sale  until  further  order  of  the  court. ^^  And  when,  under  an 
act  of  parliament  authorizing  receivers  of  the  property  of  a 
judgment  debtor  in  aid  of  his  creditors  for  the  enforcement  of 
their  judgments,  the  court  is  vested  with  a  discretion  in  limit- 
ing the  quantity  of  the  estate  over  which  the  receiver  shall  be 
extended,  it  will  not  appoint  a  receiver,  for  the  enforcement  of 
a  small  demand,  over  the  whole  of  a  large  estate,  but  only  over 
a  portion  sufficient  to  satisfy  the  indebtedness  within  a  reason- 
able period.  And  under  such  a  statute,  when  a  receiver  has 
been  appointed  over  a  part  of  defendant's  estate,  he  may  be 
extended  over  the  remainder  in  behalf  of  another  creditor  who 
comes  in  for  protection,  thus  saving  the  expense  of  a  new  ap- 
pointment, and  such  extension  will  be  regarded  as,  in  effect, 
an  original  appointment.^^ 

§  430.  Creditor  not  entitled  to  priority  over  interest  due 
on  mortgages  prior  to  his  judgment.  As  regards  priority 
of  right  between  a  judgment  creditor  and  a  mortgagee  of  the 
debtor,  it  is  held,  where  the  judgment  is  only  a  lien  upon  the 

98Wardell     v.     Leavenworth,     3  right  to  the  rents  as  between  judg- 

Edw.  Ch.,  244.     But  see  Billing  v.  ment   creditors   and   mortgagees   in 

Foster,  21  S.  C,  334.  such  a  case,   Abbott  v.   Stratten,  3 

99  Corbet  v.  Mahon,  2  Jo.  &  Lat.,  Jo.  &  Lat.,  603. 
671.      And    see,    as   to   priority   and 


616  RECEIVERS.  [CIIAP.  XII. 

lands  of  defendant  to  the  extent  of  such  estate  or  interest  as 
defendant  had  in  them,  that  the  judgment  creditor  is  not  en- 
titled to  payment  out  of  funds  received  by  the  receiver,  in 
preference  to  interest  due  upon  mortgages  of  the  land  which 
are  prior  to  his  judgment.^ 

§  431.  Appointment  after  bill  dismissed  on  demurrer. 
When  a  fund  has  already  come  into  the  hands  of  the  court 
through  the  medium  of  a  receiver,  but  the  bill  on  which  the 
appointment  was  made  is  afterward  dismissed  upon  demurrer, 
a  judgment  creditor  is  entitled  to  a  receiver  upon  a  bill  show- 
ing a  judgment  and  levy  upon  the  property,  and  that  it  is 
the  only  property  of  defendant  within  the  jurisdiction  of  the 
court  out  of  which  his  judgment  can  be  satisfied,  and  that  there 
are  conflicting  claims  thereto  which  may  defeat  his  ultimate  re- 
covery unless  the  fund  is  placed  in  the  hands  of  a  receiver.^ 

§  432.  Nature  of  property  subject  to  receivership ;  rings 
and  jewelry ;  notes  and  interest  in  firm ;  benefice  of  clergy- 
man ;  seats  in  stock  and  produce  exchange.  As  regards  the 
nature  or  specific  kind  of  property  over  which  a  receiver  may 
be  appointed  for  the  protection  of  judgment  creditors,  it  would 
seem  from  the  general  scope  and  tenor  of  the  decisions,  that 
such  a  receivership  may  properly  extend  to  property  of  any 
nature,  real  or  personal,  in  which  the  debtor  has  such  an  inter- 
est as  may  avail  his  creditor.  In  New  Jersey,  it  has  been  held 
that  a  receiver  under  a  creditor's  bill  may  be  appointed  to  take 
charge  of  rings  and  jewelry  of  the  defendant,  since  these  are 
articles  usually  worn  upon  the  person,  and  it  might  be  out  of 
the  sheriff's  power  to  levy  on  and  take  possession  of  them.^ 
And  seats  in  a  stock  exchange  and  in  a  produce  exchange,  al- 
though their  ownership  is  coupled  with  conditions  and  restric- 
tions, are  property  which  may  be  subjected  to  the  claims  of 
creditors.  It  is,  therefore,  proper  upon  proceedings  supple- 
mentary to  execution  to  appoint  a  receiver  over  such  seats  be- 

1  Holland  v.  Cork  &  Kinsale  R.  3  Frazier  v.  Barnum,  4  C.  E. 
Co.,  Ir.  Rep.,  2  Eq.,  417.                           Green,  316. 

2  Field    V.  Jones,  11  Ga.,  418. 


CHAP.  XII.]  CREDITORS.  617 

longing  to  the  judgment  debtor,  and  to  direct  the  debtor  to  as- 
sign them  to  the  receiver  and  to  order  their  sale  by  him  in  sat- 
isfaction of  the  judgment.^  And  in  New  York,  on  proceed- 
ings supplementary  to  execution  under  the  code  of  procedure, 
when  the  debtor  upon  examination  disclosed  certain  property 
consisting  of  notes  in  an  insolvent  firm,  and  an  interest  in  an 
existing  firm  of  which  he  was  a  member,  the  court  regarded 
it  as  an  eminently  proper  case  for  a  receiver  to  take  charge  of 
the  debtor's  effects  and  to  collect  what  was  due  to  him.^  In 
England,  a  judgment  creditor  of  a  beneficed  clergyman,  whose 
judgment  is,  under  acts  of  parliament,  a  lien  upon  the  benefice 
of  living  of  the  clergyman,  is  entitled  to  the  aid  of  equity  by 
a  receiver  to  collect  the  rents  and  emoluments  pertaining  to 
such  living.^ 

§  433.  Relief  refused  where  answer  alleges  nothing  due 
to  plaintiff;  delay  to  determine  regularity  of  proceedings. 
A  receiver  will  not  be  appointed  of  the  effects  of  a  defendant, 
upon  a  bill  filed  by  one  claiming  to  be  a  creditor,  when  the 
answer  positively  alleges  that  there  is  nothing  due  from  de- 
fendant to  plaintiff,  and  when  no  other  creditors  appear  in 
support  of  the  application."^  And  when  the  court  has  reason- 
able ground  to  suspect  irregularities  in  the  judgment  or  execu- 
tion on  which  the  creditor's  bill  is  founded,  it  may  delay  the 
application  for  a  receiver  for  a  sufficient  time  to  enable  the  ir- 
regularity to  be  determined  in  the  court  where  the  judgment 
was  rendered,  with  leave  to  renew  the  application  at  a  future 
time.8  So  the  relief  will  be  denied  when  the  bill  contains  no 
distinct  charges  of  fraud,  and  when  it  does  not  appear  clearly 
and  distinctly  that  there  is  any  property  or  thing  in  action  to 
be  preserved  for  the  benefit  of  the  judgment  creditor.^  But 
when  the  bill  charges  that  the  judgment  debtor  has  choses  in 

4  Habenicht  v.  Lissak,  78  Cal.,  '^  Fogarty  v.  Burke,  1  Con.  & 
351,  20  Pac,  874.  Law,  565. 

5  Webb  V.  Overmann,  6  Ab.  Pr.,  8  Bank  of  Wooster  v.  Spencer, 
92.  Clarke  Ch.,  386. 

6  Hawkins  v.  Gathercole,  1  Sim.,  ^  First  National  Bank  v.  Gage,  79 
N.  S.,  63.  Ill-,    207.       See,     contra,    Gage    v. 


618  RECEIVERS.  [chap.  XII. 

action  and  property  which  should  be  subjected  to  the  payment 
of  his  indebtedness,  and  it  is  taken  as  confessed  against  the 
debtor,  it  is  not  error  to  appoint  a  receiver. ^^ 

§  434.  Waiver  of  answer  under  oath  no  ground  of  ob- 
jection. The  fact  that  plaintiff  in  a  creditor's  bill,  seeking 
the  appointment  of  a  receiver,  sees  fit  to  waive  the  answer  of 
defendant  under  oath,  affords  no  sufficient  objection  to  grant- 
ing a  receiver  in  the  action,  and  to  making  an  order  of  refer- 
ence for  the  examination  of  defendant  on  oath  before  a  master 
in  chancery,  with  respect  to  the  property  which  he  is  required 
to  assign  to  the  receiver. ii 

§  435.  When  defendant  directed  to  pay  fund  into  court. 
When  a  defendant  in  a  creditor's  bill,  filed  by  a  receiver  of  the 
estate  of  a  deceased  person,  admits  by  his  answer  a  balance  of 
money  in  his  hands  belonging  to  the  estate  of  the  deceased,  he 
should  be  directed  to  pay  the  fund  into  court  without  waiting 
for  a  final  decree.  And  such  fund  may  either  be  kept  in  the 
custody  of  the  court,  or  invested  under  its  special  direction,  as 
the  court  may  see  fit.^^ 

§  436.  Courts  averse  to  interfering  on  ex  parte  applica- 
tion. It  is  to  be  observed  that  courts  of  equity  are  al- 
ways averse  to  appointing  receivers  upon  an  ex  parte  applica- 
tion, and  without  due  notice  to  defendants  whose  rights  are  to 
be  affected.  And  a  receiver  will  not  be  appointed  ex  parte 
upon  a  creditor's  bill,  when  it  is  not  shown  that  defendant  has 
any  property  of  a  perishable  nature,  or  choses  in  action  which 
are  in  danger  of  being  lost  unless  immediately  collected;  or 
that  any  other  special  circumstances  exist,  which  render  it 
necessary  to  put  a  receiver  in  immediate  possession  of  the  debt- 
or's property.l^  « 

Smith,  79  111..  219.  where  it  is  held  10  Runals  v.  Harding,  83  111.,  75. 

that  the  appointment  of  a  receiver  H  Root  v.    Safford.  2  Barb.   Ch., 

upon  such  a  bill  is  almost  a  matter  33. 

of    course,    as     under    the     former  12  Rutherford    v.    Jones,    26    Ga., 

chancery  practice  in  New  York  un-  150. 

der    similar    legislation    concerning  i^  Sandford  v.   Sinclair,  8   Paige, 

creditors'  bills.  373,  affirming  S.  C,  3  Edw.  Ch.,  393. 


CHAP.  XII.]  CREDITORS.  619 

§  437.  Prior  creditors  protected,  notwithstanding  dis- 
missal of  bill.  When  there  are  prior  creditors,  parties  to 
the  cause,  having  claims  upon  an  estate  which  is  placed  in  the 
hands  of  a  receiver,  although  the  plaintiff  on  whose  applica- 
tion the  receiver  is  appointed  subsequently  dismisses  his  bill  and 
consents  to  the  receiver's  discharge,  the  court  will  yet  protect 
the  rights  of  such  prior  creditors  by  continuing  the  receiver; 
and  it  may  require  them  to  file  a  bill  forthwith,  as  a  condition 
of  thus  affording  them  protection.!^ 

§  438.  Receiver  in  divorce  proceedings  to  enforce  de- 
cree for  alimony.  Upon  supplementary  proceedings  under 
the  code  of  procedure  in  Wisconsin,  to  enforce  a  judgment  or 
decree  for  alimony  rendered  in  an  action  for  a  divorce,  the 
court  may  appoint  a  receiver  to  take  possession  of  the  effects 
of  defendant  in  the  divorce  proceeding;  and  the  sheriff's  re- 
turn of  nulla  bona  upon  the  execution  for  alimony,  if  made  and 
signed  before  the  supplementary  proceedings  are  instituted, 
is  sufficient  foundation  therefor,  although  the  execution  is  not 
filed  with  the  clerk  until  after  such  proceedings  are  begun. 
And  the  receiver  thus  appointed  may  maintain  an  action  to  set 
aside  a  fraudulent  conveyance  of  his  real  estate,  made  by  the 
defendant  to  defeat  the  decree  for  alimony.^^  And  under  the 
provisions  of  the  code  of  California,  the  court  may  appoint  a 
receiver  over  the  property  of  the  defendant  either  for  the  pur- 
pose of  enforcing  payment  of  alimony  and  expense  money  pre- 
viously ordered  to  be  paid,  or  for  the  purpose  of  enforcing  a 
previous  order  requiring  the  furnishing  of  security  for  such 
payment,  or  for  the  purpose  merely  of  providing  such  se- 
curity. ^^ 

§  439.  Relief  granted  when  only  security  for  judgment 
is  a  life  estate.     A  receiver  has  been  allowed  in  the  Irish 

14  Murrough  v.  French,  2  Mol.,  perior  Court  111  Cal.,  488,  44  Pac, 
497.  177;    Huellmantel    v.    Huellmantel, 

15  Barker  7'.  Dayton,  28  Wis.,  367.  124  Cal.,  583,  57  Pac,  582;  Mc- 
See  Goff  v.  Goff,  54  West  Va.,  364,  Aneny  v.  Superior  Court,  ISO  Cal., 
<^  S.  E..  177.  6,  87  Pac,  1020. 

'"''  Pc'.nlnma  Savings  Bank  v.  Su- 


620  RECEIVERS.  [chap.  XII. 

Court  of  Chancery,  in  aid  of  a  judgment  creditor  who  had 
obtained  a  judgment  in  another  court,  the  security  for  which 
was  only  a  hfe  estate  which  might  lapse  at  any  moment,  there 
being  also  large  prior  incumbrances,  and  the  defendant  hav- 
ing sold  his  stock  and  furniture  and  gone  abroad  to  avoid 
payment  of  the  judgment.!'^  /^j-j^  ^  judgment  creditor  may 
have  a  receiver  over  the  share  of  personal  estate  to  which 
the  debtor  is  entitled  as  one  of  the  next-of-kin  of  a  deceased 
intestate,  no  administration  of  the  estate  having  been  had.i^ 
§  439a.  Supreme  Court  of  Judicature  Act  in  England. 
In  England,  notwithstanding  the  Supreme  Court  of  Judicature 
Act  of  1873,  which  authorizes  the  appointment  of  a  receiver 
"in  all  cases  in  which  it  shall  appear  to  the  court  to  be  just  or 
convenient  that  such  order  should  be  made,"  a  receiver  will 
not  be  allowed  over  personal  property,  demands  and  choses 
in  action  of  a  judgment  debtor,  when  no  obstacles  or  impedi- 
ments exist  to  the  enforcement  of  the  judgment  in  the  usual 
course  by  levying  an  execution  upon  such  property  and  by  at- 
taching the  debts  due  to  the  debtor.^^  Nor,  under  this  act, 
will  a  receiver  be  allowed  over  future  earnings  or  salary  of  the 
debtor,  which  have  not  been  by  him  assigned  or  charged  with 
payment  of  the  judgment  debt.20  And  it  is  held  that  to  jus- 
tify the  relief  under  the  act,  in  aid  of  a  judgment  creditor,  the 
circumstances  must  be  such  as  would  have  warranted  the  ap- 
pointment of  a  receiver  by  the  Court  of  Chancery  before  the 
passage  of  the  act.^i  And  when  a  judgment  debtor  dies  pend- 
ing proceedings  against  him  by  a  judgment  creditor  for  a  re- 
ceiver, the  court  has  no  power  to  grant  the  relief,  the  action 
not  having  been  revived  against  the  representatives  of  the  es- 
tate of  the  deceased  debtor.22    But  where  it  is  sought  to  reach 

17  AlcCraith  v.  Quin,  Ir.  Rep.,  7      ris  v.  Beauchamp  Brothers,   (1894) 
Eq.,  324.  1  Q.  B.,  801. 

18, T  1,  Ai,         oo  T    T5    T  20  Holmcs  •y.  Millagc,  ( 1893)  1  Q. 

18  Mullane  v.  Ahern,  28  L.  R.,  Ir.  &  .  v         /      >* 

105  ^■' 

21  Harris  v.  Beauchamp  Brothers, 

19  Manchester  &  L.  D.  B.  Co.  v.       (1894)  1  Q.  B.,  801. 

Parkinson,  22  Q.  B.  D.,  173;  Har-  22 /„  re  Shephard,  43  Ch.  D.,  13L 


CHAP.  Xn.]  CREDITORS.  621 

by  garnishment  funds  belonging  to  non-resident  defendants, 
and  it  appears  probable  that  the  defendants  will  withdraw  the 
funds  thus  owing  them  beyond  the  jurisdiction  of  the  court, 
a  receiver  is  properly  appointed  under  the  provisions  of  the 
act.23 

§  439&.  No  preference  allowed  as  between  creditors  of 
the  same  class.  Where  a  court  of  equity  has  appointed  a 
receiver  over  the  estate  of  an  insolvent  debtor  and  the  receiver 
has  taken  possession  of  his  property,  no  creditor  will  be  al- 
lowed, by  obtaining  judgment  against  the  insolvent  after  the 
receiver  has  taken  possession,  to  obtain  a  preference  over  other 
creditors  of  the  same  class,  and  this  is  true  even  though  the  ac- 
tion in  which  the  judgment  was  recovered  was  instituted  be- 
fore the  receiver  actually  took  possession  of  the  property.24 

23  Goldschmidt  v.  Oberrheinische      343,  28  S.  E.,  860.     And  see,  post, 
Metallwerke,    (1906)    1   K.   B.,  373.      §  461. 

24  Lang  V.  Macon  C.  Co.,  101  Ga., 


622  RECEIVERS.  [chap.  XII. 


II.  Of  the  Receiver's  Title. 

§  440.    Appointment  of  receiver  does  not  divest  previously  acquired 
liens;  receiver  takes  no  better  title  than  that  of  debtor. 

441.  Receiver    acquires    no    title    to    property    of    debtor    which    is 

exempt  from  execution. 

442.  Exemption  extended  to  proceeds  of  insurance;  also  to  judg- 

ment for  damages  for  seizing  exempted  property. 

443.  Assignment  by  debtor  to  receiver  not  necessary  as  to  personal 

property  and  choses  in  action;  receiver  may  recover  prop- 
erty without  assignment;  levy  by  sheriff  a  contempt  of  court. 

444.  Assignment  passes  only  property  in  which  debtor  has  bene- 

ficial interest;  need  not  except  property  held  in  trust  or 
previously  assigned;  should  except  exempted  property;  right 
of  action  for  tort  does  not  pass. 

445.  Irregularities   in  appointment  of  receiver  no  justification   for 

refusal  to  make  assignment  and  submit  to  examination. 

446.  Formal  assignment  necessary,  though  defendants  swear  they 

have  no  property;  assignment  resembles  mortgage;  no  re- 
assignment necessary. 

447.  No    assignment    to    receiver    necessary    under    New    York    code; 

receiver  acquires  only  right  of  action  as  to  property  previ- 
ously transferred  in  fraud  of  creditors. 

448.  Receiver's  title  prior  to  that  of  judgment  creditor  subsequent- 

ly levying  execution;  title  not  defeated  by  delay  in  taking 
possession;  preference  over  assignment;  date  of  receiver's 
title. 

449.  Title  to  choses  in  action  as  between  receiver  and  purchaser; 

title    acquired    by    receiver    under    code    of    procedure;    lis 
pendens. 
•J-50.     Receiver   takes   no   title   to   income   of   inalienable   trust   fund 
accruing  after  appointment. 

451.  Receiver  takes  estate  by  curtesy  in  New  York,  and  may  re- 

cover rents. 

452.  Efifect  of  debtor's  death  before  appointment  actually  made. 

§  440.  Appointment  of  receiver  does  not  divest  pre- 
viously acquired  liens;  receiver  takes  no  better  title  than 
that  of  debtor.  In  considering  the  nature  of  the  title  to 
the  debtor's  property  and  estate,  which  is  acquired  by  a  re- 
ceiver appointed  in  behalf  of  judgment  creditors,  the  first 
principle  to  be  observed  is  that  the  appointment  of  the  receiver 
does  not  operate  to  divest  liens  previously  acquired  on  the 
property  of  the  debtor  by  other  creditors  acting  in  good  faith. 


CHAP.  XII.]  CREDITORS.  623 

The  appointment  is  regarded  as  being  made  subject  to  such 
rights  and  liens  as  may  have  been  previously  acquired  by 
other  judgment  creditors,  who  will  not  be  divested  of  their 
liens  by  virtue  of  the  subsequent  receivership.25  For  example, 
a  judgment  creditor  is  entitled  to  the  enforcement  of  his  lien 
against  the  personal  property  of  his  debtor,  and  to  the  fruits 
of  a  levy  made  thereon,  notwithstanding  the  subsequent  ap- 
pointment of  a  receiver  of  the  debtor's  effects  in  a  creditor's 
suit;  since,  until  such  appointment  is  actually  made,  there  is 
no  such  lien  by  virtue  of  the  creditor's  suit  upon  the  personal 
property  of  the  debtor,  as  to  prevent  a  levy  and  sale  under  exe- 
cution.26  So  when  a  sheriff  has  made  a  valid  levy  upon  the 
debtor's  property  under  a  judgment  against  him,  and  a  re- 
ceiver is  subsequently  appointed  over  the  debtor's  estate,  the 
receiver  takes  title  subject  to  the  rights  acquired  under  the 
levy.  And  in  such  a  case,  when  the  receiver  agrees  with  the 
sheriff,  that  if  the  latter  will  desist  from  sale  under  his  levy 
and  will  permit  the  receiver  to  sell,  he  will  pay  the  plaintiff  in 
execution,  or  the  sheriff  for  his  use,  the  amount  of  such  execu- 
tion, if  it  shall  be  determined  that  plaintiff's  levy  was  a  prior 
lien,  such  agreement  may  be  enforced  by  action  against  the  re- 
ceiver.27  So  creditors,  who  have  by  their  judgments  acquired 
a  lien  upon  their  debtor's  real  estate  prior  to  the  appointment 
of  a  receiver  over  his  estate,  may  maintain  an  action  to  set 
aside  a  fraudulent  mortgage  executed  by  the  debtor;  since  the 
receiver's  appointment,  being  subsequent  to  the  lien  of  their 
judgments,  does  not  divest  them  of  their  right  of  action. 28 
And,  in  general,  it  may  be  said  that  a  receiver  over  a  debtor's 
property  occupies  the  same  relation  toward  the  proceeds  or 

25  Becker  v.  Torrance,  31  N.  Y.,  26  Davenport  v.  Kelly,  42  N.  Y., 

631 ;  Davenport  v.  Kelly,  42  N.  Y.,  193.    And  see  Van  Alstyne  v.  Cook, 

193 ;  Gere  v.  Dibble,  17  How.   Pr.,  25  N.  Y.,  489. 

31 ;   Cohen  v.   Gold   Creek   M.  Co.,  27  Becker  v.  Torrance,  31  N.  Y., 

95  Fed.,  580.    And  see  Van  .Alstyne  631. 

V.  Cook,  25  N.  Y.,  489.     See,  ante,  -8  Gere  v.  Dibble,   17  How.   Pr., 

§  138.  31. 


624  RECEIVERS.  [chap.  XII. 

fund  derived  from  the  property  as  the  debtor  himself.^^  If, 
at  the  time  of  the  receiver's  appointment,  the  property  is  in 
the  possession  of  a  sheriff,  under  writs  of  attachment  levied 
in  behalf  of  attaching  creditors,  the  receiver's  title  and  right 
to  possession  are  subordinate  to  those  of  such  attaching  cred- 
itors, who  may,  when  necessary,  be  protected  by  a  writ  of  pro- 
hibition to  prevent  the  court  from  interfering  with  their  pos- 
session.2^  And  a  receiver  can  not  acquire  a  better  or  greater 
title  than  that  of  the  debtor,^!^  nor  can  he  assert  rights  with 
respect  to  the  receivership  property  which  the  debtor  himself 
would  have  been  estopped  from  asserting.^^  Thus,  where  a 
debtor  is  estopped  to  assert  that  a  transfer  of  property  is  void 
as  being  in  fraud  of  creditors,  the  receiver  of  the  debtor  will 
likewise  be  estopped. ^^  So  where  a  corporation  is  precliided 
by  the  conduct  of  its  officers  from  maintaining  an  action 
against  a  subscriber  for  the  amount  of  his  stock  subscription, 
the  receiver  of  the  corporation  will  be  unable  to  maintain  the 
action. 24 

§  441.  Receiver  acquires  no  title  to  property  of  debtor 
which  is  exempt  from  execution.  As  regards  property  of 
the  debtor  which  is  exempt  by  law  from  levy  and  sale  under 
execution,  the  doctrine  established  by  the  courts  of  New  York 
is  that  a  receiver  appointed  on  proceedings  supplementary  to 
execution  under  the  code,  in  the  nature  of  an  ordinary  cred- 
itor's bill  under  the  former  chancery  system,  acquires  no  title 

29  Crine  v.  Davis,  68  Ga.,  138.  N.   E.,   1076 ;   Foster  v.   Rincker,  4 

30  State  V.  Superior  Court,  7  Wyo.,  484,  35  Pac,  470;  First  Na- 
Wash.,  77,  34  Pac,  430;  State  v.  tional  Bank  v.  Cook,  12  Wyo.,  492, 
Superior    Court,   8  Wash.,   210,   35  76  Pac,  674,  78  Pac,  1083. 

Pac,  1087,  distinguished  in  State  v.  32  Gottlieb  v.  Miller,  154  111.,  44, 

Superior    Court,    11    Wash.,   63,    39  39  N.  E.,  992;  Great  Western  Tele- 

Pac,  244.     And  see  Cherry  v.  W.  graph   Co.  v.   Loewenthal,    154  111., 

W.  I.  E.  Co.,  11  Wash.,  586,  40  Pac,  261,  40  N.  E.,  318. 
136.  33  Gottlieb  v.  Miller,  154  111.,  44, 

31  Gottlieb  V.  Miller,  154  111.,  44,  39  N.  E.,  992. 

39  N.  E.,  992;  Great  Western  Tele-  34  Great  Western  Telegraph   Co. 

graph   Co.  v.   Loewenthal,   154  111.,  v.  Loewenthal,  154  111.,  261,  40  N. 

261,  40  N.  E.,  318;  Chicago  Title  &  E.,  318. 
Trust  Co.  V.  Smith,  158  111.,  417,  41 


CHAP.  XII.]  CREDITORS.  625 

by  virtue  of  his  appointment  to  such  property."^  And  the  rule 
holds  good,  even  though  the  order  of  appointment  is  in  gen- 
eral terms,  without  excepting  exempted  property;  since  such 
order,  however  broad  in  its  language,  must  be  understood  as 
limited  in  its  operation,  by  the  statute  exempting  the  property 
from  execution,  and  the  law  attaches  to  the  order  and  becomes 
a  part  of  it.  A  judgment  debtor  may,  therefore,  maintain  an 
action  against  his  receiver,  for  property  taken  by  the  latter 
which  is  exempt  from  sale  under  execution. ^6 

§  442.  Exemption  extended  to  proceeds  of  insurance; 
also  to  judgment  for  damages  for  seizing  exempted  prop- 
erty. The  doctrine  as  stated  in  the  preceding  section  is 
not  limited  in  its  application  to  the  property  itself  which  is  ex- 
empted by  law  from  sale  under  judicial  process,  but  extends 
also  to  the  proceeds  of  insurance  realized  upon  the  property 
when  destroyed  by  fire.^'^  And  when  property  of  the  debtor, 
which  is  exempt  by  law  from  sale  under  execution,  is  destroyed 
by  fire  subsequent  to  the  appointment  of  the  receiver,  the  right 
of  action  for  the  insurance  does  not  vest  in  the  receiver,  and  he 
has  no  interest  therein.^^  And  a  receiver  of  a  judgment  debtor 
will  not  be  allowed  an  order,"  directing  the  debtor  to  assign  to 
him  a  policy  of  insurance  upon  furniture  of  the  defendant, 
which  was  exempt  from  execution  and  which  has  been  des- 
troyed by  fire ;  since,  in  such  case,  the  debtor  has  not  voluntarily 
parted  with  or  waived  his  right  to  the  exempted  property. ^^ 
The  doctrine  is  also  extended  to  the  case  of  a  judgment  for 
damages,  recovered  by  the  debtor  against  a  creditor  who  had 
seized  and  sold  property  which  was  exempt  from  execution,  the 
judgment  being  regarded  as  representing  the  property,  for  the 
value  of  which  it  was  recovered.     A  receiver,  therefore,  who 

35Finnin    v.    Malloy,    2,Z    N.    Y.  524;   Sands  v.  Roberts,  8  Ab.   Pr., 

Supr.  Ct.  R.,  382;  Cooney  v.  Coon-  343. 

ey,  65  Barb.,  524.     See,  also,  Tillot-  "^^  Sands   v.   Roberts,   8   Ab.    Pr., 

son  V.  Wolcott,  48  N.  Y.,  188.  343. 

36  Finnin  v.  Malloy,  33  N.  Y.  3-.)  Cooney  v.  Cooney,  65  Barb., 
Supr.  Ct.  R.,  382.  524. 

37  Cooney    v.    Cooney,    65    Barb., 

Receiver?, — 40. 


626  RECEIVERS.  [chap.  XII. 

has  collected  such  a  judgment,  will  be  ordered  to  release  it  in 
favor  of  the  debtor.^^ 

§  443.  Assignment  by  debtor  to  receiver  not  necessary 
as  to  personal  property  and  choses  in  action;  receive--  may 
recover  property  without  assignment;  levy  by  sheriff  a 
contempt  of  court.  Under  the  former  chancery  practice 
in  New  York,  it  was  customary,  upon  the  appointment  of  a 
receiver  in  aid  of  a  creditor's  bill,  to  require  the  defendant 
to  execute  an  assignment  to  the  receiver  of  all  his  property  and 
effects,  and  a  similar  practice  has  been  followed  in  other  states 
retaining  the  chancery  system.  While  there  was  some  doubt, 
under  the  New  York  decisions,  as  to  whether  such  an  as- 
signment was  not  really  necessary  to  vest  in  the  receiver  the 
title  to  real  estate  of  the  debtor,^!  yet  as  regards  personal 
property,  choses  in  action,  and  equitable  interests  of  the  debtor, 
the  assignment  was  regarded  merely  as  a  matter  of  conve- 
nience, the  established  doctrine  being  that  as  to  all  such  proper- 
ty and  interests  the  title  passed  to  the  receiver  by  virtue  of  his 
appointment,  without  the  intervention  of  or  any  necessity  for 
a  formal  assignment  from  the  debtor.^^  Especially  was  this 
the  case  with  regard  to  equitable  interests  and  choses  in  ac- 
tion in  favor  of  the  debtor,  as  to  which  it  was  held 
that  an  assignment  could  transfer  no  additional  or  higher 
right  than  the  receiver  had  by  virtue  of  his  appointment.'*^ 
And  when  a  receiver  was  appointed  over  the  estate  of  three 
defendants  in  a  creditor's  bill,  only  two  of  whom  joined  in  an 
assignment  of  their  property  to  the  receiver,  he  was  held  to 
be  invested  with  the  title  to  the  personalty,  so  as  to  maintain  an 
action  of  trover  therefor.  Such  a  receiver  was  held  to  have  a 
clear  priority  over  purchasers  of  the  same  property,  under  exe- 

40  Tillotson  V.  Wolcott,  48  N.  Y.,  6   Barb.,   542.     See,   also,    Mann   v. 
188.  Pentz,  2  Sandf.   Ch.,  272.     Albany 

41  See  Wilson  v.  Wilson,  1  Barb.  City  Bank  v.  Schermerhorn,  Clarke 
Ch.,  594.  Ch.,  297. 

42  Storm    v.    Wacldell,    2    Sandf.  4.3  Iddings  v.  Bruen,  4  Sandf.  Ch., 
Ch.,     505;     Iddings     v.     Bruen,     4  252. 

Sandf.   Ch.,  252;   Wilson  v.   Allen, 


CHAP.  XII.]  CREDITORS.  627 

cution  on  a  judgment  recovered  subsequent  to  the  appointment 
of  the  receiver,  and  to  be  entitled  to  recover  the  property  from 
such  purchasers.^4  And  the  property  being  thus  under  the 
control  of  the  court,  through  its  officer  the  receiver,  the  court 
would  not  permit  judgment  creditors  to  levy  thereon  for  the 
satisfaction  of  their  judgments,  and  a  sheriff  making  such  a 
levy  was  held  in  contempt  of  court.'*^ 

§  444.  Assignment  passes  only  property  in  which  debtor 
has  beneficial  interest;  need  not  except  property  held  in 
trust  or  previously  assigned;  should  except  exempted 
property;  right  of  action  for  tort  does  not  pass.  As  re- 
gards the  property  which  passes  to  the  receiver  by  virtue  of  an 
assignment  from  the  debtor,  under  an  order  of  court  appoint- 
ing a  receiver  of  the  money,  property,  things  in  action  and  ef- 
fects of  the  defendant,  nothing  passes  under  the  general  words 
of  assignment,  except  property  or  things  in  action  in  which  the 
defendant  has  some  beneficial  interest  at  the  time  of  making 
such  assignment.  It  is  not  necessary,  therefore,  that  it  should 
contain  an  express  reservation  of  property  which  the  debtor 
holds  merely  in  the  character  of  trustee  for  others,  under  a 
valid  and  subsisting  trust,  and  in  which  he  has  no  beneficial 
interest.  Nor  is  it  necessary  to  expressly  except  from  the  op- 
eration of  the  assignment  property  which  the  debtor  had  before 
assigned  to  the  receiver,  who  had  been  appointed  in  a  previous 
creditor's  suit.  Such  an  assignment,  however,  should  contain 
an  exception  reserving  to  the  debtor  such  property  as  he  is 
entitled  to  hold  exempt  from  levy  and  sale  under  execution ; 
and  this  should  be  done,  even  though  the  order  appointing  the 
receiver  and  directing  the  debtor  to  assign  and  deliver  over 
his  property  is  expressed  in  general  terms,  without  excepting 
any  exempted  property.^^  But  a  mere  right  of  action  in  favor 
of  a  debtor  for  a  personal  tort,  since  it  can  not  be  reached  by 
plaintiff  in  a  creditor's  bill,  is  not  an  asset  which  will  pass  to 

44  Wilson  V.  Allen,  6  Barb.,  542.  40  Caggcr  v.  Howard,  1  Barb.  Ch., 

45  Albany    City    Rank    v.    Scber-       368. 
merhorn,  Clarke  Ch.,  297 


628  RECEIVERS.  [CIIAP.  XII. 

a  receiver  appointed  on  such  bill,  by  virtue  of  the  assignment 
made  by  the  debtor  to  the  receiver.'*'^ 

§  445.  Irregularities  in  appointment  of  receiver  no  jus- 
tification for  refusal  to  make  assignment  and  submit  to 
examination.  The  fact  that  there  were  irregularities  in 
the  appointment  of  a  receiver  upon  a  creditor's  bill  in  aid  of  a 
judgment  at  law,  affords  no  justification  upon  a  motion  for  an 
attachment  against  the  defendant,  for  not  appearing  before  a 
master  in  chancery  to  make  an  assignment  of  his  property  to 
the  receiver,  and  to  submit  to  an  examination.  The  proper 
course  for  a  defendant,  desiring  to  take  advantage  of  such 
irregularities,  is  to  move  to  set  aside  the  appointment,  and  for 
an  order  staying  the  proceedings  before  the  master  in  the  mean- 
time.^^  Nor  do  such  irregularities  afford  any  valid  objec- 
tion to  an  examination  of  the  debtor  touching  his  assets  as  re- 
quired by  the  order  appointing  the  receiver.'*^ 

§  446.  Formal  assignment  necessary,  though  defend- 
ants swear  they  have  no  property;  assignment  resembles 
mortgage;  no  re-assignment  necessary.  When  a  receiver 
is  appointed  upon  a  creditor's  bill,  and  defendants  are  ordered 
to  assign  to  him  all  their  property,  assets,  and  choses  in  ac- 
tion, they  will  be  conjpelled  to  make  a  formal  assignment  to  the 
receiver  to  enable  him  to  test  the  validity  of  any  disposition 
which  they  may  have  made  of  their  property,  and  to  bring  suits 
in  relation  thereto,  even  though  they  have  sworn  that  they  have 
no  property.^^  In  such  event,  however,  nothing  will  be  re- 
quired beyond  a  formal  assignment,  un4ess  it  is  made  to  ap- 
pear by  other  testimony  that  the  debtors  have  sworn  falsely 
as  to  their  property  and  effects.^^  And  it  has  been  held  that 
an  assignment  of  his  effects  by  a  judgment  debtor  to  a  receiver 
appointed  on  a  creditor's  bill,  partakes  of  the  nature  of  a  mort- 

47  Hudson  V.  Plets,  11  Paige,  180.  ^0  Chipman  v.  Sabbaton,  7  Paige, 

48  Howard     v.      Palmer,     Walk.      47. 

(Mich.),  391.  51  Chipman  v.  Sabbaton,  7  Paige, 

49  Thomas  v.   Gartner,  97  Mich.,      47. 
608,  57  N.  W.,  188. 


CHAP.  XII.]  CREDITORS.  629 

gage  for  the  payment  of  the  judgment  and  costs,  and  when 
this  purpose  is  attained  the  assignment  has  no  further  force, 
and  that  no  re-assignment  to  the  debtor  is  necessary.^^ 

§  447.  No  assignment  to  receiver  necessary  under  New 
York  code;  receiver  acquires  only  right  of  action  as  to 
property  previously  transferred  in  fraud  of  creditors.  Un- 
der the  New  York  code  of  procedure,  upon  the  appointment  of 
a  receiver  of  the  effects  of  a  judgment  debtor  upon  proceedings 
supplementary  to  execution,  no  assignment  is  necessary  to  in- 
vest the  receiver  with  the  title  to  the  debtor's  personal  proper- 
ty or  choses  in  action ;  since  such  title  vests  at  once  in  the  re- 
ceiver by  virtue  of  his  appointment,  and  no  subsequent  act  or 
assignment  by  the  debtor  to  a  third  party  can  divest  the  lien 
thus  acquired  in  the  creditor's  suit.^^  The  rule  prevails  also 
with  regard  to  real  estate  of  the  debtor,  although  the  contrary 
was  formerly  held,^^  and  it  is  now  the  recognized  rule  that  the 
receiver,  by  virtue  of  his  appointment,  becomes  vested  with 
all  the  title  to  the  debtor's  property,  both  real  and  personal, 
without  the  execution  of  any  assignment  from  the  debtor,  no 
distinction  being  made  between  realty  and  personalty.^^     The 

52  Anderson  v.  Treadwell,  Ed-  It  was,  therefore,  held  that  where 
mond's  Select  Cases,  201.  the  debtor  had  sold  and  conveyed 

53  Porter  v.  Williams,  5  How.  real  estate  to  a  purchaser  in  good 
Pr.,  441 ;  People  v.  Hulburt,  id.,  faith  and  for  value,  although  after 
446;  S.  C,  1  Code  R.,  N.  S.,  75.  the  receiver  was  appointed,  the 
And  See  Fessenden  v.  Woods,  3  debtor  not  having  made  an  assign- 
Bosw.,  550.  As  to  the  title  of  a  re-  ment  to  the  receiver,  the  latter 
ceiver  in  proceedings  supplementary  could  not  maintain  an  action  of 
to  execution  to  policies  of  insur-  ejectment  against  the  purchaser, 
ance  upon  the  life  of  the  judgment  And  to  the  same  effect  is  Scott  v. 
debtor,  see  Reynolds  v.  Aetna  Life  Elmore,  10  Hun,  68.  It  is  believed, 
Ins.  Co.,  160  N.  Y.,  635,  55  N.  E.,  however,  that  the  doctrine  of  these 
305.  cases     is     entirely     overthrown     by 

54  See  Moak  v.  Coats,  33  Barb.,  Porter  v.  Williams,  9  N.  Y.,  142. 
498,  where  it  was  held  that  the  title  55  Porter  v.  Williams,  9  N.  Y.. 
to  the  personalty  only  passed  to  the  142;  Wing  v.  Disse,  15  Hun,  190; 
receiver  by  virtue  of  his  appoint-  Manning  v.  Evans,  19  Hun,  500. 
ment,  and  that  the  title  to  the  realty  And  see  Fessenden  v.  Woods,  3 
did  not  vest  in  him  until  an  assign-  Bosw.,  550. 

ment  was  executed  by   the  debtor. 


630  RECEIVERS.  [chap.  XII. 

doctrine,  however,  would  seem  to  be  limited  to  property  actual- 
ly in  the  possession  of  the  debtor,  and  it  is  held  that  the  ap- 
pointment does  not  invest  the  receiver  with  title  to  property 
previously  transferred  or  assigned  by  the  debtor  in  fraud  of 
his  creditors.  As  to  such  property,  it  is  held,  he  can  acquire 
no  title  by  succession  to  the  rights  of  the  debtor,  since  the 
transfer  is  valid  as  to  him,  and  the  fraudulent  assignee  ac- 
quires a  good  title  to  the  property  as  against  the  debtor  and  all 
other  persons,  except  the  creditors  of  the  debtor.  As  to  such 
property,  therefore,  the  receiver's  only  right  is  a  right  of  ac- 
tion, as  trustee  for  the  creditors,  to  set  aside  the  fraudulent 
transfer  and  to  recover  the  property,  for  the  benefit  of  the 
judgment  creditors  at  whose  suit  he  was  appointed. ^^  And 
if,  in  such  case,  the  receiver  takes  no  steps  to  set  aside  such 
assignment  until  after  the  debtor  is  adjudicated  a  bankrupt 
and  an  assignee  of  his  estate  is  appointed,  the  receiver  can  not 
then  maintain  an  action  to  set  aside  the  assignment  and  to  re- 
cover the  assets.^"^ 

§  448.  Receiver's  title  prior  to  that  of  judgment  creditor 
subsequently  levying  execution;  title  not  defeated  by  de- 
lay in  taking  possession ;  preference  over  assignment ;  date 
of  receiver's  title.  Since  a  receiver,  in  proceedings  supple- 
mentary to  execution,  acquires  title  to  the  debtor's  property 
by  virtue  of  his  order  of  appointment,  which  order  divests 
all  the  title  and  interest  of  the  debtor  and  vests  it  in  the  re- 
ceiver, his  title  takes  precedence  over  that  of  a  judgment  cred- 
itor who  levies  an  execution  subsequent  to  the  receiver's  ap- 
pointment. The  receiver  may,  therefore,  maintain  an  action 
for  the  recovery  of  property  so  levied  upon  and  sold,  and  may 

^'6  Bostwick  V.   Menck,  40  N.  Y.,  N.  J.  Eq.,  291 ;  Bergen  v.  Littell,  41 

383;  Olney  v.  Tanner,  10  Fed.,  101,  N.  J.  Eq.,  18,  2  Atl.,  614.     But  see 

affirmed  on  appeal,  21  Blatchf.,  540.  Skinner  v.  Terhune,  45  N.  J.  Eq., 

And  a  receiver,  under  the  statutes  565,  19  Atl.,  Zll ;  Boid  v.  Dean,  48 

of  New  Jersey,  may  file  a  bill  in  his  N.  J.  Eq.,  193,  21  Atl.,  618. 

own  name  to  set  aside  a  fraudulent  57  Olney  v.  Tanner,  10  Fed.,  101, 

transfer  of  the  judgment  debtor's  affirmed  on  appeal,  21  Blatchf.,  540. 
propertj'.     Miller  v.   Mackenzie,  29 


CHAP.  XII.]  CREDITORS.  631 

recover  its  value  with  interest  from  the  date  of  sale.  Nor  is 
the  receiver's  title  to  the  property,  or  his  right  of  action  for 
its  recovery,  defeated  because  of  his  delay  in  taking  possession 
until  after  levy  of  the  execution,  when  no  fraud  or  collusion 
is  shown,  and  when  there  is  no  evidence  that  the  delay  of  the 
receiver  in  taking  possession  was  by  the  consent  or  direction 
of  the  creditors  at  whose  instance  he  was  appointed. ^^  So 
after  the  appointment  of  a  receiver  in  behalf  of  the  creditors 
of  an  insolvent  debtor,  such  debtor  can  not  make  a  valid  as- 
signment of  his  property  in  the  receiver's  possession  by  way  of 
preference  to  certain  creditors,  since,  the  property  or  fund 
being  in  the  possession  of  the  court  for  equitable  distribution, 
the  debtor  has  no  power  to  interfere  therewith. ^^  And  imder 
the  statutes  of  North  Carolina,  it  is  held  that  a  receiver  in  this 
class  of  cases  becomes  vested  with  the  title  of  the  judgment 
debtor  as  of  the  date  of  service  of  a  restraining  order  upon 
the  debtor,  or,  in  the  absence  of  such  order,  from  the  date  of 
filing  and  recording  the  order  appointing  a  receiver.^^ 

§  449.  Title  to  choses  in  action  as  between  receiver  and 
purchaser;  title  acquired  by  receiver  under  code  of  pro- 
cedure; lis  pendens.  As  regards  the  title  to  choses  in  action 
of  the  debtor,  as  between  the  receiver  and  an  assignee  or  pur- 
chaser from  the  debtor,  who  purchases  subsequent  to  the  filing 
of  the  creditor's  bill  and  with  notice  thereof,  it  was  held,  under 
the  former  chancery  practice  in  New  York,  that  the  title  ac- 
quired by  the  receiver  was  superior  to  that  of  the  purchaser,  and 
would  prevent  the  latter  from  maintaining  a  bill  in  equity  for 
the  enforcement  of  the  chose  in  action. ^i  Under  the  code  of 
procedure,  it  would  seem  that  a  receiver,  appointed  in  supple- 
mentary proceedings,  acquires  title  to  such  property  only  of 
the  debtor  as  belonged  to  him  at  the  time  the  proceedings  were 


SSFessenden  v.  Woods,  3  Bosw.,  60  Rose  v.  Baker,  99  N.  C,  323, 

550.  5  S.  E.,  919. 

•'>9  McGowan  v.   Myers,  66  Iowa,  ^i  Weed  v.  Smull,  3  Sandf.  Ch., 

99,  23  N.  W.,  282.  273. 


632  RECEIVERS.  [chap.  XII. 

instituted.<52  And  it  is  held  in  Rhode  Island,  that  the  filing  of 
a  petition  in  eqnity  for  the  appointment  of  a  receiver,  under  the 
insolvent  law  of  the  state,  operates  as  lis  pendens  as  to  all  prop- 
erty and  assets  of  the  defendant  debtor.  When,  therefore,  af- 
ter the  filing  and  during  the  pendency  of  such  a  petition  against 
a  copartnership,  one  member  of  the  firm  assigns  his  individual 
property  to  a  third  person,  the  court  may  require  such  partner 
and  his  assignee  to  convey  the  property  so  assigned  to  the  re- 
ceiver.^3 

§  450.  Receiver  takes  no  title  to  income  of  inalienable 
trust  fund  accruing  after  appointment.  An  order  appoint- 
ing a  receiver  in  a  creditor's  suit  does  not  invest  him  with  title 
to  any  part  of  the  income  of  a  trust  fund,  to  accrue  to  the 
debtor  after  the  date  of  the  receiver's  appointment,  which  fund 
is  devised  to  the  debtor  and  is  inalienable  in  his  hands.^^  And 
in  New  York,  a  receiver  appointed  in  proceedings  supple- 
mentary to  execution  can  not  maintain  an  action  in  the  nature 
of  a  creditor's  suit  to  recover  the  interest  of  the  judgment 
debtor  as  a  beneficiary  in  a  trust  fund,  the  trust  having  been 
created  by  a  person  other  than  the  debtor,  nor  can  the  receiver 
reach  the  surplus  of  such  fund,  beyond  what  is  required  for  the 
support  of  the  beneficiary.^^ 

§  451.  Receiver  takes  estate  by  curtesy  in  New  York, 
and  may  recover  rents.  In  New  York,  where  the  common- 
law  estate  by  curtesy  is  still  recognized,  it  is  held  that  the  es- 
tate thus  acquired  by  the  husband  upon  the  death  of  his  wife 
intestate  after  issue  born,  is  such  an  estate  or  interest  as 
will  pass  to  a  receiver  of  the  husband,  on  proceedings  against 
him  by  a  judgment  creditor.  And  the  receiver  is  entitled  to 
recover  the  rent  due  on  account  of  such  estate  at  the  period 

62  Campbell  v.  Genet,  2  Ililt.,  290.  65  Campbell  v.  Foster,  35  N.  Y., 

63  Petition  of  Arnold,  15  R.  I.,  361;  McEwen  v.  Brewster,  17  Hnn, 
15,  23  Atl.,  31.  223.     See,  also,  Manning  v.  Evans, 

64  Graff  V.  Bonnett,  31  N.  Y.,  9,  19  Hun,  500. 
:..ffirming    S.    C,   2   Rob.    (N.   Y.), 

54. 


CHAP.  XII.  J 


CREDITORS.  C33 


of  his  appointment,  and  all  rent  accruing  afterward  and  until 
the  expiration  of  his  receivership. ^^ 

§  452.  Effect  of  debtor's  death  before  appointment  ac- 
tually made.  Under  the  code  of  procedure  in  North  Caro- 
lina, when  a  receiver  is  appointed  in  supplementary  proceed- 
ings in  aid  of  a  judgment  creditor,  but  the  debtor  dies  before 
the  appointment  is  actually  made,  the  receiver  does  not  acquire 
title  to  the  debtor's  effects,  and  the  judgment  creditor  does 
not  become  entitled  to  any  priority  therein,  the  laws  of  the 
state  having  fixed  the  distribution  of  the  assets  of  a  deceased 
among  his  creditors.^*^ 

66  Beamish  v.  Hoyt,  2  Rob.    (N.  67  Rankin  v.  Minor,  72  N.  C,  424. 

Y.),  307. 


634  RECEIVERS.  [chap.  XII. 

III.  Of  the  Receiver's  Functions  and  Rights  of  Action. 

§  453.     Functions  and  duties  fixed  by  order  of  court;  what  usually  in- 
cluded. 

454.  Receiver  a  trustee  for  creditors;  may  sue  to  set  aside  fraudu- 

lent transfers;  parties  defendant  in  such  suit;  may  remove 
cloud;  may  not  enforce  trust;  when  fraudulent  conveyance 
not  set  aside. 

455.  Receiver's    rights    of    action    limited    to    extent    necessary    to 

satisfy  judgments;  can  not  unite  rights  of  subsequent 
creditors  with  former  action. 

456.  Receiver  estopped  by  estoppel  of  creditor. 

457.  Receiver  can  not  take  forcible  possession  of  property  assigned 

to  third  person;  rights  of  property  to  be  determined  by 
action. 

458.  In  action  by  receiver  to  recover  property  assigned,  when  as- 

signees allowed  to  retain  possession;  when  receiver  refused 
injunction  and  receiver. 

459.  Allegations  necessary  in  action  by  receiver  to  set  aside  fraudu- 

lent assignment;  debtor  a  proper  party  defendant;  effect  of 
order. 

460.  Receiver  can  not  recover  property  assigned  in  trust  for  pay- 

ment of  debts,  when  trust  partly  fulfilled. 

461.  Priority   as   between    different   judgment    creditors. 

462.  Receivers  in  aid  of  proceedings  in  bankruptcy. 

463.  Receiver  of  corporation   appointed  in  creditor's  suit  can  not 

enforce   subscription  by  shareholder. 

464.  In  action  by  receiver  on  notes,  defendant  can  not  set  off  judg- 

ment against  receiver  on  note  of  debtor. 
464a.  Receiver  entitled  to  letters  patent;  effect  of  sale;  membership 
in  exchange. 

465.  Receiver  may  maintain  action  for  proceeds  of  note  in  hands 

of  third  parties,  applied  on  judgment  against  debtor. 

466.  Interest  devised  to  testator  can  not  be  divested  on  mere  petition 

or  application. 

467.  Action  against  debtor  for  conversion  of  property;  mortgage  of 

chattels;  receiver  can  not  maintain  action  for  money  received 
by  debtor  after  appointment. 

468.  Action  by  receiver  to  recover  usurious  payments. 

469.  Acquiescence  in  sheriff's  sale  by  creditor,  effect  of  on  action 

by  receiver. 

470.  Appointment  of  receiver  can  not  be  questioned  in  action  by 

receiver;  rents  received  from  sub-tenants  of  debtor  by  re- 
ceiver should  go  to  landlord. 

471.  Receiver  appointed  by  one  federal  court  can  not  sue  in  another 

to  recover  securities  belonging  to  debtor. 
471c.  Effect  of  death  of  parties  or  of  receiver;  practice  in  such  case. 


CHAP.  XII.]  CREDITORS.  635 

§  453.  Functions  and  duties  fixed  by  order  of  court; 
what  usually  included.  In  appointing  receivers  over  the 
property  and  effects  of  a  debtor,  upon  the  application  of  his 
judgment  creditors,  it  is  usual  for  the  order  of  appointment  to 
fix  in  general  terms  the  functions  and  duties  of  the  receiver, 
and  these  are  subject  to  modification  or  enlargement  by  fur- 
ther order  of  court,  from  time  to  time,  as  the  exigencies  of  the 
case  may  demand.  These  functions  usually  embrace  the  re- 
ceiving of  whatever  property  and  effects  may  belong  to  the 
debtor;  the  collection  of  debts  and  demands  due  to  him,  and 
the  prosecution  of  suits  for  this  purpose  when  necessary;  and 
the  payment  into  court  of  the  proceeds,  to  be  applied  in  satis- 
faction of  the  judgment  in  aid  of  which  he  was  appointed. 
And  under  the  rules  of  court  prevailing  under  the  former  chan- 
cery practice  in  New  York,  a  receiver  appointed  in  aid  of  a 
creditor's  bill  was  vested  with  a  general  power  to  sue  for  all 
demands  due  to  the  debtor.  And  it  would  seem  that  he  might 
institute  such  actions  siw  motii,  merely  obtaining  the  consent 
of  the  creditors  for  his  own  protection  as  to  the  question  of 
costs. ^^ 

§  454.  Receiver  a  trustee  for  creditors;  may  sue  to 
set  aside  fraudulent  transfers;  parties  defendant  in  such 
suit;  may  remove  cloud;  may  not  enforce  trust;  when 
fraudulent  conveyance  not  set  aside.  As  regards  the  gen- 
eral functions  and  rights  of  action  of  a  receiver  in  proceedings 
supplementary  to  execution  under  the  New  York  code  of  pro- 
cedure, and  in  other  states  which  have  adopted  the  same  prac- 
tice, the  established  doctrine  is,  that  such  receiver  is  not  the 
mere  agent  or  representative  of  the  debtor,  but  occupies  the 
relation  of  a  trustee  for  the  creditors  in  whose  behalf  he  is 


68  Green    v.    Bostwick,    1    Sandf.  maintain  an  action  for  the  partition 

Ch.,  185.     As  to  the  right  of  a  re-  of     real     estate     of    the    judgment 

ceiver  appointed  in  proceedings  sup-  debtor,   see,  Dubois  v.   Cassidy,   75 

plementary  to  execution,  under  the  N.  Y.,  298. 
New    York   code   of   procedure,   to 


636 


RECEIVERS. 


[chap.  XII. 


appointed.^^  He  is,  therefore,  entitled  to  enforce  the  rights  of 
such  creditors  to  the  extent  necessary  for  the  satisfaction  of 
their  demands.''^  And  for  this  purpose,  he  may  institute  ac- 
tions in  his  own  name  to  set  aside  fraudulent  assignments  or 
transfers  of  his  property,  made  by  the  debtor  with  a  view  of 
defeating  his  creditors,  and  may  recover  the  property  so  trans- 
ferred for  the  purpose  of  applying  it  in  satisfaction  of  the 
judgments.'^^  So  the  receiver  may  maintain  an  action  to  set 
aside  a  void  chattel  mortgage  or  to  recover  the  property  or 


69Bostwick  V.  Menck,  40  N.  Y., 
383.  See  Same  v.  Same,  4  Daly,  68, 
reversing  S.  C,  8  Ab.  Pr.,  N.  S., 
169;  Farmers'  Loan  &  Trust  Co.  v. 
Minneapolis  Engine  &  Machine 
Works,  35  Minn.,  543,  29  N.  W., 
349.  In  Porter  v.  Williams,  9  N. 
Y.,  142,  it  is  said  that  such  a  re- 
ceiver is  a  "trustee  for  all  parties," 
but  the  language  would  seem  to  be 
too  broad,  in  view  of  the  decision 
in  Bostwick  v.  Menck,  which  limits 
the  receiver's  functions  to  those  of 
a  representative  or  trustee  for  the 
creditors,  in  whose  behalf  he  was 
appointed,  excluding  others  who  had 
not  joined  in  the  proceedings.  And 
see,  post,  §  539a. 

70  Bostwick  V.  Menck,  4  Daly,  68, 
reversing  S.  C,  8  Ab.  Pr.,  N.  S., 
169;  Manley  v.  Rassiga,  13  Hun, 
288. 

71  Porter  v.  Williams,  9  N.  Y., 
142;  Bostwick  v.  Menck,  40  N.  Y., 
383;  Mandeville  v.  Avery,  124  N. 
Y.,  376,  26  N.  E.,  951;  Manley  v. 
Rassiga,  13  Hun,  288;  Hamlin  v. 
Wright,  23  Wis.,  491 ;  Hill  v.  West- 
ern &  A.  R.  Co.,  86  Ga.,  284,  12  S. 
E.,  635;  Prescott  v.  Pfeiffer,  57 
Mich.,  21,  23  N.  W.,  477;  Walsh  v. 
Byrnes,  39  Minn.,  527,  40  N.  W., 
831;  Pender  v.  Mallett,  123  N.  C, 
57,  31  S.  E.,  351.     And  see  Cham- 


berlain V.  O'Brien,  46  Minn.,  80, 
48  N.  W.,  447.  But  see,  contra, 
Higgins  V.  Gillesheiner,  26  N.  J. 
Eq.,  308.  And  see,  ante,  §  320.  The 
earlier  doctrine  of  the  supreme 
court  of  New  York  was  directly 
the  reverse,  and  it  was  held  that 
the  receiver's  functions  were  lim- 
ited to  the  control  of  property  of 
which  the  debtor  had  possession, 
either  actual  or  constructive,  at  the 
time  of  appointment,  and  that  he 
could  not  maintain  an  action  to  set 
aside  a  fraudulent  assignment  made 
by  the  debtor  prior  to  the  receiver- 
ship, or  to  recover  the  property  so 
assigned,  and  that  the  remedy  must 
be  sought  in  an  action  by  the  judg- 
ment creditor  himself.  Seymour 
V.  Wilson,  16  Barb.,  294;  Hayner  v. 
Fowler,  16  Barb.,  300.  Seymour  v. 
Wilson  was,  however,  reversed  by 
the  court  of  appeals  on  other 
grounds  (14  N.  Y.,  567),  the  court 
not  passing  upon  any  of  the  points 
decided  below.  And  the  opinion 
of  the  court  of  appeals  in  Porter  v. 
Williams,  9  N.  Y.,  142,  may  be  re- 
garded as  setting  the  question  at 
rest  in  New  York,  and  firmly  es- 
tablishing the  doctrine  enunciated 
in  the  text.  The  court,  Willard, 
J.,  say,  p.  150:  "The  act  which  the 
receiver  seeks  to  avoid,  in  this  case, 


CHAP.   XII.]  CREDITORS. 


637 


its  value.'^2  And  in  such  case,  the  pendency  of  the  supple- 
mentary proceedings  is  no  bar  to  the  receiver's  action  to  set 
aside  the  fraudulent  conveyance,  since  the  object  of  the  former 
proceeding  is  to  reach  such  property  of  the  judgment  debtor  as 
is  not  claimed  adversely,  while  the  purpose  of  the  latter  is  to 
reach  property  claimed  adversely  and  which  can  not  be  reached 
by  the  supplementary  proceedings.  And  in  such  an  action,  it 
is  proper  to  join  all  the  fraudulent  grantees  as  defendants,  since 
the  fact  of  their  being  accessory  to  the  debtor's  fraudulent  at- 
tempt to  place  his  property  beyond  reach  of  his  creditors,  gives 
them  such  a  common  connection  with  the  subject-matter  of  the 
suit  that  they  may  all  be  joined  as  defendants,  although  they 
purchased  at  different  times,  and  each  is  charged  with  the 
fraud  in  his  own  purchase  only.'^^  Such  a  receiver  may  also 
maintain  an  action  to  remove  a  cloud  upon  the  title  of  the 
judgment  debtor,  and  to  sell  the  property  on  execution  under 
the  judgment  upon  which  the  receiver  was  appointed.'^^  ^or 
is  it  necessary  to  enable  the  receiver  to  maintain  an  action 
to  set  aside  a  fraudulent  transfer  of  his  property  by  the  debtor 
that  the  receiver  should  be  invested  with  the  legal  title  to  such 
property,  since,  for  the  purposes  of  the  action,  he  stands  in 
the  place  of  and  represents  the  judgment  creditor.     The  right 

was  an  illegal  act  of  the  debtor.  He  stands,  in  this  respect,  in  the 
The  object  of  the  action  is  to  set  same  condition  as  the  receiver  of  an 
aside  an  assignment  made  by  the  insolvent  corporation,  or  as  an  exec- 
debtor  with  intent,  as  alleged,  to  utor  or  administrator,  and  like 
defraud  the  creditor  under  whose  them  can  assail  the  illegal  and 
judgment  and  execution  the  plain-  fraudulent  acts  of  the  debtor  whose 
tiff  was  appointed  receiver,  and  the  estate  he  is  appointed  to  adminis- 
other     creditors     of     the     assignor.  ten" 

Such  conveyance  was  void  at  com-  '^~  Stephens    v.    Perrine,    143    N. 

mon  law,  and  is  expressly  forbidden  Y.,    476,    39    N.    E.,    11.      And    see 

ty  the  statute.    It  is  void  as  against  Richards  v.  Haliday,  92  Fed..  798. 

the   creditors   of  the  party  making  73  Hamlin    v.    Wright,    23    Wis., 

it,  though  good  as  between  him  and  491. 

his    grantee.      The    plaintiff,    repre-  "^4  Wright  v.  Nostrand,  94  N.  Y., 

senting  the  interest  of  the  creditors,  31.     And    see   this    case   as   to   the 

has  a  right  to  invoke  the  aid  of  the  requisite  proof  of  the  receiver's  ap- 

court  to   set  aside  the   assignment.  pointment  in  such  case. 


638  RECEIVERS.  [CKAP.  XII. 

to  maintain  such  an  action  does  not  depend  upon  any  succes- 
sion by  the  receiver  to  the  title  of  the  debtor,  but  upon  the 
equity  of  the  creditor  to  have  a  conveyance  set  aside  which 
is  invahd  as  to  him,  aUhough  effectual  as  a  cloud  to  prevent 
the  application  of  the  property  to  the  satisfaction  of  his  judg- 
ment."^^  Nor  is  the  receiver's  right  of  action  confined  to  set- 
ting aside  the  fraudulent  transfer,  but  he  may  follow  the  fund 
or  proceeds  of  the  sale  of  the  property  thus  transferred  and 
may  reclaim  it  as  against  any  person  other  than  a  bona  fide 
holder.''^  And  when,  under  the  laws  of  the  state,  any  cred- 
itor of  a  defendant  in  attachment  may  intervene  in  the  suit 
and  contest  the  grounds  for  attachment,  a  receiver  of  such  a 
defendant,  appointed  in  a  judgment  creditor's  suit,  is  regard- 
ed as  a  representative  of  creditors  to  the  extent  that  he  may 
intervene  in  their  behalf  in  like  manner  as  the  creditors  them- 
selves.'^^  But  while  the  right  of  action  of  a  receiver  in  a  judg- 
ment creditor's  suit  to  set  aside  fraudulent  transfers  of  his 
property  by  the  debtor  is  well  established,  he  is,  like  any  other 
suitor,  limited  to  the  appropriate  remedies,  and  he  may  not 
maintain  a  bill  in  equity  for  this  purpose  when  full  relief  may 
be  had  at  law.'^^  But  the  receiver  is  not  the  representative  of 
the  creditor  for  the  purpose  of  enforcing  a  trust  created  by 
statute  in  favor  of  the  creditors  of  a  debtor  who  pays  t.he  con- 
sideration for  lands  which  are  conveyed  to  another,  since,  in 
such  case,  the  debtor  acquires  no  legal  or  equitable  interest  in 
the  land,  and  the  creditor  may  proceed  directly  to  enforce  the 
trust.79 

§  455.  Receiver's  rights  of  action  limited  to  extent  nec- 
essary to  satisfy  judgments ;  can  not  unite  rights  of  subse- 
quent creditors  with  former  action.  It  is  further  to  be  ob- 
served, with  reference  to  the  functions  of  receivers  in  the  class 

75  Dunham  v.    Byrnes,  36   Minn.,  "SPrescott   v.    Pfeiffer,   57   Mich., 

106,  30  N.  W.,  402.  21.  23  N.  W.,  477. 

'J'S  Mandeville   v.  Avery,    124    N.  "^9  Underwood  v.  Sutcliffe,  77  N. 

Y.,  376,  26  N.  E.,  951.  V.,  58. 

""  Paine    v.    Holliday,    68    Miss., 
298,  8  So.,  676. 


CHAP.  XII.] 


CREDITORS. 


639 


of  actions  under  consideration,  and  their  right  of  action  to 
set  aside  fraudulent  assignments  made  by  the  debtor,  that  the 
receiver  is  regarded  as  a  trustee  for  the  creditors  only  in 
whose  behalf  he  has  been  appointed,  and  that  he  can  maintain 
his  action  only  to  the  extent  necessary  to  satisfy  their  judg- 
ments, and  no  further.  His  rights  of  action  in  this  respect  are 
precisely  such  as  the  creditors  themselves  might  have  main- 
tained, and  no  more;  and  since  he  succeeds  to  their  rights  of 
action,  he  can  maintain  a  suit  to  set  aside  assignments  in  fraud 
of  their  rights,  only  to  the  extent  necessary  to  satisfy  their  de- 
mands and  costs,  and  has  no  right  to  interfere  with  the  trans- 
fer beyond  this.^^  And  when  the  receiver,  after  instituting  an 
action  to  set  aside  a  fraudulent  conveyance  made  by  the  debtor, 


SOBostwick  V.  Menck,  40  N.  Y., 
383.  See,  also,  Olney  v.  Tanner, 
10  Fed.,  101,  affirmed  on  appeal,  21 
Blatchf.,  540;  Goddard  v.  Stiles,  90 
N.  Y.,  199;  Righton  v.  Pruden.  7Z 
N.  C,  61 ;  Young  v.  Clapp,  147  Til., 
176,  32  N.  E..  187,  35  N.  E.,  372; 
Russell  V.  Chicago  Trust  &  Sav- 
ings Bank,  139  111.,  538,  29  N.  E., 
37;  Holbrook  v.  Ford,  153  111..  633, 
39  N.  E.,  1091,  27  L.  R.  A.,  324,  46 
Am.  St.  Rep.,  917.  Bostwick  v. 
Menck,  40  N.  Y.,  383,  was  an  ac- 
tion brought  by  a  receiver  appointed 
in  behalf  of  a  judgment  creditor  to 
set  aside  a  fraudulent  assignment 
of  the  debtor's  property.  The  judg- 
ment on  which  the  receiver  was  ap- 
pointed was  for  about  $200,  and  the 
decree  directed  the  defendant  to 
pay  over  to  the  receiver  all  the 
avails  of  the  assigned  property, 
amounting  to  $15,000,  except  such 
as  he  had  distributed  under  the  as- 
signment before  the  suit  was 
brought.  The  judgment  was  re- 
versed on  appeal,  Grover,  J.,  hold- 
ing as  follows,  p.  385 :  ".  .  .  The 
only  right  of  the  receiver  is,  there- 


fore, as  trustee  of  the  creditors. 
The  latter  have  the  right  to  set 
aside  the  transfer  and  to  recover 
the  property  from  the  fraudulent 
holder,  and  the  receiver  is,  by  law, 
invested  with  all  the  rights  of  all 
(he  creditors  represented  by  him  in 
this  respect.  It  is  clear  that  the 
right  of  the  receiver  representing 
the  creditors,  and  acting  in  their 
behalf,  is  no  greater  than  that  of 
the  creditors.  What,  then,  are  the 
legal  and  equitable  rights  of  a  cred- 
itor as  to  property  fraudulently 
transferred?  Manifestly  only  to 
treat  as  void  and  set  aside  such 
transfer,  so  far  as  shall  be  neces- 
sary to  satisfy  his  debt  and  costs. 
He  has  no  right  to  interfere  with 
(he  transfer  beyond  this.  When  his 
debt  and  costs  are  paid,  the  transfer 
is  as  valid  as  to  him  as  to  other  per- 
sons. If  this  be  the  extent  of  the 
rights  of  a  single  creditor,  and  all 
that  can  be  conferred  upon  a  re- 
ceiver appointed  by  law  to  act  as  his 
trustee,  it  is  clear  that  the  right  is 
not  enlarged  by  the  appointment 
of  the  same  person  as  receiver  for 


640  RECEIVERS  [chap.  XII. 

is  appointed  receiver  of  the  estate  of  the  same  debtor  in  sub- 
sequent proceedings  by  other  judgment  creditors,  he  can  not 
unite  the  rights  of  such  subsequent  creditors  with  the  former 
action  by  a  supplemental  bill  or  complaint.^i  So  the  receiver 
being  appointed  only  for  the  benefit  of  the  judgment  creditor 
instituting  the  proceeding,  his  right  of  action  to  recover  the 
debtor's  property  terminates  when  the  judgment  upon  which 
he  was  appointed  is  paid,  and  he  then  becomes  functus  ofHcio.^^ 
And  it  is  improper  to  direct  the  receiver  to  pay  other  judg- 
ments than  those  upon  which  he  was  appointed,  without  no- 
tice to  the  debtor,  and  with  no  opportunity  to  him  to  be  heard, 
since  the  receiver  does  not  represent  the  debtor  as  to  such  other 
judgments. ^^ 

§  456.  Receiver  estopped  by  estoppel  of  creditor.  The 
functions  and  powers  of  the  receiver,  as  regards  rights  of  ac- 
tion to  set  aside  fraudulent  transfers  made  by  the  debtor,  be- 
ing limited  to  such  rights  of  action  as  the  judgment  creditor 
might  himself  have  maintained,  he  can  not  effect  a  result  which 

several   creditors.     The   receiver   is  was  not  the  purpose  of  this  provi- 

then    trustee    for   all,    clothed    with  sion  of  the  code  to  seize  upon  and 

power  to  set  aside  transfers  fraudu-  sequestrate    the    judgment    debtor's 

lent  as  against  the  demands  repre-  estate  for  the  benefit  of  all  his  crcd- 

sented   by   him,    only   to   an   extent  itors.     Its  purpose  was  to  furnish  a 

sufficient    to    satisfy   such    demands  cheap  and  easy  mode  of  discover- 

and  costs.     When  this  is  done  his  ing    the    concealed    property    of    a 

duties,  and  consequently  his  powers  judgment    debtor,    and    applying   it 

and   right  to   act   further   in  behalf  to  the  satisfaction  of  the  judgment 

of  the  creditors,  cease  as  to  prop-  or  judgments  in  which  proceedings 

erty   that   has   been   transferred   by  were  taken.    When  property  enough 

the  debtor.     As  to  property  owned  to   satisfy  such  judgment  or  judg- 

by   the   debtor   at   the   time   of  the  ments    is    reached,    the   purpose    of 

appointment,  we  have  seen  that  the  the    appointment    of    a    receiver    is 

rule   is  different;   that,   as  to   such  accomplished;     that     officer     owes 

property,  the  appointment  vests  the  no   duty   to   other  creditors   of   the 

legal  title  to  the  whole  in  the  re-  debtor." 

ceiver,    and    he    may    consequently  81  Bostwick  v.  Menck,  4  Daly,  68, 

assert  his  title   thereto   without   re-  reversing   S.   C,  8  Ab.    Pr.,   N.   S., 

gard   to   the  amount    of   the   judg-  169. 

ments     upon     which    he    has    been  82  Righton  v.  Pruden,  73  N.  C,  61. 

appointed."  And  Mr.  Justice  James,  83  Goddard  v.  Stiles,  90  N  Y.,  199. 
in  the  same  case,  p.  389,  says :     "It 


CHAP.  XII.]  CREDITORS.  641 

the  creditor  himself  could  not  have  effected;  since  he  stands 
in  the  place  of  the  judgment  creditor,  and  is  limited  by  any  acts 
■or  conduct  on  his  part  which  would  have  barred  proceedings 
by  the  creditor  himself.  And  when  the  creditor  is  estopped 
by  his  own  act  from  proceeding  against  the  debtor  or  his  as- 
signee, to  set  aside  a  fraudulent  assignment  of  the  debtor's 
property,  such  estoppel  applies  equally  as  against  the  receiver, 
appointed  in  aid  of  such  creditor.  For  example,  when  a  debtor 
purchases  property  with  the  intention  of  assigning  it  to  de- 
fraud the  vendor,  and  carries  this  intention  into  execution,  if 
the  vendor,  instead  of  disaffirming  the  sale  and  suing  for  the 
wrongful  conversion,  elects  to  affirm  the  contract  and  sues 
for  the  purchase  price,  after  judgment  thereon  and  the  appoint- 
ment of  a  receiver  in  aid  of  the  judgment,  the  receiver  will 
not  be  allowed  to  maintain  an  action  to  set  aside  the  fraudulent 
assignment.^'* 

§  457.  Receiver  can  not  take  forcible  possession  of  prop- 
erty assigned  to  third  persons;  rights  of  property  to  be 
determined  by  action.  Since  the  receiver,  in  this  class  of 
cases,  is  vested  with  the  same  rights  of  action  to  set  aside 
fraudulent  transfers  by  the  debtor  as  the  creditors  whom  he 
represents,  he  can  not  take,  or  authorize  others  to  take,  forcible 
possession  of  property  previously  assigned  by  the  debtor  to  a 
third  person,  when  the  property  was  actually  transferred  under 
a  sale  valid  as  between  the  debtor  and  the  vendee.  The  only 
right  of  the  receiver,  in  such  a  case,  is  a  right  of  action  to  set 
aside  the  transfer;  and  it  constitutes  no  defense  to  an  action 
of  trespass,  brought  by  the  purchaser  of  the  property  from 
the  debtor,  that  the  defendants,  who  had  taken  forcible  posses- 
sion of  the  property,  acted  under  the  direction  of  the  debtor's 
receiver.SS    fhe  receiver  can  not  question  such  a  transfer  as 

84  Kennedy  v.  Thorp,  51  N.  Y.,  Richards  v.  Allen,  3  E.  D.  Smith, 
174.     And  see  as  to  the  doctrine  of      399. 

■estoppel   in   actions   by   a   receiver,  85  Brown  v.  Gilmore,  16  How.  .Pr.. 

527. 

Receivers — 41. 


642  RECEIVERS.  [chap.  XII. 

representing  the  debtor,  since  the  debtor  himself  can  not  im- 
peach his  own  completed  act,  however  fraudulent  as  against 
creditors.  Nor  can  the  receiver  authorize  the  forcible  taking 
possession  of  the  property  as  representing  the  judgment  cred- 
itors, since  the  property,  even  though  transferred  to  delay  and 
hinder  such  creditors,  does  not  for  that  reason  belong  to  them, 
or  to  their  representative,  so  as  to  give  a  right  to  its  imme- 
diate and  absolute  control,  before  action  brought  to  set  aside 
the  transfer.^^  So  when  the  debtor  is  in  possession  of  proper- 
ty, belonging  to  or  claimed  by  a  third  person  under  a  title  ap- 
parently valid,  and  which  is  held  by  the  debtor  as  his  agent, 
it  is  improper  by  order  of  court  to  direct  the  delivery  of  such 
property  to  the  receiver,  since  the  courts  will  not  thus  sum- 
marily dispose  of  or  determine  the  title  to  property  claimed 
by  third  parties,  but  will  leave  the  parties  to  the  appropriate 
mode  of  recovering  the  property,  in  an  action  by  the  receiver 
against  the  person  claiming  title.^"^  So  where  the  property  of  a 
debtor  upon  which  apparently  valid  liens  are  asserted  by  third 
persons  is  claimed  by  a  receiver,  the  court  should  not  sum- 
marily order  such  property  to  be  delivered  to  the  receiver  but 
he  should  be  required  to  resort  to  the  appropriate  action  for 
its  recovery. ^^  And  where  a  receiver  has  been  appointed  in  a 
federal  court,  he  is  not  entitled  thereby  to  maintain  a  petition 
in  the  receivership  proceeding  in  the  nature  of  a  plenary  suit 
in  equity  for  the  recovery  of  purely  legal  demands  against  a 
person  not  a  party  to  the  receivership  proceeding  but  his  rem- 
edy in  such  case  should  be  at  law.^^  And  when  the  court  is 
fully  authorized  to  appoint  a  receiver  of  the  debtor's  estate, 
who  might  bring  an  action  to  test  the  title  to  property  in  the 
hands  of  a  third  person,  claiming  title  from  the  debtor,  it  is 
improper  to  determine  such  disputed  cjuestion  of  title  upon  a 

SG  Brown  v.  Gilmore.  16  How.  Pr,  12  Wyo.,  492,  76  Pac,  674,  78  Pac, 

527.  1083. 

8"  Rodman   v.    Henry,    17   N.    Y.,  80  Whelan   v.    Enterprise   T.   Co., 

482.  164  Fed.,  95. 

88  First   National   Bank  v.   Cook, 


CHAP.  XII.]  CREDITORS.  643 

summary  application,  the  remedy  by  the  appointment  of  a  re- 
ceiver being  the  appropriate  course  to  pursue.^^ 

§  458.  In  action  by  receiver  to  recover  property  as- 
signed, when  assignees  allowed  to  retain  possession ;  when 
receiver  refused  injunction  and  receiver.  When  the  re- 
ceiver of  a  judgment  debtor  brings  an  action  to  set  aside  an 
assignment  made  by  the  debtor  for  the  benefit  of  his  creditors, 
it  is  proper  for  the  court  to  permit  the  assignees  to  continue 
in  possession,  and  to  dispose  of  the  property  and  collect  the 
debts,  holding  the  proceeds  subject  to  the  order  of  the  court, 
when  no  fraud  is  shown  as  against  the  assignees,  and  when 
they  are  perfectly  solvent  and  able  to  respond  to  any  liability 
on  account  of  the  property  assigned.  The  assignees,  under 
such  circumstances,  will  be  regarded  in  the  light  of  special  re- 
ceivers, and  bound  to  abide  by  such  further  order  as  the  court 
may  make  in  the  premises. ^i  And  when  the  receiver  insti- 
tutes an  action  for  the  recovery  of  property  assigned  by  the 
debtor,  under  a  voluntary  assignment  for  the  benefit  of  his 
creditors,  he  is  not  entitled  to  an  injunction  and  a  receiver  of 
the  assigned  property,  if  he  fails  to  show  that  the  assignment 
was  made  to  delay,  hinder  or  defraud  the  creditors. ^2 

§  459.  Allegations  necessary  in  action  by  receiver  to 
set  aside  fraudulent  assignment ;  debtor  a  proper  party  de- 
fendant; effect  of  order.  To  entitle  the  receiver  to  main- 
tain an  action  to  set  aside  an  assignment  of  the  debtor's  prop- 
erty for  the  benefit  of  his  creditors,  it  is  not  sufficient  to  allege 
in  his  pleadings  merely  that  he  was  appointed  receiver  in  the 
creditor's  suit,  but  the  judgment  and  other  facts  necessary  to 
sustain  the  creditor's  suit  should  be  set  forth.  In  other  words, 
the  receiver  must  state  the  equities  of  the  parties  whom  he  rep- 
resents, in  order  to  maintain  such  an  action,  since  he  is  only 
clothed  with  the  same  rights  of  action  which  might  have  been 


90  Teller  v.  Randall,  40  Barb.,  242.  92  Bostwick  v.  Elton,  25  How.  Pr., 

91  Spring  v.  Strauss,  3  Bosw.,  607.      362. 


644  RECEIVERS.  [chap.  XII. 

maintained  by  the  creditors  whose  representative  he  is.^^  And 
in  an  action  by  the  receiver  to  remove  a  cloud  from  the  title  of 
property  of  the  debtor  and  to  subject  it  to  execution,  the  pro- 
duction of  an  order  appointing  the  receiver,  made  by  a  court 
of  competent  jurisdiction  and  reciting  the  facts  necessary  to 
give  the  court  jurisdiction,  affords  conclusive  evidence  of  the 
regularity  of  the  order  and  prima  facie  evidence  of  the  facts 
necessary  to  confer  jurisdiction. ^"^  And  in  an  action  brought 
by  such  a  receiver,  to  set  aside  an  alleged  fraudulent  assign- 
ment and  conveyance  of  the  debtor's  property  to  a  third  per- 
son, the  debtor  himself  is  a  proper  party  defendant.^^ 

§  460.  Receiver  can  not  recover  property  assigned  in 
trust  for  payment  of  debts,  when  trust  partly  fulfilled. 
It  has  been  held  that  where  a  debtor  assigns  his  property  to  one 
of  his  creditors,  upon  condition  that  he  shall  deduct  his  own 
demand  out  of  the  proceeds,  and  then  apply  the  balance  in 
payment  of  the  other  creditors,  and  the  assignee  sells  and 
transfers  the  property  to  a  third  person  upon  the  same  condi- 
tion and  subject  to  the  same  trust,  and  such  purchaser  fulfills 
the  duty  in  part,  a  receiver  of  the  debtor's  effects,  appointed  in 
behalf  of  a  judgment  creditor,  can  not  maintain  an  action 
against  the  purchaser  for  a  balance  of  the  fund  remaining  in 
his  hands.  In  such  case,  it  being  the  plain  duty  of  the  pur- 
chaser to  distribute  the  fund  among  the  creditors,  the  receiv- 
er acquires  no  right  of  action  for  its  recovery.^^ 

§  461.  Priority  as  between  different  judgment  creditors. 
As  between  different  judgment  creditors  of  the  same  debtor, 
one  of  whom,  by  his  superior  diligence,  obtains  possession  of  . 
or  a  charge  upon  the  debtor's  property,  equity  will  not  inter- 
fere in  behalf  of  a  more  dilatory  creditor  to  disturb  such  pos- 
session.^"^    And  this  is  equally  true,  even  though  the  judgment 

93  Coope  V.  Bowles,  42  Barb.,  87;  96  Smith  v.  Woodrufif.  1  Hilt.,  462. 
S.  C,  28  How.  Pr.,  10.  97  Bates  v.  Brothers,  2  Sm.  &  G., 

94  Wright  v.  Nostrand,  94  N.  Y.,  509.  See,  also.  Parks  v.  Sprinkle, 
31.  64  N.  C,  637.    And  see,  ante,  §  439&, 

95  Palen  v.  Bushnell,   18  Ab.  Pr., 
301 ;  Allison  v.  Weller,  3  Hun,  608. 


CHAP.   XII.]  CREDITORS.  645 

cf  the  creditor  obtaining  such  priority  is  later  in  date  than 
the  others. ^8  It  is  held,  therefore,  in  a  race  of  dihgence  be- 
tween judgment  creditors  for  the  property  of  their  debtor,  that 
the  one  who  first  institutes  a  creditor's  suit  and  procures  a 
receiver  therein  takes  priority,  and  is  entitled  to  the  property 
of  the  debtor  not  previously  levied  upon,  as  against  a  creditor 
who  has  not  yet  obtained  a  receiver.^^  But  when  judgment 
creditors  claim  a  lien  upon  a  fund  in  the  hands  of  the  receiver 
of  their  debtor,  and  petition  the  court  for  an  order  appropriat- 
ing the  fund  in  payment  of  their  judgment,  the  court  will  not 
grant  such  order  in  limine  and  before  the  other  creditors  in- 
terested in  the  fund  can  be  heard.  It  is,  however,  proper  to 
restrict  the  receiver  from  paying  out  the  fund,  in  such  case, 
without  notice  to  the  creditors  claiming  the  lien.  And  the 
creditors  claiming  such  lien  may  be  authorized  to  institute  an 
action  against  the  receiver  to  establish  their  rights.^  So  when, 
pending  an  attachment  suit,  a  creditor's  bill  is  filed  against 
the  defendants,  under  which  receivers  are  appointed  over  their 
effects,  plaintiffs  in  the  attachment,  after  obtaining  judgment, 
can  not,  by  a  summary  rule  against  the  receivers,  compel  pay- 
ment in  full  of  their  demand  out  of  funds  of  the  receivership, 
before  a  full  hearing  as  to  the  priorities  of  all  parties  in  in- 
terest.2 

§  462.  Receivers  in  aid  of  proceedings  in  bankruptcy. 
Under  the  English  practice,  receivers  are  sometimes  appointed 
in  aid  of  creditors  who  have  instituted  proceedings  in  bank- 
ruptcy against  a  debtor;  and  a  receiver  thus  appointed,  upon 
the  application  of  any  one  creditor,  is  regarded  as  appointed 
equally  for  the  benefit  of  all.  Such  a  receiver,  therefore,  can 
not  rightfully  permit  a  payment  to  be  made  to  the  creditor 

^8  Bates  V.  Brothers,  2  Sm.  &  G.,  New     York     code     against     their 

509.  debtor,      in     property      which      the 

9^  Parks  V.  Sprinkle,  64  N.  C,  637.  debtor    had    assigned     to     a    third 

And   see,   as   to   the    relative   rights  party,    Conger   v.    Sands,    19    How. 

and     liens     of     different     judgment  Pr.,  8. 

creditors   who   have   instituted   sup-  1  Hubbard  v.  Guild,  2  Ducr,  685. 

plementary    proceedings    under    the  2  Lowe  v.  Stephens,  66  Ga.,  607. 


646  RECEIVERS.  [chap.  XII. 

on  whose  application  he  was  appointed,  in  preference  to  the 
remaining  creditors,  and  such  a  payment  will  be  held  fraudu- 
lent and  void  as  against  the  trustee  of  the  creditors  in  the 
proceedings  in  bankruptcy.^ 

§  463.  Receiver  of  corporation  appointed  in  creditor's 
suit  can  not  enforce  subscription  by  shareholder.  It  has 
been  elsewhere  shown,  in  discussing  the  subject  of  receivers 
of  insolvent  corporations  appointed  for  winding  up  their  affairs 
under  the  statutes  of  various  states,  that  such  receivers  are  fre- 
quently vested  with  the  power  of  making  assessments  for  and 
collecting  unpaid  balances  due  from  delinquent  shareholders 
upon  their  subscriptions  to  the  capital  stock  of  the  corpora- 
tion.^ But  this  power  or  right  of  action  is  derived  wholly  from 
statute,  and  does  not  exist  in  the  absence  of  statutory  author- 
ity. And  it  is  held  in  New  York,  that  a  receiver  of  a  corpora- 
tion appointed  on  a  creditor's  bill,  and  vested  with  only  the 
ordinary  powers  of  receivers  in  creditors'  suits,  can  not,  by 
virtue  of  his  appointment,  maintain  a  bill  in  equity  against  a 
shareholder  to  enforce  payment  of  a  balance  due  upon  his  sub- 
scription to  the  capital  stock  of  the  corporation.^ 

§  464.  In  action  by  receiver  on  notes,  defendant  can  not 
set  off  judgment  against  receiver  on  note  of  debtor.  In  an 
action  by  the  receiver  of  an  insolvent  debtor  to  recover  upon 
notes  due  to  the  debtor's  estate,  the  maker  of  such  notes  can 
not  set  off  against  the  action  a  judgment  which  he  has  obtained 
against  the  receiver  upon  a  note  executed  by  the  judgment 
debtor;  since,  to  allow  such  set-off,  would  be  to  give  the  de- 
fendant a  preference  over  other  creditors.  His  judgment 
against  the  receiver  is  regarded  only  as  a  legal  determination 
of  the  amount  and  validity  of  his  claim,  and  not  an  adjudica- 
tion giving  it  preference  over  others.^ 

3  Ex  parte  Jay,  L.  R.,  9  Ch.  App.,  corporation  appointed  in  behalf  of 
133.  a     judgment     creditor     under     the 

4  See  §  324,  ante.  laws  of  New  York,  Angell  v.   Sils- 

5  Mann   v.    Pentz,   3    N.    Y.,    41.S.  bury,  19  How.  Pr.,  48. 

And    see,    as   to   the    functions    and  G  Clark  ^.  Brockway,  3  Keyes,  13; 

powers  of  a  receiver  of  a  moneyed       S.    C,    1    Ah.    Ct.    Ap.    Dec,    351. 


CHAP.  XII.] 


CREDITORS. 


647 


§  4(i4a.  Receiver  entitled  to  letters  patent;  effect  of 
sale;  membership  in  exchange.  A  receiver  over  an  insol- 
vent debtor,  under  the  statutes  of  Rhode  Island,  is  entitled. 
by  virtue  of  his  appointment,  to  letters  patent  owned  by  the 
debtor,  and  the  court  may  order  the  debtor  to  make  a  convey- 
ance to  the  receiver,  if  necessary  to  fully  invest  him  with  title 
thereto.'^  But,  in  the  absence  of  such  a  conveyance,  it  is  held 
that  a  sale  and  assignment  by  a  receiver  of  the  interest  of  the 
judgment  debtor  in  letters  patent  confers  no  title  upon  the  pur- 
chaser, such  an  assignment  not  being  a  wa'itten  instrument 
signed  by  the  owner  of  the  patent,  as  required  by  the  act  of 


Clark  V.  Brockway  was  an  action 
by  the  receiver  of  the  estate  of  one 
Sherman,  to  recover  upon  notes 
executed  by  defendant  to  the  as- 
signees of  Sherman,  and  which  had 
passed  from  the  assignees  to  the 
receiver  on  the  assignment  being 
set  aside  as  void  against  creditors. 
Defendant  had  obtained  a  judg- 
ment on  a  note  of  Sherman's  held 
by  him,  and  a  further  judgment 
against  the  receiver,  directing  the 
latter  to  pay  such  judgment  out  of 
the  assets  in  his  hands.  The  court 
below  denied  the  right  of  set-off 
and  gave  judgment  for  the  receiver 
for  the  amount  of  the  notes,  and 
the  judgment  was  affirmed  on 
appeal.  Hunt,  J.,  says,  p.  14: 
"The  defendant,  in  his  suit  against 
the  present  plaintiff,  as  receiver, 
and  others,  recovered  a  judgment 
directing  the  receiver  to  pay  the 
amount  of  the  notes  held  by  him, 
$345.48,  with  the  costs,  and  he 
claims  that  judgment  to  be  deci- 
sive of  the  present  suit.  In  this,  I 
think,  he  errs.  His  judgment  is  a 
legal  determination  of  the  validity 
of  his  claim,  but  it  does  not  deter- 
mine   when    it    shall    be    paid,    or 


what,  if  any,  shall  be  its  preference 
over  other  debts.  By  obtaining  an 
offset  against  the  notes  in  suit,  the 
defendant  would  at  once  obtain 
payment  of  his  claim  to  that 
amount,  and  this  without  regard 
to  the  amount  of  debts  or  assets 
applicable  to  the  general  settlement 
of  Wm.  Sherman's  affairs.  He 
might  thus  obtain  a  large  propor- 
tion or  the  whole  of  his  debt,  wiiile 
others,  equally  entitled,  might  be 
compelled  to  accept  a  much  smaller 
proportion.  This  the  law  does  not 
allow.  Equality  in  the  payment  of 
debts  by  a  receiver  is  the  rule  of 
law,  unless,  by  diligence  or  for 
some  special  reason,  a  preference 
is  declared  of  one  creditor  or  of  one 
class  over  creditors  generally.  No 
such  circumstance  exists  in  this 
case,  and  the  judgment  is  to  be  re- 
garded as  determining  simply  the 
validity  of  the  plaintiff's  claim  on 
the  notes  held  by  him.  His  debt  is 
adjudged  to  be  valid,  but  it  must 
take  its  chances  of  payment  with 
other  valid  debts  in  the  general  ad- 
ministration of  the  estate  of  Wm. 
Sherman." 
7/m  re  Kcnch,  14  R.  I.,  571. 


648  RECEIVERS.  [chap.  XII. 

congress,  but  a  mere  assignment  by  operation  of  law,  and  with- 
out the  action  of  the  patentee  or  owner.^  But  a  receiver  in 
proceedings  supplementary  to  execution,  in  New  York,  suc- 
ceeds to  the  title  of  the  judgment  debtor  in  a  certificate  of  mem- 
bership in  the  New  York  Cotton  Exchange,  and  may  maintain 
a  suit  to  redeem  such  certificate  from  one  to  whom  it  has  been 
pledged.^ 

§  465.  Receiver  may  maintain  action  for  proceeds  of 
note  in  hands  of  third  parties,  applied  on  judgment  against 
debtor.  When  a  receiver  of  the  efifects  and  estate  of  a 
judgment  debtor,  appointed  in  different  creditors'  suits,  be- 
comes vested  with  the  title  to  all  the  debtor's  property  imme- 
diately upon  the  filing  and  recording  of  his  order  of  appoint- 
ment, he  may  maintain  an  action  for  the  proceeds  of  a  note 
due  to  tht  estate  in  the  hands  of  third  parties,  notwithstand- 
ing they  have,  subsequent  to  the  appointment,  procured  an  ex 
parte  order  of  court  directing  the  note  to  be  applied  upon  a 
judgment  which  they  hold  against  the  debtor;  since  the  title 
to  the  note  having  vested  in  the  receiver,  it  is  not  in  the  power 
of  the  court  to  divest  his  title  on  an  application  to  which  he  is 
not  a  party.l^ 

§  466.  Interest  devised  to  testator  can  not  be  divested 
on  mere  petition  or  application.  A  receiver  of  a  judgment 
debtor  can  not,  by  mere  motion  or  application  to  the  court, 
reach  an  interest  in  property  of  an  inalienable  nature,  which  is 
vested  in  the  debtor  as  cestui  que  trust,  or  devisee  under  a  will. 
And  when  a  testator  has  devised  his  property  to  executors,  in 
trust  to  convert  it  into  money  and  to  divide  it  in  certain  shares, 
one  of  which  is  to  go  to  the  debtor,  the  court  will  not  grant 
the  receiver  an  order  for  the  sale  of  such  interest,  upon  a  mere 
application  or  petition  for  that  purpose.  If  the  creditors  are 
to  derive  any  benefit  from  the  provisions  of  the  will,  in  such 

8  Gordon  v.  Anthony,  16  Blatchf.,  10  Rogers  v.    Corning,   44   Barb., 
234.                                                            229. 

9  Powell   V.   Waldron,  89   N.   Y., 
3,28. 


CHAP.  XII.]  CREDITORS.  649 

case,  it  must  be  by  a  proceeding  to  which  the  executor  is  a 
party.ll 

§  467.  Action  against  debtor  for  conversion  of  proper- 
ty ;  mortgage  of  chattels ;  receiver  can  not  maintain  action 
for  money  received  by  debtor  after  appointment.  A  re- 
ceiver appointed  in  a  judgment  creditor's  suit  would  seem  to 
have  the  same  rights  of  action  against  the  debtor  himself,  for 
the  conversion  of  his  property,  as  against  strangers,  and  he 
may,  therefore,  maintain  an  action  for  such  conversion  by  the 
debtor.  But  he  acquires  only  such  title  as  the  debtor  had  at 
the  time  of  appointment,  and  if  the  debtor's  title  was  a  mere 
equity  of  redemption  in  mortgaged  chattels,  and  the  receiver 
neglects  to  redeem  the  property  by  paying  off  the  mortgage, 
until  the  right  of  the  mortgagee  becomes  absolute,  neither  the 
debtor,  nor  the  plaintiff  as  his  receiver,  has  any  interest  in  the 
property  which  can  be  the  subject  of  a  conversion,  or  sustain 
an  action  by  the  receiver.12  And  the  receiver  is  not  by  virtue 
of  his  appointment,  invested  with  any  title  to  property  which 
may  be  afterward  acquired  by  the  debtor ;  he  can  not  therefore, 
maintain  an  action  for  the  recovery  of  money  received  by  the 
debtor  subsequent  to  the  appointment.^^ 

§  468.  Action  by  receiver  to  recover  usurious  payments. 
In  New  York,  it  is  held  that  a  receiver  in  a  creditor's  suit 
may  maintain  an  action  for  the  recovery  of  usurious  payments 
made  by  the  debtor  to  a  third  person ;  since  the  receiver  is  the 
representative,  not  merely  of  the  debtor,  but  of  the  creditors, 
and  his  title  is,  therefore,  sufficient  to  maintain  such  an  action. 
And  the  judgment  debtor  is  not  a  necessary  party  to  such  an 
action. 1^ 

§  469.  Acquiescence  in  sheriff's  sale  by  creditor,  effect 
of,  on  action  by  receiver.  A  receiver  of  a  judgment  debtor 
can  not  maintain  an  action  to  recover  back  the  value  of  prop- 

11  Scott  V.  Nevius,  6  Duer,  672.  14  Pakn  v.  Bushnell,  18  Ab.  Pr., 

12  Gardner  v.  Smith,  29  Barb.,  68.      301. 

13  Graff  V.  Bonnett,  25  How.  Pr., 
470. 


650  RECEIVERS.  [CIIAP.  XII, 

erty  which  has  been  sold  at  a  sheriff's  sale  under  executions 
against  the  debtor,  when  the  creditor,  in  whose  behalf  the  re- 
ceiver was  appointed,  was  present  by  his  attorney  and  request- 
ed and  acquiesced  in  the  sale  by  the  sheriff,  but  afterward  pro- 
cured the  appointment  of  a  receiver,  on  failing  to  obtain  the 
proceeds  of  such  sale,  which  were  diverted  to  the  payment  of 
other  executions  in  the  hands  of  the  sheriff.^^ 

^  470.  Appointment  of  receiver  can  not  be  questioned 
in  action  by  receiver;  rents  received  from  sub-tenants  of 
debtor  by  receiver  should  go  to  landlord.  When  a  debtor 
voluntarily  appears  in  court,  and  consents  to  a  receiver  being 
appointed  over  his  estate  and  effects  for  the  benefit  of  his 
creditors,  in  an  action  instituted  by  such  receiver  to  recover 
upon  a  demand  due  to  or  for  property  owned  by  the  debtor,  the 
defendant  can  not  object  to  the  irregularity  in  the  receiver's 
appointment,  since,  the  party  against  whom  the  receiver  was 
appointed  having  consented  to  the  proceeding  and  waived  all 
irregularities  therein,  it  does  not  lie  in  the  mouth  of  his  debtor 
or  of  third  persons  to  question  the  regularity  of  such  proceed- 
ings.l^  Nor  can  the  validity  of  the  receiver's  appointment  be 
assailed,  collaterally,  as  in  a  suit  brought  by  him  against  third 
parties,  if  sufficient  jurisdictional  facts  w^ere  shown  in  the  origi- 
nal proceeding  for  his  appointment  to  warrant  the  court  in 
the  exercise  of  its  jurisdiction ;  since  the  judgment  debtor  being 
concluded  so  long  as  the  order  is  unreversed,  third  persons  are 
also  concluded.  1'^  When  a  receiver  over  a  judgment  debtor  re- 
ceives rents  from  sub-tenants  of  the  debtor,  for  the  rental  of 
premises  of  which  the  debtor  held  a  lease,  such  funds  are 
not  subject  to  distribution  among  the  creditors  generally,  but 
are  reserved  for  the  landlord  of  the  premises,  wdiose  equity  is 
superior  to  that  of  all  other  creditors.     And  in  such  a  case, 

15  Richards  v.  Allen,  3  E.  D.  89  N.  Y.,  328;  Green  v.  Bookhart, 
Smith,  399.  19  S.  C,  466. 

16  Tyler  v.  Willis,  33  Barb.,  327;  i '  Whiulesey  v.  Frantz,  74  N.  Y„ 
S.  C,  sub  nom.     Tyler  v.  Whitney,  456. 

12  Ab.  Pr.,  465 ;  Powell  v.  Waldron, 


CHAP.   XII.]  CREDITORS.  651 

the  receiver  will  be  directed  to  pay  the  money  to  the  landlord, 
or  to  his  representative,  upon  petition  showing  the  facts. ^^ 

§  471.  Receiver  appointed  by  one  federal  court  can  not 
sue  in  another  to  recover  securities  belonging  to  debtor. 

It  is  held  that  a  receiver  appointed  on  a  creditor's  bill  in  a  cir- 
cuit court  of  the  United  States,  having  no  right  or  authority 
except  such  as  is  conferred  upon  him  by  the  order  of  his  ap- 
pointment, can  not  maintain  an  action  in  a  federal  court  in  an- 
other district  to  compel  the  surrender  of  certain  securities  of 
the  debtor  held  by  defendant,  to  be  applied  in  satisfaction  of  the 
judgment  in  aid  of  which  the  receiver  was  appointed.  Such  a 
receiver,  it  is  held,  has  no  extra-territorial  jurisdiction  or 
rights  of  action,  and  the  federal  court  by  which  he  was  ap- 
pointed is  treated,  for  the  purposes  of  such  a  case,  as  a  court 
of  local  and  limited  jurisdiction.  Nor  is  his  right  of  action, 
under  such  circumstances,  enlarged  by  the  fact  that,  under 
the  statutes  of  the  state  in  which  he  was  appointed,  receivers 
on  creditors'  bills  are  vested  with  full  title,  and  have  full  au- 
thority to  maintain  suits;  since  the  laws  of  the  state  can  not 
enlarge  or  alter  the  effect  of  the  order  of  the  federal  cour^, 
nor  enlarge  the  jurisdiction  of  that  court.^^ 

18  Riggs  V.  Whitney,  15  Ab.  Pr.,  ferred  by  an  order  of  the  circuit 
388.  court  of  the  United  States,  for  the 

19  Brigham  v.  Luddington,  12  eastern  district  of  Wisconsin,  can 
Blatchf.,  237.  This  was  a  bill  filed  not  maintain  this  suit  in  this  dis- 
in  the  circuit  court  of  the  United  trict.  The  opinion  of  the  supreme 
States,  for  the  southern  district  of  court  in  Booth  v.  Clark,  17  How- 
New  York,  by  a  receiver  appointed  ard,  322,  seems  to  me  fully  to  sus- 
on  a  judgment  creditor's  bill  in  the  tain  this  objection.  That  was  an 
circuit  court  of  the  United  States,  action  in  the  circuit  court  for  the 
for  the  eastern  district  of  Wiscon-  District  of  Columbia,  by  a  receiver 
sin,  seeking  a  recovery  of  certain  appointed  under  a  creditor's  bill 
securities  of  the  judgment  debtor,  filed  in  a  court  of  equity  of  the  state 
and  to  apply  them  in  satisfaction  of  of  New  York.  He  was  held  not 
the  judgment.  Mr.  Justice  Wood-  entitled  to  sue.  The  suggestion  of 
ruff  says,  p.  242:  "I  notice,  with-  counsel,  that  the  circuit  court  for 
out  enlarging  upon  the  stibject.  a  this  district  and  the  circuit  court 
further  objection,  viz.,  that  the  for  the  eastern  district  of  Wiscon- 
complainant,  having  no  right  or  sin,  derive  their  authority  from  the 
authority,   except   such  as  was  con-  same    government     and     the     same 


652 


RECEIVERS. 


[chap.  XII. 


§  471i/.  Effect  of  death  of  parties  or  of  receiver;  prac- 
tice in  such  case.  When  a  receiver  is  appointed  in  a  cred- 
itor's suit  instituted  to  reach  the  property  and  equitable  inter- 
ests of  judgment  debtors,  and  to  subject  them  to  the  payment 
of  the  judgment,  and  tlie  debtors  assign  their  property  to  the 
receiver,  the  receiversliip  does  not  terminate  by  the  death  of 
the  receiver,  or  by  the  death  of  the  judgment  debtors.  And 
while  the  creditor's  suit  abates  by  the  death  of  the  judgment 
debtors,  the  title  to  their  property  is  regarded  as  vested  in  the 
court  itself.  It  is,  therefore,  competent  for  the  court  to  ap- 
point a  new  receiver,  who  ma}'^  institute  actions  to  recover  the 
estate  of  the  debtors. 20  So  the  death  of  a  receiver  appointed 
to  wind  up  the  affairs  of  a  partnership  does  not  abate  the  re- 
ceivership, and  it  is  proper  for  the  court  in  such  case  to  appoint 
another  receiver.^i  And  upon  the  death  of  a  receiver,  a  rule  to 
show  cause  is  the  proper  procedure  to  continue  the  action  in  the 


federal  laws,  does  not  meet  the 
difficulty.  The  decision  did  not 
proceed  upon  the  sole  ground  that 
the  jurisdiction  of  New  York  was 
foreign  to  that  of  the  federal  courts ; 
but  on  the  ground  that  such  a  re- 
ceiver could  not  sue  in  another  ter- 
ritorial jurisdiction.  The  circuit 
court  for  this  district  and  the  cir- 
cuit court  for  the  eastern  district  of 
Wisconsin  each  exercises  a  local 
and  limited  jurisdiction,  and  I  am 
not  able  to  withdraw  this  case 
from  the  operation  of  the  decision 
of  the  supreme  court  above  cited. 
(See  on  this  subject,  Hope  Mutual 
Life  Ins.  Co.  v.  Taylor,  2  Robert- 
son, 278.)  To  the  suggestion  of 
counsel,  that,  by  the  statutes  of 
Wisconsin,  receivers  appointed  on 
creditors'  bills  are  vested  with  full 
title,  and  have  full  authority,  to 
maintain  suits,  which  this  court 
ought  to   recognize,   it   must   suffice 


to  say:  (1)  This  receiver  was  ap- 
pointed under  and  by  virtue  of  the 
general  power  of  courts  of  equity, 
and  with  such  efifect  only  as  is  due 
to  the  order  of  the  court  making 
the  appointment.  He  was  not  ap- 
pointed under  or  by  virtue  of  any 
statute.  (2)  The  statutes  of  the 
state  of  Wisconsin  can  not  enlarge 
or  alter  the  effect  of  an  order  or 
decree  of  the  circuit  court  of  the 
United  States,  nor  enlarge  or  mod- 
ify the  jurisdiction  of  that  court  or 
its  efficiency.  Payne  v.  Hook,  7 
Wal.,  425.  These  views  render  it 
wholly  unnecessary  to  consider  the 
merits  of  this  suit  or  the  various 
matters  ably  discussed  on  the  hear- 
ing. I  am  constrained  to  conclude 
that  the  bill  should  be  dismissed." 

20  Nicoll  V.  Boyd,  90  N.  Y.,  516. 

21  Smith  V.  Harris,  135  Ind.,  621, 
35  N.  E.,  984. 


CHAP.  XII.]  CREDITORS.  653 

name  of  his  successor,  and  if  the  defendant  wishes  to  contest 
the  fact  of  the  death  of  the  former  receiver,  the  issue  should 
be  raised  in  the  return  to  the  rule.22 

22  Pickett  V.  Fidelity  &  C  Co.,  60   S.  C,  477,  38  S.  E.,  160,  629. 


CHAPTER  XIII. 

OF  RECEIVERS  OVER  PARTNERSHIPS. 

I.  Principles  on  Which  the  Relief  is  Granted  §  472 

II.  Receiver  Upon  Dissolution  of  the  Firm  509 

III.  Exclusion  from  Firm  as  Ground  for  Receiver 522 

IV.  Receiver  Upon  Death  of  Partner 530 

V.  Functions  and  Duties  of  the  Receiver  538 

I.  Principles  on  Which  the  Relief  is  Granted. 

§  472.     The   jurisdiction    well    established;    doctrine    of    Lord    Eldon; 
probability  of  decree  for  dissolution. 

473.  Courts  proceed  with  extreme  caution;  beneficial  nature  of  the 

relief. 

474.  Receiver  granted  on  same  ground  as  injunction;     actual  abuse 

necessary;  dissolution;  quarrel  between  partners. 

475.  Court  does  not  determine  ultimate  rights  of  the  parties. 

476.  There  must  be  an  actual  partnership  inter  se;  employee,  though 

nominal  partner,  can  not  have  receiver. 

477.  Right    to    participate    in    profits    the    test;    burden    of    proof    on 

plaintifif. 

478.  Defendant   permitted   to   give   security  to   account   to  plaintiff,    in 

lieu   of  receiver. 

479.  Denial  of  partnership  by  defendant  not  alone  sufficient  to  pre- 

vent receiver. 

480.  Not  the  province  of  the  court  to  superintend  the  business. 

481.  Receiver  may  manage  business  pendente  lite;  running  steam- 

boat;    horses     and     carriages;     political     paper;     borrowing 
money. 

482.  Courts  will   interfere  only  in   clear  cases;   and  where  there  is 

mismanagement. 

483.  Breach    of    duty    must     be     shown;  irreconcilable  disagreement; 

fraud;  probability  of  loss. 

484.  Want  of  confidence  as  a  ground  for  receiver. 

485.  Failure    to    co-operate    in    managemant    of    business    no    groimd 

for  receiver;   unprofitable  business  no  ground  for  relief. 

486.  Appointment  not  a  matter  of  course;  confidence  between  part- 

ners. 

654 


CHAP.  XIII.]  PARTNERSHIPS.  655 

§  487.     Defendant    resolved   to   break  up  business;  impossibility  of  con- 
tinuing advantageously. 

488.  Dispute  as  to  firm  property;   insolvency  and  bad  faith  of  de- 

fendant; bankruptcy. 

489.  Violation  of  agreement  for  dissolution;  exclusion  from  books; 

embittered   feeling. 

490.  Partner  in  possession  can  not  have  receiver. 

491.  Receiver  not  granted  when  equities  of  bill  denied  by  answer. 

492.  Refused  when  plaintiff's  right  is  not  questioned  or  disturbed. 

493.  Receiver  in  behalf  of  outgoing  partner. 

494.  Receiver  on  judgment  creditor's  bill  after  dissolution. 

495.  Appointment  prevents  preference  to  creditor;  does  not  inter- 

fere with  rights  or  liens  of  creditors  already  acquired. 

496.  Failure    to    contribute    to   capital    stock;    sale   of   interest;    insol- 

vency; exclusion  by  purchaser. 

497.  Not   sufficient   to   allege   large   sums   of  money   in   defendant's 

hands ;  misapplication  of  funds ;  agreement  for  arbitration. 

498.  Receiver  refused  over  shares  of  stock  constituting  entire  assets 

of  firm. 

499.  Use  of  firm  effects  by  remaining  partners  after  dissolution. 

500.  Partnership   for  sawing  lumber;   failure  to  take  timber  from 

land  of  one  partner. 

501.  When  court  may  direct  issue  to  be  tried  by  jury. 

502.  Courts  averse  to  interfering  ex  parte. 

503.  Jurisdiction  over  foreign  partnerships. 

504.  Partnership  in  working  farm;  deficiency  in  profits. 

505.  Priority  by  attaching  creditors  before  final  decree. 

506.  Injunction  auxiliary  to  receivership  continued  to  hearing. 

507.  Receiver  granted  as  between  purchasers  or  assignees  of  differ- 

ent partners. 

508.  Limited  partnerships. 

508a.  Effect  of  denial  of  motion  in  former  suit. 

§  472.  The   jurisdiction  well   established;    doctrine   of 
Lord  Eldon;  probability  of  decree  for  dissolution.     The 

appointment  of  receivers  in  actions  between  partners  for  an 
accounting  and  a  settlement  of  their  partnership  affairs,  to 
take  charge  of  the  assets,  collect  the  debts  and  wind  up  the 
business  of  the  firm,  is  a  legitimate  exercise  of  the  jurisdiction 
of  courts  of  equity,  and  one  which  is  clearly  sustained  by  the 
authorities.^  And  the  power  of  thus  appointing  a  receiver  in 
an  action  for  the  dissolution  of  a  partnership  and  the  settlement 

1  See  Saylor  v.  Mockbie,  9  Iowa.  209 ;  Jordan  v.   Miller,  75  Va.,  442. 


656  RECEIVERS.  [chap.  XIII. 

of  the  firm  business,  is  regarded  as  essential  to  the  object  sought 
by  such  suit,  and  falls  within  that  class  of  incidental  powers 
which  the  courts  having  jurisdiction  over  such  cases  have 
full  authority  to  exercise.^  The  doctrine  of  the  English  Court 
of  Chancery,  as  laid  down  by  Lord  Eldon,  was,  that  the  court 
would  not  take  a  partnership  business  into  its  own  hands  by 
the  appointment  of  a  receiver,  unless  the  suit  was  so  framed  that 
a  decree  could  be  made  at  the  hearing,  either  that  the  business 
be  carried  on  according  to  the  terms  of  some  instrument,  which 
by  agreement  between  the  parties  was  to  regulate  the  manner  of 
conducting  the  business,  or  that  it  be  wholly  ended  and  the  part- 
nership dissolved.^  And  while  the  tendency  of  the  latter  deci- 
sions, especially  in  this  country,  has  been  averse  to  the  con- 
tinuance and  management  of  a  partnership  business  by  a  re- 
ceiver, the  other  element  in  the  rule  as  laid  down  by  Lord  El- 
don, viz.,  the  probability  of  a  decree  for  a  dissolution,  is  still 
recognized  as  a  controlling  element  in  determining  whether  a 
receiver  shall  be  appointed. ^ 

§  473.  Courts  proceed  with  extreme  caution;  beneficial 
nature  of  the  relief.  The  determination  of  an  application 
for  a  receiver,  upon  a  bill  seeking  the  dissolution  of  a  partner- 
ship, is  justly  regarded  as  a  matter  of  extreme  delicacy,  and  one 
which  requires  the  most  careful  consideration  upon  the  part  of 
the  court;  since,  if  the  application  is  granted,  its  effect  is  to 
terminate  the  partnership  contrary  to  the  wishes  of  the  defend- 
ant partner,  while,  if,  refused,  it  leaves  defendant  to  continue 
the  business  at  the  risk  of  great  loss  and  prejudice  to  plaintiff's 
rights.^  But,  while  the  courts  proceed  with  extreme  caution 
in  exercising  their  power  of  appointing  receivers  in  this  class 
of  cases,  the  jurisdiction  is  regarded  as  an  extremely  beneficial 

2  Gridley  v.  Connor,  2  La.  An.,  87.  These   considerations    are   well    ex- 

3  Const  V.  Harris,  Turn.  &  R.,  517.  pressed  by  Lord   Langdale,   Master 

4  For  the  application  of  the  doc-  of  the  Rolls,  in  the  latter  case, 
trine  in  Alabama,  see  Gillett  v.  Hig-  p.  500,  as  follows:  "It  must  be  ad- 
gins,  142  Ala.,  444,  38  So.,  664.  mitted  that  when   an  application   is 

5  New  V.  Wright,  44  Miss.,  202;  made  for  a  receiver  in  partnership 
Madgwick  v.  Wimble,  6  Beav.,  495.  cases,  the  court  is  always  placed  in 


CHAP.  XIII.]  PARTNERSHIPS.  657 

one,  !;ince  cases  frequently  arise  of  disputes  in  the  settlement 
of  partnership  affairs,  where  the  interests  of  both  parties  can 
only  be  properly  secured  by  the  intervention  of  equity  through 
the  appointment  of  a  receiver.*^ 

g  474,  Receiver  granted  on  same  ground  as  injunction ; 
actual  abuse  necessary ;  dissolution ;  quarrel  between  part- 
ners. It  may  be  said,  generally,  that  substantially  the  same 
conditions  are  requisite  to  warrant  the  extraordinary  aid  of 
equity  by  appointing  a  receiver  in  partnership  cases,  as  are 
necessary  to  induce  the  court  to  interfere  by  injunction.  Some 
actual  abuse  of  the  partnership  property,  or  of  the  rights  of  a 
copartner,  must  appear,  and  not  a  mere  temptation  to  such 
abuse,  and  the  grounds  relied  upon  should  usually  be  such  as  to 
authorize  a  decree  for  a  dissolution  of  the  firm.  When  the  dis- 
solution has  already  taken  place,  or  when  it  is  apparent  that  it 
will  be  decreed  upon  the  ground  of  some  breach  of  duty  by  one 
of  the  partners,  a  receiver  may  be  appointed,  but  the  court  will 
not  interfere  merely  because  of  a  quarrel  between  the  partners, 

a  position  of  very  great  difficulty.  472.  Frick,  J.,  very  forcibly  oh- 
On  the  one  hand,  if  it  grants  the  serves,  with  reference  to  the  power 
motion,  the  effect  of  it  is  to  put  an  of  appointing  receivers,  as  follows, 
end  to  the  partnership  which  one  of  p.  476  :  "It  is  a  high  power,  never  ex- 
the  parties  claims  the  right  to  have  ercised  where  it  is  likely  to  produce 
continued;  and  on  the  other  hand,  irreparable  injustice  or  injury  to 
if  it  refuses  the  motion,  it  leaves  private  rights,  or  where  there  exists 
the  defendant  at  liberty  to  go  on  any  other  safe  or  expedient  remedy, 
with  the  partnership  business,  at  While  in  a  variety  of  instances,  es- 
the  risk,  and  probably  at  the  great  pecially  in  partnership  transactions, 
loss  and  prejudice,  of  the  dissent-  where  the  parties,  after  dissolution 
ing  party.  Between  these  difficul-  of  their  connections,  can  not  agree 
ties,  it  is  not  very  easy  to  select  the  upon  the  adjustment,  and  the  prop- 
course  which  is  best  to  be  taken,  erty  or  funds  in  dispute  are  in  the 
but  the  court  is  under  the  necessity  hands  of  one  partner  alone,  each 
of  adopting  some  mode  of  proceed-  having  an  equal  right  to  the  con- 
ing to  protect,  according  to  the  best  trol  of  the  property,  cases  must 
view  it  can  take  of  the  matter,  the  necessarily  arise  where  the  interest 
interests  of  both  parties,  and  it  has  of  both  can  only  be  properly  se- 
accordingly  interfered  in  many  cured  by  the  intervention  and  ap- 
such  cases."  pointmcnt  of  a  receiver." 
6  See  Speights  v.  Peters,  9  Gill, 
Receivers — 42. 


658 


RECEIVERS. 


[chap.  XIII. 


since  this  does  not,  of  itself,  constitute  sufficient  ground  for  a 
dissolution."^  But  a  receiver  is  properly  appointed  at  the  in- 
stance of  one  of  the  partners  where  it  appears  that  the  partner- 
ship is  insolvent  and  that  there  are  serious  dissentions  among" 


"  Henn  v.  Walsh,  2  Edw.  CIi.,  129. 
The  principles  governing  the  courts 
in  the  appointment  of  receivers  in 
partnership  cases  are  well  stated  by 
McCoun,  Vice-Chancellor,  in  this 
case,  as  follows,  p.  130:  "A  part- 
nership agreement,  like  any  other, 
is  binding  upon  the  parties,  and  they 
must  adhere  to  its  terms.  Neither 
partner  is  at  liberty  to  recede  from 
it  against  the  will  of  the  other  with- 
out a  sufficient  cause.  Mere  dis- 
satisfaction by  one  partner  will  not 
justify  him  in  filing  a  bill  for  a  dis- 
solution, where,  by  their  express 
agreement,  it  is  to  continue  for  a 
definite  term;  and  this  court  will 
not  interfere  to  dissolve  the  con- 
tract upon  such  ground.  Here, 
there  was  a  five-years  partnership, 
with  the  privilege  of  dissolving  it 
at  the  end  of  two  years.  The  com- 
plainant has  become  dissatisfied; 
and  he  makes  various  charges  in 
his  bill,  showing  prima  facie  cause 
enough  for  a  dissolution  before  the 
stipulated  time.  But  his  allega- 
tions are  positively  and  fully  de- 
nied in  the  answer.  As  the  mat- 
ter now  stands,  the  complainant's 
case  fails,  and  he  would  not  be  en- 
titled, on  the  hearing,  to  a  decree 
for  a  dissolution— consequently,  not 
to  an  injuncti-)n  or  receiver  in  the 
meantime.  If  there  be  any  breach 
of  covenants  by  one  partner  which, 
in  its  consequences,  would  be  so  im- 
portant as  to  authorize  the  party 
complaining  to  call  for  a  dissolu- 
tion before  the  copartnership  could 
be  dissolved  by  the  efflux  of  time. 


the  complainant  may  then  have  an 
injunction.  There  must  be  some 
actual  abuse  of  the  partnership 
property  or  of  the  rights  of  a  co- 
partner, and  not  a  mere  temptation 
to  such  abuse,  which  will  induce 
this  court  to  interfere.  The  same 
rules  apply  in  respect  to  the  ap- 
pointment of  a  receiver.  It  must 
appear  to  be  such  a  case  as  would 
authorize  a  decree  for  dissolution. 
In  thus  interposing,  the  court  gen- 
erally looks  to  the  winding  up  of 
the  affairs,  and  not  to  the  continu- 
ation of  a  trade  under  its  author- 
ity. Where  a  dissolution  has 
already  taken  place,  or  it  is  appar- 
ent that  it  will  be  decreed  on  the 
ground  of  some  breach  of  duty  or 
contract  by  one  of  the  partners, 
there  a  receiver  will  be  appointed. 
But  if  partners  quarrel,  a  receiver 
will  not  be  appointed  merely  on 
such  an  account,  because  it  may 
not,  of  itself,  be  a  sufficient  ground 
for  severing  the  connection  be- 
tween them.  In  the  present  case, 
the  complainant  produces  affidavits 
to  show  a  breach  of  the  articles  of 
the  partnership  by  the  defendant's 
withdrawing  more  than  the  stipu- 
lated twenty-five  dollars  per  month. 
The  affidavits  are  not  positive  on 
the  subject.  They  speak  merely 
from  what  appears  by  entries  in 
the  books,  coupled  with  what  is 
believed;  while  on  the  other  hand 
the  denials  of  the  defendant  are 
positive.  I  can  not  at  present,  in 
the  face  of  all  this,  interfere.  It 
may  be  an   unfortunate  connection 


CHAP.  XIII.]  PARTNERSHIPS.  659 

the  partners  and  a  probability  of  waste  and  the  necessity  for 
an  accounting  and  dissolution.^ 

§  475.  Court  does  not  determine  ultimate  rights  of  the 
parties.  Upon  applications  for  receivers  of  partnership 
assets,  in  actions  for  a  dissolution  and  a  settlement  of  the 
affairs  of  the  firm,  the  court  does  not  determine  the  ultimate 
rights  of  the  parties,  and  will  refuse  to  pass  upon  those  rights 
upon  such  preliminary  applications.  The  duty  of  the  court,  in 
such  cases,  is  merely  to  protect  the  property  pendente  lite,  for 
the  benefit  of  whoever  may  ultimately  be  determined  to  be  en- 
titled thereto,  when  the  court  shall  have  before  it  all  the  evi- 
dence necessary  to  a  full  and  complete  determination  of  the 
questions  involved.  And  the  court  does  not,  on  the  preliminary 
application,  pretend  or  assume  to  say  which  of  the  partners  is 
entitled  to  the  firm  assets.^  But  when  the  case  is  ready  for  final 
hearing  upon  the  pleadings  and  proofs,  it  is  error  to  appoint 
a  receiver  over  a  partnership  without  first  adjudicating  the 
merits  upon  which  the  right  to  such  relief  depends,  and  without 
any  showing  of  urgency  or  of  an  immediate  necessity  for  the  ap- 
pointment. ^^ 

§  476.  There  must  be  an  actual  partnership  inter  se; 
employee,  though  nominal  partner,  can  not  have  receiver. 
It  is  important  to  observe,  that,  as  regards  the  parties  them- 
selves, a  court  of  equity  will  not  lend  its  extraordinary  aid  by 
appointing  a  receiver  unless  an  actual  partnership  inter  se 
be  shown  to  have  existed.  It  is,  therefore,  in  all  cases,  essential 
to  the  exercise  of  the  jurisdiction,  that  there  should  actually  be 
an  existing  partnership,  either  admitted  by  defendant  or  estab- 

which  the  complainant  has  formed.  v.   Perkins,   13   Mont.,  143,  32  Pac, 

Still,   he   entered   into   it   advisedly;  653. 

and    he    must    endure    it    until    the  8  Veith   v.    Ress,   60   Neb.,   52.   82 

contract    allows    of    a    withdrawal,  N.  W.,  116. 

unless    he    can    overthrow    the    de-  9  Blakeney   v.    Dufaur,    15    Beav., 

nials   of  the   defendant  by   superior  40. 

evidence.     The   injunction   must   be  10  Morey  v.  Grant,  48  Mich.,  326, 

dissolved,  and  the  motion  for  a  re-  12  N.  W.,  202. 

ceiver  denied."     And  see  Mcintosh 


660  RECEIVERS.  [chap.  XIII. 

lished  by  satisfactory  proof,  since  otherwise  the  individual 
property  of  a  defendant  might  be  taken  from  him  by  a  receiver, 
and  in  the  end  it  might  appear  that  plaintiff  had  no  right.^l 
When,  therefore,  the  existence  of  a  partnership  is  directly  in 
dispute,  and  is  denied  by  defendant,  in  an  action  for  an  ac- 
counting, the  court  will  not  appoint  a  receiver  in  limine,  es- 
pecially when  there  is  no  allegation  of  defendant's  insolvency, 
or  of  his  inability  to  respond  in  the  event  of  a  final  recovery 
against  him.^^  And  when  the  partnership  is  only  a  nominal 
one,  the  parties  using  a  firm  name,  but  under  an  agreement 
that  one  shall  be  employed  as  a  clerk  or  employee  of  the  other, 
receiving  as  compensation  a  share  of  the  profits,  either  with  or 
without  additional  salary,  the  agreement  expressly  stating 
that  they  are  not  partners,  and  that  no  partnership  relation  was 
intended  to  be  formed,  the  person  thus  employed  can  not  main- 
tain a  bill  against  the  other  for  an  injunction  and  a  receiver, 
since  he  has  no  such  lien  upon  the  assets  as  to  warrant  the 
interposition  of  a  court  of  equity  in  his  behalf.^^  And  this  is 
true,  even  though  the  parties  by  their  conduct  have  become  lia- 
ble as  partners  to  third  persons,  the  rights  of  third  persons  or 
of  creditors  not  being  involved  in  the  litigation.^* 

§  477.  Right  to  participate  in  profits  the  test;  burden  of 
proof  on  plaintiff.  In  the  application  of  the  general  rule 
which  limits  the  relief  to  cases  of  existing  partnership  between 
the  parties,  it  must  satisfactorily  appear  that  the  partnership 
was  actually  completed  so  far  as  to  entitle  the  parties  to  a  par- 
ticipation in  profits ;  since  the  right  to  participate  in  the  profits, 
and  the  danger  which  one  partner  might  sustain  by  being  ex- 
cluded therefrom,  pending  an  action  for  a  dissolution,  consti- 

iiGoulding    v.    Bain,    4    Sandf.,  Irwin   v.    Everson,  95    Ala.,  64,    10 

716;    Kerr   v.    Potter,   6   Gill,    404;  So.,  320;  Wood  v.  Wood,  50  West 

Irwin   V.   Everson,   95   Ala.,   64,    10  Va.,  570.  40  S.  E.,  416;  Rowland  v. 

So.,  320;  Nutting  v.  Colt,  3  Halst.  Auto  Car  Co.,  133  Fed.,  835. 

Ch.,     539.      See,    also,     Hobart    v.  13  Kerr    v.    Potter,    6    Gill,    404; 

Ballard,   31    Iowa,   521;    Popper   v.  Nutting  v.  Colt,  3  Halst.  Ch..  539. 

Scheider,  7  Ab.  Pr.,  N.  S.,  56.  14  Kerr  zk  Potter,  6  Gill,  404 

12  Goulding  v.  Bain,  4  Sandf.,  716 ; 


CHAP.  XIII.]  PARTNERSHIPS.  661 

tiite  the  principal  reason  for  the  appointment  of  receivers  in 
this  class  of  actions.  And  the  burden  of  showing  the  exist- 
ence of  a  partnership  at  the  time  of  the  application  for  a  re- 
ceiver rests  upon  the  plaintiff.  When,  therefore,  the  consum- 
mation of  the  relation  to  the  extent  of  a  right  to  participate  in 
the  profits  is  not  shown,  there  being  only  a  contract  which 
might  ripen  into  a  partnership  upon  payment  of  certain  money, 
being  in  the  nature  of  an  executory  agreement  to  form  a  part- 
nership, a  receiver  should  not  be  allowed.!^ 

§  478.  Defendant  permitted  to  give  security  to  account 
to  plaintiff,  in  lieu  of  receiver.  When  plaintiff,  in  an  action 
for  the  dissolution  of  a  partnership,  has  obtained  an  injunc- 
tion and  a  receiver,  but  the  partnership  relation  is  denied  by  de- 
fendants, and  it  is  apparent  that  plaintiff's  interest  in  the  firm, 
if  any,  is  very  small,  and  that  by  continuing  the  receiver  the 
business  will  be  greatly  imperiled  and  perhaps  ruined,  it  is 
proper  for  the  court  to  modify  the  order  for  the  injunction 
and  receiver,  by  permitting  defendants,  in  lieu  thereof,  to  give 
security  for  the  payment  to  plaintiff  of  any  sum  which  may  be 
found  due  him  upon  a  final  settlement.  In  such  a  case,  the 
court,  proceeding  upon  equitable  principles,  will  mold  and 
adapt  its  remedy  so  as  to  attain  substantial  justice,  without 
compromising  the  rights  of  any  of  the  parties.!^    And  where 

15  Hobart  t'.  Ballard,  31  Iowa,  521.  stead,   to  permit   the  defendants   to 

16  Popper  V.  Scheider,  7  Ab.  Pr.,  file  security  to  pay  the  plaintiff  any 
N.  S.,  56.  McCiinn,  J.,  says,  p.  58:  sum  that  may  be  found  due  him  on 
".  .  .  This  action  is  in  the  nature  a  final  settlement  of  the  partner- 
of  a  suit  in  equity,  in  which  the  re-  ship  accounts.  In  view  of  the  facts 
lief  demanded  is  the  dissolution  of  that  a  partnership  between  the 
an  alleged  copartnership,  and  an  plaintifif  and  defendants  is  posi- 
adjustment  of  the  partnership  ac-  tively  denied;  that  a  very  small 
counts,  and  in  which  provisional  proportion  of  the  partnership  cap- 
relief  is  sought  by  an  injunction  ilal  was  contributed  by  the  plain- 
and  the  appointment  of  a  receiver.  tiff,  if,  indeed,  any  were  contributed 
I  allowed  an  interlocutory  order  for  by  him  in  the  character  of  partner; 
an  injunction  and  the  appointment  that  by  the  allowance  of  an  injiuic- 
of  a  receiver.  The  motion  now  is  tion  and  the  appointment  of  a  re- 
to  modify  the  order  of  injunction  ceiver  the  partnership  business, 
and  appointing  a  receiver;  and,  in-  which    is   very    large    and    flotu^ish- 


662  RECEIVERS.  [chap.  XIII. 

it  appears  that  the  appointment  of  a  receiver  in  an  accounting 
between  partners  will  result  in  great  injury  and  loss  to  both 
parties  which  can  easily  be  avoided  by  the  giving  of  a  proper 
bond,  the  court  may  deny  the  appointment  of  a  receiver  upon 
the  filing  of  such  a  bond>'^  And  under  a  statute  which  pro- 
vided that  a  receiver  should  not  be  appointed  if  the  defendant 
should  offer  a  proper  bond  to  hold  plaintiff  harmless,  and  it 
appeared  that  such  a  bond  had  been  tendered,  it  was  held 
that  a  receiver  should  not  be  appointed. ^^ 

§  479.  Denial  of  partnership  by  defendant  not  alone 
sufficient  to  prevent  receiver.  While  it  is  true,  as  has  thus 
been  shown,  that,  in  cases  of  doubt  as  to  the  existence  of  a 
partnership,  courts  of  equity  will  not  interfere  by  a  receiver, 
yet  if,  from  the  affidavits  presented  upon  the  application,  it 
satisfactorily  appears  that  there  is  a  partnership  and  that 
defendant  is  in  possession  of  most  of  the  assets,  denying  the 
other  partner  access  thereto,  the  court  may  properly  grant  the 
aid  of  a  receiver,  although  defendant  by  affidavits  denies  the 
existence  of  a  partnership.  In  other  words,  the  mere  denial  by 
the  defendant  partner  of  the  e:>:istence  of  a  partnership  is  not 
sufficient  to  prevent  the  appointment,  when  the  court  is  satis- 
fied from  the  evidence  in  support  of  the  application  that  the 
partnership  relation  exists.^^ 

ing,   will   be   arrested,   and   perliaps  visional    remedy    is    only    auxiliary 

ruined;    and   that  by   the   modifica-  to  ultimate  relief,  and  should  never 

tion  proposed,  the  plaintiff   will  be  usurp    or   anticipate   the   office   and 

abundantly      secured      in      all      his  effects  of  a  trial  on  the  merits." 

rights,     absolute    or    contingent,    I  17  Cary  Bros.  v.  Dalhoff   C.   Co., 

can  not  doubt  but  the  equity  of  'che  126  Fed.,  584.     To  the  same  effect,^ 

case    requires    a    rescission    of    the  Mann  v.  Gaddie,  88  C.  C.  A.,  1,  158 

order    of    injunction    and    receiver-  Fed.,  42,  reversing  S.  C,  147  Fed., 

ship,    and    the    substitution    of    an  955.     And  see,  ante,  §§  9,  124,  308. 

order  to  the  effect  suggested.     It  is  18  Roberts  v.  Pipkin,  63  S.  C,  252, 

thus   that   a  court  of  equity  molds  41   S.  E.,  300. 

and    adapts    the    remedial    relief    it  19  Hottenstein  v.  Conrad,  9  Kan., 

accords,  so  as  to  reach  the  ends  of  435.     Brewer,  J.,  says,  p.  440:     "It 

substantial     justice,     without     com-  would    be    opening   the    door   to    a 

promising  the  rights  or  interest  of  great   deal    of   wrong   to   hold   that 

any  party  to  the  litigation.     A  pro-  by  simply  denying  the  existence  of 


CHAP.  XIII.] 


PARTNERSHIPS. 


663 


§  480.  Not  the  province  of  the  court  to  superintend  the 
business.  It  is  important  to  bear  in  mind,  in  considering 
the  subject  of  receivers  in  partnership  cases,  that  it  is  not  the 
province  of  a  court  of  equity  to  conduct  the  business  of  a  co- 
partnership, and  while  a  receiver  may  be  directed  to  continue 
the  business  a  sufficient  length  of  time  to  enable  the  court  to 
determine  the  rights  of  the  parties  Htigant,  it  is  not  the  prov- 
ince of  the  court  to  become  the  superintendent  and  manager  of 
the  private  business  of  parties.^^  Indeed,  this  necessarily  fol- 
lows from  the  very  object  and  purpose  contemplated  by  the 
court  in  appointing  a  receiver  upon  a  bill  for  the  dissolution  of 
a  partnership,  such  purpose  being  the  preservation  of  the  firm 
property  until  the  cause  can  be  determined,  the  court,  through 


a  partnership,  a  party  in  possession 
of  large  amounts  of  partnership 
property  could  hold  that  possession 
until,  after  the  delay  of  a  suit,  the 
verdict  of  a  jury  had  established 
the  partnership.  It  would  often  re- 
sult in  real  victory  to  the  wrong- 
doer. A  court  having  the  right  to 
hear  testimony  as  to  a  fact,  upon  a 
motion,  has  a  right  to  find  the  ex- 
istence of  that  fact.  Wherever  an 
application  for  a  receiver  in  a  part- 
nership case  is  made,  the  court  has 
to  hear  some  testimony  as  to  the 
existence  of  the  partnership.  Or- 
dinarily, there  is  on  this  point  no 
■counter  testimony ;  yet  the  court 
finds  on  the  testimony  presented 
on  the  motion  that  there  was  a 
partnership.  Without  such  find- 
ing, it  could  not  appoint  a  receiver. 
Having  power  to  make  such  a  find- 
ing, that  power  is  not  taken  away 
by  the  introduction  of  counter  tes- 
timony. It  must  still  find  as  to  the 
fact.  If  there  be  much  contradic- 
tion in  the  testimony,  it  may  re- 
quire proof  of  additional  facts,  such 
as  the  insolvency  of  the  defendant. 


before  making  any  appointment. 
But  still,  its  power  to  examine  the 
testimony,  and  determine  as  to 
the  fact,  remains.  Whatever  a 
court  may  examine  into  on  motion, 
it  may  also  determine.  Its  deter- 
mination, for  the  purposes  of  the 
motion,  establishes  the  fact." 

20  Allen  V.  Hawley,  6  Fla..  164; 
Wolbert  v.  Harris,  3  Halst.  Ch., 
605 ;  First  National  Bank  v.  Cook, 
12  Wyo.,  492,  76  Pac,  674,  78  Pac, 
1083.  See,  also.  Marten  v.  Van 
Schaick,  4  Paige,  479;  Jackson  v. 
De  Forest,  14  How.  Pr.,  81.  And 
see,  ante,  §  36.  In  Allen  v.  Hawley, 
6  Fla.,  164,  Mr.  Justice  Dupont  ob- 
serves :  "As  it  is  not  the  province 
of  the  court  to  create  a  copartner- 
ship, so  it  is  equally  foreign  from 
its  functions  to  conduct  its  business. 
It  never  could  have  been  contem- 
plated that  a  court  of  chancery 
should  become  the  superintendent 
of  the  private  affairs  of  individuals. 
Its  legitimate  province  is  to  adjust 
the  rights  and  settle  the  disagree- 
ments of  parties  growing  out  of 
such  transactions." 


664  RECEIVERS.  [chap.  XIII. 

its  officer  the  receiver,  having  charge  of  the  firm  assets,  not  in 
hehalf  of  either  party,  but  for  the  common  benefit  of  all. 21 
Nor  will  a  receiver  be  appointed  over  a  partnership  for  the 
purpose  of  carrying  out  a  proposed  settlement  or  compromise 
of  an  indebtedness  due  to  the  firm,  which  neither  partner  under 
the  articles  would  be  empowered  to  carry  out,  since  the  court 
can  not  clothe  its  receiver  with  larger  powers  in  this  regard 
than  might  be  exercised  by  the  partners  themselves. ^2 

^  481.  Receiver  may  manage  business  pendente  lite; 
running  steamboat;  horses  and  carriages;  political  paper; 
borrowing  money.  While,  as  is  thus  seen,  courts  of 
equity  will  not  sanction  the  permanent  or  continued  manage- 
ment of  a  partnership  business  in  the  hands  of  a  receiver,  he 
may,  in  a  proper  case,  be  allowed  to  continue  the  management 
of  the  business  pending  legal  proceedings  for  a  dissolution, 
in  order  that  the  good-will  may  be  preserved  to  the  ultimate 
purchaser,  and  its  full  value  be  realized  by  the  partners  at  a 
final  sale,  and  to  prevent  great  loss  to  the  parties. 23  Thus,  when 
two  persons  are  interested  as  partners  in  a  steamboat,  upon  a 
bill  for  a  dissolution  and  an  accounting  it  is  proper  to  appoint 
a  receiver,  and  to  direct  him  to  operate  the  boat  during  the  con- 
tinuance of  the  litigation,  and  until  the  rights  of  the  parties 
can  be  finally  determined.24  So  when  the  partnership  property 
is  of  such  a  nature  that  it  is  liable  to  injury  by  remaining  idle, 
and  it  is  for  the  obvious  benefit  of  all  parties  that  it  should  be 
employed  until  a  sale  may  be  effected,  as  in  the  case  of  horses 
and  carriages,  when  profits  might  accrue  from  their  hire  and 
the  expense  of  their  keeping  is  a  serious  charge  upon  the  re- 
ceiver, the  court  may  permit  him  to  let  and  hire  the  property 
for  the  benefit  of  the  partnership  fund,  until  a  favorable  sale  is 

21  V^olbert    v.    Harris,    3    Halst.  479 ;  Jackson  v.  De  Forest,  14  How. 
Ch.,  605.  Pr.,  81 ;  Heatherton  v.  Hastings,  5 

22  Niemann   v.    Niemann,   43    Cli.  Hun,     459.     And     see     Gwynne     v. 
D.,  198.  Memphis  A.-A.  Co.,  93  Tenn.,  603, 

23  Allen  V.  Hawley,  6  Fla.,   164;  30  S.  W.,  23. 

Marten   v.   Van    Schaick,   4    Paige,  24  Allen  v.  Hawley,  6  Fla.,  164. 


CHAP.  XIII.]  PARTNERSHIPS.  665 

effected. 2^  And  when,  upon  the  dissolution  of  a  manufac- 
turing firm,  the  partners  are  unable  to  agree  among  them- 
selves as  to  the  manner  of  closing  out  the  business  and  there  are 
outstanding  contracts  which  should  be  completed,  the  court 
may  appoint  a  receiver  and  may  authorize  him  to  complete  such 
contracts  and  to  continue  the  business  with  a  view  of  selling  it 
as  a  going  concern. ^^  And  it  has  been  held,  where  a  large  por- 
tion of  the  assets  of  a  partnership  consisted  of  material  in  the 
process  of  manufacture  and  notes  taken  in  the  course  of  the 
business  of  the  firm  which  could  be  made  available  only  by  a 
temporary  and  limited  continuance  of  the  business,  that  the 
receiver  might  be  authorized  to  continue  the  business  to  a 
limited  extent  and  to  borrow  money  for  that  purpose  which 
should  be  given  a  preference  over  prior  mortgage  liens. 27  But 
the  court  will  not  assume  the  responsibility  of  continuing  the 
publication  of  a  political  paper,  which  constitutes  the  partner- 
ship assets,  any  longer  than  is  absolutely  necessary  for  the 
preservation  of  the  property;  and  until  a  sale  can  be  effected 
by  the  receiver,  the  partners  owning  the  paper  may  be  allowed 
to  continue  its  editorial  management,  the  publication  being 
managed  under  the  receiver's  direction. 28 

§  482.  Courts  will  interfere  only  in  clear  cases;  and 
where  there  is  mismanagement.  Courts  of  equity  are 
averse  to  the  dissolution  of  partnerships  and  the  appointing  of 
receivers,  when  it  is  apparent  that  this  course  will  result  disas- 
trously to  the  interests  of  the  parties,  and  when  the  defendant 
partner  protests  against  a  dissolution.  And  it  may  be  said 
generally,  that  the  courts  will  not  lend  their  aid  by  receivers,  in 
this  class  of  cases,  except  in  cases  falling  clearly  within  the 
principles  laid  down  by  the  authorities.29  And  while  the  gen- 
eral rule  is  well  established,  that  if  upon  the  dissolution  of  a 

25  Jackson  v.  De  Forest,  14  How.       Paige,  479.     But  see  Meridian  N.  & 
Pr.,  81.  P.   Co.   V.   Diem   &   W.    P.    Co.,   70 

26  Taylor  v.  Neate,  39  Ch.  D.,  538.       Miss..  695,  12  So.,  702. 

2T  Blythe    v.    Gibbons,    141    Incl.,  29  See  Paige  t^.  Vankirk,  1  Brews., 

332.  35  N.  E.,  557.  290;   Heflebower  v.   Buck,  64  Md., 

28  Marten     ?/.     Van     Schaick,     4       15,  20  Atl.,  991. 


666  RECEIVERS.  [chap.  XIII. 

partnership  the  partners  can  not  agree  upon  the  disposition  to 
be  made  of  the  firm  assets,  and  one  of  the  partners  prevents  or 
seeks  to  exckide  the  other  from  participation  in  the  management 
of  the  firm  effects,  a  receiver  will  be  appointed,  yet  it  must 
clearly  and  satisfactorily  appear  that  there  is  a  conflict  of  inter- 
est, and  that  one  partner  is  seeking  to  deprive  the  other  of  his 
right  to  manage  the  business.  When,  therefore,  it  does  not 
appear  that  the  defendant  partner,  against  whom  a  receiver  is 
sought,  has  offered  any  opposition  to  plaintiff's  participa- 
tion in  settling  the  firm  business,  and  the  answer  denies  that 
defendant  is  proceeding  against  the  rights  or  contrary  to  the 
interests  of  his  copartner,  and  denies  that  he  has  made  any 
demand  upon  plaintiff  for  any  of  the  firm  assets,  a  receiver  will 
be  refused.  The  court  will  not,  under  such  circumstances,  in 
the  absence  of  proof  of  mismanagement  on  the  part  of  defend- 
ant, permit  him  to  be  deprived  of  all  control  over  the  settle- 
ment of  the  business. ^^ 

§  483.  Breach  of  duty  must  be  shown;  irreconcilable 
disagreement ;  fraud ;  probability  of  loss.  The  general  rule 
is,  that  to  warrant  a  receiver  in  partnership  cases,  there  must 
be  some  breach  of  duty  on  the  part  of  one  of  the  partners, 
or  a  violation  of  the  articles  of  copartnership.^^  And  when- 
ever, by  reason  of  dissensions  or  disagreements  between  part- 
ners, the  intervention  of  a  court  of  equity  becomes  necessary 
to  effect  a  settlement  and  winding  up  of  their  affairs,  a  re- 
ceiver will  be  allowed  upon  a  bill  by  one  partner  showing  a 
breach  of  duty  or  a  violation  of  the  copartnership  agreement 
by  the  other.32     Thus,  wilful  acts  of  fraud  by  the  defendant, 

30  Terrell  v.  Goddard,  18  Ga.,  664.  ever  the  intervention  of  a  court  of 
And  see  Warwick  v.  Stockton,  55  equity  becomes  necessary,  in  con- 
N.  J.  Eq.,  61,  36  Atl.,  488.  sequence  of  dissensions  or  disagree- 

31  New  V.  Wright,  44  Miss.,  202.  ments     between     the    partners,     to 

32  Allen  V.  Hawley,  6  Fla.,  164.  effect  a  settlement  and  closing  of 
Mr.  Justice  Dupont  observes,  p.  164:  the  partnership  concerns,  upon  bill 
"From  the  examination  which  we  filed  by  any  of  the  partners,  show- 
have  made  of  the  authorities  on  ing  either  a  breach  of  duty  on  the 
this  subject,  we  think  the  law  may  part  of  the  other  partners,  or  a  vio- 
be  considered  as  settled,  that  when-  iation  of  the  agreement  of  partner- 


CHAP.  XIII.]  PARTNERSHIPS.  667 

such  as  misappropriation  of  firm  funds,  making  false  and  im- 
proper entries  upon  the  firm  books,  and  depriving  complain- 
ant of  access  to  the  books,  and  concealing  from  him  the  true 
condition  of  the  business,  afford  sufficient  ground  for  appoint- 
ing a  receiver.^2  Sq  when  the  pleadings  disclose  a  serious 
and  apparently  irreconcilable  disagreement  between  the  part- 
ners, both  as  to  the  control  and  disposition  of  their  effects 
and  as  to  their  respective  demands  against  each  other,  the 
granting  an  injunction  and  a  receiver  is  regarded  as  a  provident 
exercise  of  the  powers  of  a  court  of  equity,  sanctioned  alike  by 
authority  and  by  the  exigencies  of  the  case.^^  It  should,  how- 
ever, clearly  appear  that  on  account  of  the  dissensions  and  dis- 
agreements complained  of,  serious  injury  will  result  to  the 
parties  unless  a  receiver  is  appointed,  and  such  dissensions, 
without  fault  of  defendant,  will  not  justify  the  summary  in- 
terposition of  a  receiver,  unless  it  is  clearly  shown  that  the 
parties  will  suffer  loss  by  continuing  in  possession  of  the  prop- 
erty.^^ 

§  484.  Want  of  confidence  as  a  ground  for  receiver.  The 
fact  that  a  partner's  conduct  has  been  such  as  to  destroy  the  mu- 
tual confidence  which  ought  to  subsist  between  partners,  is  an 
important  element  influencing  the  court  in  granting  relief  by 
an  injunction  and  a  receiver.36  And  when  one  of  two  partners 
has  exclusive  control  of  the  firm  business,  and  so  mismanages 
it  that  the  firm  speedily  becomes  insolvent,  and  all  friendship 
and  confidence  between  the  partners  are  destroyed,  the  ap- 
pointment of  a  receiver  may  be  regarded  as  the  only  practi- 
cable method  of  speedily  and  peaceably  winding  up  the  affairs 

ship,    a   receiver   will   be   appointed  36  Smith  v.   Jeyes,  4  Beav.,   503 ; 

as  a  matter  of  course."  Todd  v.  Rich,  2  Tenn.  Ch.,  107.   See, 

33  Barnes  v.  Jones,  91  Ind.,  161;  also,  Boyce  v.  Burchard,  21  Ga.,  74; 
Shannon  v.  Wright,  60  Md.,  520.  Williamson  v.  Wilson,  1  Bland,  418; 

34  Whitman  v.  Robinson,  21  Md.,  Sutro  v.  Wagner.  8  C.  E.  Green, 
30.  And  see  Smith  v.  Brown,  44  388;  White  z;.  Colfax,  33  N.  Y.  Supr. 
West  Va.,  342,  30  S.  E.,  160.  Ct.  R.,  297. 

35  Loomis  v.  McKenzie,  31  Iowa, 
425, 


668  RECEIVERS.  [chap.  XIII. 

of  the  firm.  The  rehef  will  be  granted,  in  such  a  case,  even 
though  the  plaintiff  in  the  bill  may  have  acted  in  an  unwarrant- 
ed and  illegal  manner,  in  himself  attempting  to  exclude  defend- 
ant from  possession  and  control  of  the  assets  after  filing  his 
bill. 2'^  So  when  it  is  apparent  from  the  bill  and  answer  that 
neither  partner  has  confidence  in  the  other,  and  it  is  admitted 
by  both  that  the  firm  is  in  a  condition  of  insolvency,  and  each 
partner  charges  the  other  with  intent  to  waste  the  joint  proper- 
ty and  to  give  an  undue  preference  to  certain  creditors,  it  is  pe- 
culiarly fitting  and  proper  that  a  receiver  should  be  appointed, 
as  a  means  of  winding  up  the  firm  business  for  the  benefit  of 
all  concerned.  Under  such  circumstances,  the  relief  is  grant- 
ed primarily  for  the  benefit  of  the  firm  creditors,  that  they  may 
come  in  pari  passu  and  share  in  the  proceeds  according  as  their 
respective  priorities  may  be  shown. ^^ 

§  485.  Failure  to  co-operate  in  management  of  business 
no  ground  for  receiver;  unprofitable  business  no  ground 
for  relief.  It  is  to  be  observed,  however,  that  the  mere 
want  of  co-operation  by  one  partner  in  managing  the  business, 
thus  leading  the  other  to  act  upon  his  own  responsibility,  is 
not  sufficient  ground  for  the  interference  of  equity  by  a  re- 
ceiver, when  the  defendant  has  not  interfered  with  the  man- 
agement of  the  business  by  the  plaintiff.  And  when  one  mem- 
ber of  the  firm  occupies  the  relation  of  managing  partner, 
having  practically  the  sole  management  and  control  of  the 
business,  the  mere  fact  that  the  other  refuses  to  co-operate  with 
him  affords  no  sufficient  ground  for  a  receiver.39  Nor  does  the 
fact  that  the  partnership  business  has  been  unprofitable,  or 
that  it  should  be  discontinued  and  the  firm  dissolved,  warrant 
a  court  in  taking  the  property  out  of  defendant's  hands,  to  be 
administered  by  a  receiver.^^ 

37  Boyce  v.  Burchard,  21  Ga.,  74.  ing  receivers  in  partnership  cases. 

38  Williamson  v.  Wilson,  1  Bland,  30  Roberts  v.  Eberhardt,  Kay.  148. 
418.  And  see  this  case  for  an  ex-  40  Moies  v.  O'Neill,  8  C.  E.  Green, 
tended  discussion  of  the  principles  207;  Shoemaker  v.  Smith,  74  Ind., 
governing  courts  of  equity  in  grant-  71. 


CHAP.  XIII.]  PARTNERSHIPS. 


669 


§  486.  Appointment  not  a  matter  of  course ;  confidence 
between  partners.  The  appointment  of  a  receiver,  upon  a 
bill  for  an  accounting  of  partnership  affairs,  is  not  a  matter  of 
course,  since  the  granting  of  such  applications  as  of  course 
would  frequently  work  great  hardship  and  injustice.  And 
when  no  disqualification  is  shown  on  the  part  of  the  defendant 
partner,  the  bill  alleging  no  facts  showing  the  necessity  for  a 
receiver,  and  merely  alleging  in  general  terms  that  plaintiff  is 
on  principles  of  equity  entitled  to  the  interposition  of  the  court 
and  the  aid  of  a  receiver,  the  court  will  refuse  to  interfere, 
the  confidence  reposed  by  one  partner  in  another  being  a  suffi- 
cient objection  to  the  appointment  of  a  receiver  under  such 
circumstances.^! 

§  487.  Defendant  resolved  to  break  up  business;  im- 
possibility of  continuing  advantageously.  When  the  con- 
duct of  the  defendant  partner  has  been  such  as  to  satisfy  the 
court  that  he  has  deliberately  resolved  to  break  up  and  ruin 
the  firm  business,  and  the  personal  relations  between  the  part- 
ners are  such  that  they  can  never  carry  on  the  business  advan- 
tageously, a  fit  case  is  presented  for  an  injunction  and  a  re- 
ceiver.*-^ 

§  488.  Dispute  as  to  firm  property ;  insolvency  and  bad 
faith  of  defendant;  bankruptcy.  Although  there  may  be 
some  dispute  as  to  whether  property  in  possession  of  the  de- 
fendant partner,  in  an  action  for  an  accounting  between  part- 
ners, is  really  firm  property,  yet  when  it  appears  that  it  was  re- 
ceived in  part  payment  for  a  sale  of  firm  property,  and  plain- 
tiff shows  that  defendant  is  insolvent,  and  that  he  has  acted 
in  bad  faith  and  has  disposed  of  part  of  the  property  with  in- 
tent to  defraud  creditors,  sufficient  cause  is  shown  for  an  in- 
junction and  a  receiver,  leaving  defendant  to  show  if  he  can, 
in  the  further  stages  of  the  cause,  that  the  property  in  question 


41  Opinion  of  Gould,  J.,  in  Tom-  42  Sutro  v.  Wagner,  8  C.  E.  Green, 

linson  v.  Ward,  2  Conn.,  396.  388. 


670  RECEIVERS.  [chap.  XIII. 

was  his  individual  property.^^  But  when  the  articles  provide 
that  upon  the  deatli  or  bankruptcy  of  either  partner  he  shall 
be  deemed  to  have  ceased  to  be  a  member  of  the  firm,  but  that 
his  share  in  its  capital  shall  remain  as  a  loan  to  the  surviving 
or  continuing  members  during  the  residue  of  the  term,  to  be 
secured  by  their  bond,  upon  the  bankruptcy  of  some  of  the 
partners  their  trustees  in  bankruptcy  are  entitled  to  a  receiver 
over  the  firm,  notwithstanding  such  provision  in  the  articles, 
the  relief  being  granted  for  the  protection  of  creditors  of  the 
bankrupt  partners.  In  such  case  the  solvent  partner  may  prop- 
erly be  appointed  receiver  and  manager  upon  giving  adequate 
security.4^ 

§  489.  Violation  of  agreement  for  dissolution ;  exclusion 
from  books;  embittered  feeling.  When,  upon  the  dissolu- 
tion of  a  partnership,  the  members  enter  into  an  agreement 
fixing  the  terms  of  dissolution,  and  the  retiring  partner  trans- 
fers the  entire  partnership  property  to  the  remaining  part- 
ners, retaining  only  an  equity  to  compel  them  to  pay  the  firm 
liabilities,  the  courts  will  be  exceedingly  jealous  in  guarding  the 
retiring  partner's  rights,  and  in  enforcing  performance  of  their 
agreement  by  the  other  partners.  And  if  they  violate  and  de- 
part from  the  terms  of  such  agreement  in  important  particu- 
lars, and  deny  the  retiring  partner's  right  to  have  access  to  the 
books,  to  which  he  is  entitled  under  the  terms  of  the  dissolu- 
tion, sufficient  cause  is  shown  for  a  receiver  to  wind  up  the 
partnership  affairs.  And  the  fact  that  such  an  embittered  state 
of  feeling  exists  between  partners,  with  reference  to  the  wind- 
ing up  of  their  affairs,  as  to  render  it  r  .nifest  that  the  right 
of  supervision  by  one  partner  can  not  be  exercised  without 
great  unpleasantness,  is  an  additional  ground  for  granting  re- 
lief by  a  receiver.45  But  when  the  partners,  upon  a  dissolution 
of  the  firm,  enter  into  an  agreement  as  to  the  method  of  collect- 
ing and  disposing  of  their  outstanding  accounts  and  of  closing 

43  Saylor  v.  Mockbie.  9  Iowa,  209.  45  White  v.  Colfax,  33  N.  Y.  Supr. 

44  Collins  V.  Barker  (1893),  1  Ch.,       Ct.  R.,  297. 
578. 


CHAP.  XIII.]  PARTNERSHIPS.  671 

up  the  firm  business,  a  receiver  should  not  be  appointed  when 
defendants  are  responsible,  and  when  no  danger  is  shown  as 
likely  to  result  from  awaiting  the  final  disposition  of  the  case 
upon  its  merits. ^^ 

§  490.  Partner  in  possession  can  not  have  receiver.  As 
between  the  partners  themselves,  a  receiver  is  appointed  only 
for  the  protection  of  the  party  complaining  against  the  adverse 
possession  of  the  other  partner.  There  is,  therefore,  no  ground 
for  a  receiver  upon  the  application  of  a  partner  who  is  himself 
in  possession,  since  he  is  fully  authorized  to  sell  the  firm  assets, 
subject  to  his  liability  to  account  to  the  other  partner  for  his 
share.  And  if  the  defendant  partner  does  not  object  to  the 
control  of  the  property  by  plaintiff,  the  latter,  being  in  posses- 
sion, will  not  be  allowed  a  receiver-^"^  So  when  a  partnership 
expires  by  limitation,  a  receiver  will  not  be  appointed  upon 
the  application  of  one  partner,  in  the  absence  of  any  showing  of 
mismanagement  by  the  defendant  partner  in  possession,  who 
offers  to  surrender  the  assets  to  plaintiff  for  final  adjustment  of 
their  affairs.  Nor  will  the  court  in  such  case  interfere  be- 
cause the  plaintiff  partner  lacks  the  requisite  experience  to  wind 
up  the  business,  or  because  of  a  disagreement  between  the 
parties  as  to  the  construction  of  the  partnership  articles.^^ 

§  491.  Receiver  not  granted  when  equities  of  bill  de- 
nied by  answer.  Upon  application  for  the  extraordinary 
aid  of  equity  by  a  receiver  in  cases  of  partnership,  the  relief 
will  usually  be  denied  when  the  equities  of  the  plaintiff's  case 
are  fully  met  and  negatived  by  defendant's  answer.49  Thus, 
in  an  action  for  an  accounting  of  the  firm  affairs  and  for 
a  receiver  of  its  assets,  when  the  defendant  partner  denies  by 
his  answer  the  principal  allegations  of  the  bill,  and  denies  that 
he  has  excluded  plaintiff  from  participating  in  the  business, 

46  Simon  V.  Schloss,  48  Mich.,  233,  49  Parkhurst  v.  Muir,  3  Halst.  Ch., 
12  N.  W.,  196.                                              307;  Williamson  v.  Monroe,  3  Cal., 

47  Smith  V.  Lowe,  1  Edw.  Ch.,  ZZ.      383 ;   Coddington  v.  Tappan,  26  N. 
48Bnfkin  v.  Boyce,  104  Ind.,  S3,      J.   Eq.,    141.     See,   also,  Rhodes  v. 

3  N.  E.,  615.  Lee,  32  Ga.,  470. 


672  RECEIVERS.  [chap.  XIII. 

or  from  ha\ing  access  to  the  books,  and  also  denies  that  he 
has  refused  to  account  with  the  plaintiff  concernins^^  the  tirm 
business,  a  receiver  will  not  be  allowed. ^^  So  when  the  alle- 
gations of  the  bill  are  so  general  in  their  nature  that  an  indict- 
ment for  perjury  could  not  be  founded  upon  them  if  false, 
and  the  equities  of  plaintiff's  case  are  fully  denied  by  the  an- 
swer, defendant  denying  that  he  has  been  guilty  of  any  waste 
or  improper  expenditure  or  misappropriation  of  the  partnership 
fund  as  charged  in  the  bill,  although  plaintiff  may  be  entitled 
to  an  accounting,  no  sufficient  ground  is  presented  to  justify 
withdrawing  the  property  from  the  hands  of  a  defendant  part- 
ner who  is  fully  acquainted  with  the  business,  and  placing  it  in 
the  hands  of  a  receiver.^^  And  if  the  equities  of  the  bill  are 
all  successfully  met  and  contradicted  by  the  answer,  it  is  proper 
for  the  court  to  dissolve  a  preliminary  injunction  granted  upon 
filing  the  bill,  and  to  refuse  the  appointment  of  a  receiver.^^ 

§  492.  Refused  when  plaintiff's  right  is  not  questioned 
or  disturbed.  As  between  partners  themselves,  a  receiver 
will  not  be  appointed  to  take  possession  of  property  which  the 
plaintiff  partner  claims  to  belong  to  himself,  as  his  individual 
property,  transferred  to  him  by  the  firm,  when  it  is  not  alleged 
that  his  right  as  individual  owner  of  the  property  is  questioned, 
or  his  possession  disturbed. ^^ 

§  493.  Receiver  in  behalf  of  outgoing  partner.  Where, 
upon  the  dissolution  of  a  partnership,  the  outgoing  partner  as- 
signs his  entire  interest  in  the  firm  assets  to  the  remaining 
partner,  upon  condition  of  the  latter  assuming  all  the  debts  of 
the  firm,  and  agreeing  to  save  the  retiring  partner  harmless 
on  account  thereof,  the  relation  thus  established  between  the 
parties  is  analogous  to  that  of  principal  and  surety,  the  con- 
tinuing partner  having  the  clear  legal  title  to  the  property, 
and  there  being  no  joint  ownership.     And  while  a  receiver  is 

50  Parkhurst    v.  Miiir,    3    Halst.  52  Rhodes  v.  Lee,  32  Ga.,  470. 

Ch.,  307.  53  Buchanan     v.     Comstock,     57 

•"1  Williamson  v.  Monroe,  3  Cal.,       Barb.,  579. 
383. 


CHAP.  XIII.]  PARTNERSHIPS.  673 

not  ordinarily  allowed  as  against  a  clear  legal  title,  when  there 
is  no  lien  or  acknowledged  trust,  yet  upon  a  bill  by  the  surety 
or  outgoing  partner,  showing  that  the  continuing  partner  is 
fraudulently  acting  in  disregard  of  his  covenants,  and  sending 
his  money  beyond  the  state,  and  that  plaintiff  is  being  sued  for 
the  firm  debts,  a  receiver  may  be  appointed  to  take  charge  of 
such  an  amount  of  the  firm  assets  as  will  suffice  to  discharge 
the  joint  indebtedness  and  relieve  the  surety. ^^ 

§  494.  Receiver  on  judgment  creditor's  bill  after  disso- 
lution. When,  upon  the  dissolution  of  a  partnership,  one 
partner  assumes  payment  of  all  the  firm  indebtedness,  and  a 
creditor's  bill  is  afterward  filed  upon  a  judgment  against  the 
firm,  on  which  a  receiver  is  sought,  the  application  for  a  receiv- 
er should  not  be  confined  merely  to  the  individual  property  of 
the  partner  as  to  whom  the  firm  indebtedness  has  been  assumed 
by  his  copartner,  but  should  extend  to  and  cover  the  partnership 
effects,  as  well  as  the  separate  property  of  the  defendant  who 
is  the  real  debtor.^^ 

§  495.  Appointment  prevents  preference  to  creditor; 
does  not  interfere  with  rights  or  liens  of  creditors  already 
acquired.  Upon  a  bill  for  an  accounting  between  partners, 
and  for  a  settlement  of  their  affairs  after  a  dissolution,  the 
appointment  of  a  receiver  has  the  effect  of  preventing  one 
partner  from  giving  a  preference  to  any  creditor  by  a  warrant 
of  attorney  to  confess  judgment  for  a  firm  indebtedness.  And 
a  creditor  thus  obtaining  judgment  acquires  no  such  lien  as 
entitles  him  to  satisfaction  of  his  judgment  out  of  the  fund  in 
the  receiver's  hands,  in  preference  to  the  other  partnership 
creditors.5^  So  when,  upon  a  bill  to  wind  up  an  insolvent  firm, 
a  receiver  is  appointed  and  is  in  charge  of  the  firm  assets,  and 
an  order  is  made  for  creditors  to  prove  their  demands,  credit- 
ors can  not  by  obtaining  judgment  and  filing  a  creditor's  bill 
obtain  priority  over  the  general  creditors  out  of  the  funds  in 
the  receiver's  hands.     Especially  are  such  judgment  creditors 

54  West  V.  Chasten,  12  Fla.,  315.  56  Waring   v.    Robinson,    Hoffm., 

55  Henry  v.  Henry.  10  Paige,  314.      524. 

Receivers — 43. 


674  RECEIVERS.  [chap,  XIII. 

estopped  from  claiming  priority  when  they  have  proven  their 
claims  before  the  master,  and  when  they  have  shared  in  a  divi- 
dend paid  by  the  receiver.^''^  But  the  jurisdiction  of  equity  over 
the  affairs  of  insolvent  partnerships,  by  the  appointment  of  re- 
ceivers, will  not  be  exercised  in  such  manner  as  to  interfere  with 
the  rights  of  creditors,  which  have  ripened  into  liens  upon  the 
firm  property  by  the  use  of  diligence,  before  the  receiver's  ap- 
pointment. And  the  levy  of  an  execution  by  a  judgment  credit- 
or of  the  firm,  upon  partnership  property,  before  the  order 
appointing  a  receiver,  will  not  be  overreached  by  such  order, 
and  the  subsequent  appointment  of  the  receiver  will  not  de- 
prive the  execution  creditor  of  the  rights  acquired  by  his  levy.^^ 
If,  however,  a  receiver  is  already  appointed  and  is  in  possession 
of  the  firm  assets  for  the  benefit  of  all  the  creditors,  no  creditor 
will  be  permitted  to  levy  upon  and  sell  the  property  for  his  own 
benefit.^^ 

§  496.  Failure  to  contribute  to  capital  stock ;  sale  of  in- 
terest; insolvency;  exclusion  by  purchaser.  The  fact  that 
one  partner  fails  to  contribute  his  portion  of  the  capital  stock 
of  the  firm,  as  fixed  by  the  articles  of  copartnership,  and  that 
he  sells  his  interest  in  the  firm  to  a  third  person,  without  the 
knowledge  or  consent  of  the  other  partner,  coupled  with  his 
insolvency  and  refusal  to  pay  any  portion  of  the  partnership 
indebtedness,  and  the  fact  that  the  purchaser  has  taken  posses- 
sion of  the  firm  property  and  threatens  to  exclude  the  other 
partner  therefrom,  are  sufficient  grounds  for  granting  an  in- 
junction and  a  receiver  to  take  charge  of  the  assets. ^^ 

§  497.  Not  sufficient  to  allege  large  sums  of  money  in 
defendant's  hands ;  misapplication  of  funds ;  agreement  for 
arbitration.  It  is  not  sufficient  ground  for  appointing  a  re- 
ceiver, upon  a  bill  for  the  settlement  of  partnership  affairs,  that 

57  Jackson  v.  Lahee,  114  111.,  287,      port  v.  Kelly,  42  N.  Y.,  193. 

2  N.  E.,  172.  59  Knode  v.  Baldridge,  73  Ind..  54. 

58  Van  Alstyne  v.  Cook,  25  N.  Y.,  60  Heathcot     v.     Ravenscroft,     2 
489;   Hoffman  v.   Schoyer,   143  III.,      Halst.  Ch.,  113. 

598,  28  N.  E.,  823.    .\nd  see  Daven- 


CHAP.  XIII.]  PARTNERSHIPS.  675 

the  defendant  partner  has  large  sums  of  money  belonging  to 
the  firm  in  his  hands,  when  it  is  not  shown  that  there  is  any 
danger  of  the  money  being  ultimately  lost  to  the  plaintiffs,  and 
no  allegation  is  made  that  defendant  is  insolvent  and  unable  to 
respond  for  the  amount  due.^^  But  the  withdrawal  by  a  part- 
ner of  large  sums  from  the  firm  to  meet  his  individual  losses 
sustained  in  stock  speculations  has  been  held  to  constitute  suffi- 
cient ground  for  a  receiver.  And  the  relief  has  been  allowed  in 
such  case,  notwithstanding  a  provision  in  the  articles  of  part- 
nership for  the  submission  to  arbitration  of  all  differences  be- 
tween the  partners,  since  the  jurisdiction  of  equity  to  grant  a 
receiver  in  such  case  is  not  ousted  by  an  agreement  of  the  par- 
ties to  submit  to  arbitration. ^2 

§  498.  Receiver  refused  over  shares  of  stock  constitut- 
ing entire  assets  of  firm.  In  an  action  between  partners, 
a  receiver  will  not  be  appointed  to  take  charge  of  and  sell  cer- 
tain shares  of  stock  in  an  incorporated  company,  which  consti- 
tute the  entire  assets  of  the  firm,  when  it  is  not  determined  how 
much  of  the  stock  belongs  to  each  partner,  the  question  de- 
pending upon  the  state  of  th'eir  accounts ;  and  when  it  is  not 
alleged  that  the  defendant  partner  is  insolvent,  and  he  denies  by 
his  answer  the  equities  of  plaintiff's  case  and  consents  that  one- 
half  the  stock  may  be  transferred  to  plaintiff,  and  offers  to  give 
such  security  as  the  court  may  require  to  indemnify  the  plaintiff 
partner  for  any  balance  which  may  ultimately  be  found  in  his 
favor.^^ 

§  499.  Use  of  firm  effects  by  remaining  partners  after 
dissolution.  The  fact  that,  after  the  dissolution  of  the 
partnership,  the  remaining  partners  continue  to  carry  on  the 
business  on  their  own  account,  with  the  partnership  effects,  is 
sufficient  ground  to  warrant  the  interference  of  equity  by  a  re- 
ceiver. 


64 


61  Wellman  v.  Harker,  3  Ore.,  520.  63  Buchanan     v.     Comstock,     57 

62  Pini    V.    Roncoroni    (1892),    1       Barb.,  568. 

Ch.,  6.33.  ®^  Harding  v.  Glover,  18  Ves.,  281. 


676  RECEIVERS.  [CHAF.  Xlli. 

§  500.  Partnership  for  sawing  lumber;  failure  to  take 
timber  from  land  of  one  partner.  In  case  of  a  partnershii) 
formed  for  the  purpose  of  sawing  lumber,  where  by  the  arti- 
cles of  copartnership  the  partner  having  charge  of  the  business 
was  to  take  the  timber  used  for  the  business  from  land  belong- 
ing to  the  other  partner,  a  violation  of  this  part  of  the  contract 
has  been  held  a  sufficient  breach  of  duty  to  warrant  an  injunc- 
tion and  a  receiver,  when  the  business  was  shown  to  be  in  a  de- 
clining condition  and  the  firm  indebtedness  increasing.^^ 

§  501.  When  court  may  direct  issue  to  be  tried  by  jury. 
When  the  appointment  of  a  receiver  of  a  partnership  estate, 
in  an  action  for  an  accounting  between  the  partners,  is  de- 
pendent upon  whether  it  was  a  partnership  at  will  or  for  a  term 
of  years,  and  if  at  will  whether  it  has  actually  been  dissolved, 
the  court  will  not  determine  the  question  upon  a  motion  for  a 
receiver,  but  may  direct  an  issue  to  be  tried  at  law  as  to  whether 
there  was  a  subsisting  partnership  between  the  parties.66  So 
if,  upon  an  application  for  a  receiver  on  a  bill  for  the  settlement 
of  partnership  affairs,  there  is  doubt  as  to  whether  plaintiff  is 
entitled  to  an  interest  in  the  profits,  the  court  may  direct  an  issue 
to  be  tried  by  a  jury,  as  to  whether  plaintiff  is  entitled  to  profits, 
and,  if  so,  in  what  amount.^^  And  when  the  existence  of  the 
partnership  is  denied,  a  receiver  will  not  be  appointed  in  aid 
of  an  execution  over  the  effects  of  the  firm  until  the  question 
of  the  existence  of  the  partnership  is  determined.^^ 

§  502,  Courts  averse  to  interfering  ex  parte.  The  courts 
are  averse  to  appointing  receivers  in  controversies  between 
partners,  without  notice  to  the  defendant  partner  and  without 
service  of  process,  especially  when  an  injunction  has  already 
been  granted  which  is  ample  to  protect  the  property  from  loss 
until  the  motion  for  a  receiver  may  be  regularly  heard.  ^^ 

65  New  V.  Wright,  44  Miss.,  202.  69  McCarthy  v.    Peake,    18  How. 

66  Fairburn  v.  Pearson,  2  Mac.  &  Pr.,  138 ;  Mann  v.  Gaddie,  88  C  C. 
G.,  144.  A.,  1,  158  Fed.,  42,  reversing  S.  C, 

67  Peacock  v.  Peacock,  16  Ves.,  49.  147  Fed.,  955. 

68  Guild  V.  Meyer,  56  N.  J.  Eq., 
183,  38  Atl.,  959. 


CHAP.  XIII.]  PARTNERSHIPS.  677 

§  503.  Jurisdiction  over  foreign  partnerships.  As  re- 
gards the  jurisdiction  of  equity  in  cases  of  foreign  partner- 
ships, it  is  held,  in  Massachusetts,  that  a  receiver  will  not  be  ap- 
pointed against  a  non-resident  purchaser  of  the  interest  of  one 
partner,  conducting  the  business  in  another  state,  although  it 
would  seem  that  as  against  such  partner,  if  within  the  juris- 
diction of  the  court,  a  receiver  may  be  had.'^^  And  when  an 
association  in  the  nature  of  a  partnership  was  formed  in  Eng- 
land, for  the  purpose  of  conducting  mining  operations  in 
Brazil,  and  the  property  of  the  association  in  Brazil  was  vested 
in  a  trustee  for  management,  upon  a  bill  by  a  member  of  the 
association  in  England,  in  behalf  of  himself  and  all  others, 
for  an  accounting  and  distribution  of  profits,  the  trustee  hav- 
ing clandestinely  left  the  country,  and  having  threatened  to  sell 
the  property  of  the  association,  the  court  allowed  a  receiver 
and  granted  an  injunction  to  restrain  the  trustee  from  selling, 
the  relief  being  justified  by  the  necessity  of  protecting  the 
property.*^! 

§  504.  Partnership  in  working  farm;  deficiency  in  prof- 
its. Where  plaintiffs,  the  owners  of  a  farm,  have  entered 
into  an  agreement  with  defendant  in  the  nature  of  a  part- 
nership, for  working  the  farm  and  dividing  the  profits,  with  a 
provision  that  plaintiffs  may  terminate  the  partnership  on  six 
months'  notice,  if  the  profits  shall  not  reach  a  certain  amount, 
upon  showing  that  the  profits  have  not  reached  the  amount 
agreed  upon,  plaintiffs  have  been  allowed  an  injunction  and  a 
receiver.  "^2 

§  505.  Priority  by  attaching  creditors  before  final  de- 
cree. As  regards  the  effect  of  a  receivership  in  partner- 
ship cases  upon  the  rights  of  creditors,  it  is  held,  in  California, 
that  the  filing  of  a  bill  by  one  partner  for  a  dissolution  and  an 
accounting,  and  the  appointment  of  a  receiver  thereon,  will 
not  prevent  a  general  creditor  of  the  firm  from  proceeding  by 
attachment  and  judgment,  and  thus  gaining  a  priority  over 

70  Harvey  v.  Varncy,  104  Mass.,  72  Dunn  z'.  McNaught,  38  Ga.,  179. 
436. 

71  Shcppard  v.  Oxenford,   1   Kay 
&  J.,  491. 


678  RECEIVERS.  [chap.  XIII. 

other  creditors,  at  any  time  before  a  final  decree  dissolving  the 
firm.  Until  a  dissolution  of  the  partnership,  it  is  held,  it  can 
not  be  known  that  the  firm  is  insolvent  or  that  the  court  will 
administer  its  assets,  and  it  would,  therefore,  be  unjust  to  deny 
a  creditor  not  a  party  to  that  litigation  the  right  to  prosecute 
an  action  at  law  for  the  recovery  of  his  demand.'^^ 

§  506.  Injunction  auxiliary  to  receivership  continued  to 
hearing.  When,  upon  a  bill  for  the  settlement  of  partner- 
ship affairs  and  for  a  receiver,  an  injunction  is  granted  and  a 
receiver  appointed,  if,  under  the  circumstances  of  the  case,  the 
injunction  is  regarded  as  a  proper  auxiliary  to  the  receiver- 
ship, upon  overruling  a  motion  to  rescind  the  appointment  of 
the  receiver,  the  injunction  will  be  continued  until  the  hearing 
or  further  order  of  the  court.'^'* 

§  507.  Receiver  granted  as  between  purchasers  or  as- 
signees of  different  partners.  The  right  to  invoke  the  aid 
of  equity  by  the  appointment  of  a  receiver  of  partnership  effects, 
in  an  action  to  wind  up  the  firm  affairs,  is  not  limited  to  the 
parties  themselves,  and  the  jurisdiction  may,  under  proper  cir- 
cumstances, be  exercised  in  favor  of  the  assignees  of  the  part- 
ners who  have  succeeded  to  their  interests  in  the  firm.  For 
example  when  both  partners  have  assigned  and  transferred 
their  respective  interests  in  the  firm,  upon  a  bill  by  the  pur- 
chaser or  assignee  under  one  of  the  partners  against  the  as- 
signees of  the  other,  alleging  their  possession  of  the  property 
as  well  as  their  insolvency  and  refusal  to  allow  plaintiff  to  be 
let  into  possession,  a  proper  case  is  presented  for  appointing  a 
receiver,  upon  the  general  principles  which  govern  the  juris- 
diction as  between  partners  themselves.'^^ 

§  508.  Limited  partnerships.  In  cases  of  limited  part- 
nerships, the  courts  of  New  York  allow  the  appointment  of  re- 

73  Adams  v.  Woods,  8  Cal.,  152;  74  Williamson  v.  Wilson,  1  Bland, 

Naglee  v.  Minturn,  id.,  540;  Adams      428. 

V.    Woods,    9    Cal.,    24.      And    see  75  Maynard  v.  Railey,  2  Nev.,  313. 

opinion  of  Burnett,  J.,  in  Adams  v. 
Hackett,  7  Cal.,  187. 


CHAP.  XIII.] 


PARTNERSHIPS. 


C79 


ceivers  upon  the  insolvency  of  the  firm,  for  the  protection  of  all 
the  creditors,  and  will  not  permit  any  creditor  to  obtain  a  pref- 
erence in  the  satisfaction  of  his  demand.  It  is  held,  in  that 
state,  that  upon  the  insolvency  of  such  a  partnership  its  assets 
immediately  become  a  trust  fund  to  be  divided  equally  among 
all  the  creditors,  and  it  is  the  duty  of  the  general  partners  to 
place  this  fund  in  the  hands  of  a  trustee  for  equal  distribution 
among  the  creditors.  And  when  the  general  partners  neglect 
the  performance  of  this  duty,  the  court  will  appoint  a  receiver, 
who  becomes  entitled  to  the  entire  assets  of  the  firm  as  they 
existed  at  the  date  of  insolvency,  and  discharged  of  all  liens 
suffered  or  created  by  the  partners  after  that  date."^^ 


76  Jackson  v.  Sheldon,  9  Ab.  Pr., 
127.  See,  also,  Lottimer  v.  Lord, 
4  E.  D.  Smith,  183.  In  Jackson  v. 
Sheldon,  9  Ab.  Pr.,  127,  the  defend- 
ants in  the  case  had  formed  a  spe- 
cial or  limited  partnership  under 
the  statute  of  New  York.  Insolv- 
ency ensued,  and  judgments  hav- 
ing been  recovered  against  the 
partners  by  default,  under  which 
their  stock  was  levied  upon  and 
partly  sold,  they  made  an  assign- 
ment for  the  benefit  of  their  cred- 
itors. Jackson,  who  was  a  creditor 
at  large  of  the  firm,  brought  this 
action  to  set  aside  the  judgments 
and  vacate  the  sales,  and  for  the 
appointment  of  a  receiver  to  take 
the  assets  and  apply  them  for  the 
benefit  of  all  the  creditors.  The 
court,  Davies,  J.,  say,  p.  133,  after 
a  review  of  the  New  York  author- 
ities :  "These  cases,  therefore,  fully 
sustain  the  proposition  that  as  soon 
as  the  special  partnership  becomes 
insolvent,  it  is  the  duty  of  the  gen- 
eral partners  to  place  the  assets  of 
the  firm  in  the  hands  of  a  compe- 
tent trustee,  to  divide  the  same 
equally   among    its    creditors.      The 


question  presented  in  this  case  is, 
whether,  having  neglected  that 
duty,  the  court  will  permit  them, 
by  reason  of  such  omission,  to  ac- 
complish indirectly  what  they  are 
prohibited  from  doing  directly — 
give  a  preference  among  their  cred- 
itors. I  think  clearly  not.  The 
moment  the  firm  became  insolvent 
their  effects  became  trust  funds,  to 
be  divided  equally  among  all  their 
creditors.  No  one  creditor  could 
obtain  a  preference  over  another 
for  payment  out  of  this  fund,  by 
reason  of  any  act  of  omission  or 
commission  on  the  part  of  these, 
whose  duty  it  was  immediately  to 
place  the  funds  and  assets  in  the 
hands  of  a  competent  trustee.  On 
the  happening  of  insolvency,  the 
assets  of  a  limited  copartnership, 
equally  with  those  of  a  moneyed 
corporation,  have  attached  to  them 
the  character  of  trust  funds,  in 
which  all  creditors  are  entitled 
equally  to  participate,  and  in  which 
no  one  can  share  to  the  disadvan- 
tage of  the  others.  .  .  The  gen- 
eral partners  of  this  special  part- 
nership, not  having  discharged  the 


680 


RECEIVERS. 


[chap.  XIII. 


§  508^-.  Effect  of  denial  of  motion  in  former  suit.    The 

appointment  of  a  receiver  in  an  action  for  the  settlement  of 
partnership  affairs  being  merely  ancillary  to  the  principal  re- 
lief sought,  it  constitutes  no  bar  to  the  relief  that  a  similar 
motion  was  denied  in  a  former  suit  brought  by  the  plaintiff 
partner  for  a  settlement  of  the  firm  business,  which  suit  was 
dismissed  by  plaintiff  of  his  own  motion.  Such  dismissal  being 
without  prejudice  to  plaintiff's  rights,  he  is  at  liberty  to  bring 
another  action  witli  all  its  rights  and  incidents,  including  the 
right  to  apply  for  a  receiver.'^'^ 


duty  which  the  law  casts  upon 
them,  on  the  happening  of  the  in- 
solvency of  the  partnership,  by 
placing  the  trust  funds  in  the  hands 
of  a  competent  trustee,  for  equal 
distribution  among  all  the  credit- 
ors, it  is  entirely  competent  for  this 
plaintiff  to  invoke  the  aid  of  this 
court  to  accomplish  the  same  re- 
sult. It  is  the  duty  of  this  court 
to  appoint  a  receiver  for  that  pur- 
pose, who  will  be  entitled  t(3  take 
charge  of  and  possess  himself  of 
all  the  assets,  funds  and  effects  of 
said  partnership  as  they  existed  at 


the  time  of  its  insolvency,  dis- 
charged of  all  liens  suffered  or 
created  since  the  happening  of  that 
event,  and  to  collect  in  the  same, 
and  to  distribute  the  same  equally 
among  all  the  creditors  of  the  part- 
nership. The  injunction  and  re- 
ceiver as  prayed  for  in  the  com- 
plaint should  have  been  granted, 
and  the  order  appealed  from  deny- 
ing the  same  must  be  reversed  with 
costs." 

"^7  Anderson  v.  Powell,  44  Iowa, 
20. 


CHAP,  XIII.]  ■     PARTNERSHIPS.  681 


II.  Receiver  Upon  Dissolution  of  the  Firm. 

§  509.     English  rule  denying  receiver  unless  plaintiff  is  entitled  to  a 
dissolution. 

510.  English  rule  followed  in  this  country;  receiver  does  not  neces- 

sarily follow  injunction;  disagreement  on  dissolution;   right 
to  use  retiring  partner's  name. 

511.  Ground  for  dissolution  not  necessarily  ground  for  receiver;  re- 

lief refused  when  defendant  has  advanced  entire  capital;  in- 
solvency of  defendant. 

512.  Relief  refused  purchaser  of  one  partner's  interest  at  sheriff's 

sale. 

513.  Departure  from  agreement,  when  ground  for  receiver  in  case 

of  theater. 

514.  Court  should  be  careful  to  preserve  the  business;   relief  not 

granted   when   it   would   destroy   value   of   business   without 
benefit  to  either  party. 

515.  Relief  granted  on  exclusion  from  firm;  refused  when  answer 

denies  bill. 

516.  Receiver  granted  against  partner  authorized  to  close  up  firm. 

517.  Assignment  of  assets  by  insolvent  partners  for  benefit  of  their 

creditors,  ground  for  relief. 

518.  General  assignment  for  benefit  of  all  creditors,  when  receiver 

refused. 

519.  Partnership  at  will,  receiver  almost  of  course;  funds  applied 

ratably,  and  without  preference. 

520.  Appointment  on  final  decree;  failure  to  give  bond. 

521.  Usually    appointed  on  interlocutory     application;    injunction    also 

granted. 

§  509.  English  rule  denying  receiver  unless  plaintiff  is 
entitled  to  a  dissolution.  It  is  the  established  doctrine  in 
England,  that  a  receiver  in  partnership  cases  will  only  be  al- 
lowed when  the  relief  is  ancillary  to  a  dissolution  of  the  firm. 
And  when  the  court  can  not  foresee  that  it  will  ultimately 
decree  a  dissolution,  or  when  the  object  of  the  suit  is  not  to 
obtain  a  dissolution,  but  on  the  contrary  to  continue  the  part- 
nership, the  bill  praying  the  establishment  of  the  firm  and  the 
specific  performance  of  the  partnership  articles,  equity  will 
not  lend  its  extraordinary  aid  by  a  receiver. '^^  And  while, 
under  the  English  practice,  it  is  almost  a  matter  of  course  to 

78  Hall  z:  Hall,  3  Mac.  &  G.,  79 ;    Roberts  v.  Eberhardt,  Kay,  148. 


6S2 


RECEIVERS. 


[CITAP.  XIII. 


appoint  a  receiver  upon  a  bill  for  the  dissolution  of  a  firm,  if 
the  case  presented  is  such  as  to  entitle  plaintiff  to  a  dissolu- 
tion, the  court  will  not  interfere  and  take  the  conduct  of  a 
partnership  into  its  own  hands,  if  upon  the  case  ao  presented  it 
is  doubtful  whether  plaintiff  is  entitled  to  a  dissolution.'^^ 
The  rule  may  be  stated  in  general  terms,  that  to  warrant  a  re- 
ceiver in  partnership  cases,  such  a  state  of  facts  must  be 
shown  by  the  party  complaining  as,  if  proven  at  the  hearing, 
will  entitle  him  to  a  dissolution. ^0  And  in  considering  wheth- 
er the  conduct  of  one  partner  has  been  such  as  to  entitle  the 
other  to  a  dissolution,  for  the  purpose  of  determining  an  ap- 
plication for  a  receiver,  the  court  will  consider  not  merely  the 
specific  terms  of  the  partnership  articles,  but  also  the  duties 
and  obligations  implied  in  every  contract  of  partnership.  And 
when  it  is  obvious  that  the  conduct  of  the  defendant  partner 


"9  Goodman  v.  Whitcomb,  1  Jac. 
&  W.,  589;  Chapman  v.  Beach,  id., 
594.  The  doctrine  is  well  stated  in 
Goodman  v.  Whitcomb,  by  Lord 
Eldon,  as  follows:  "This  is  a  bill 
filed  for  the  purpose  of  having  a 
dissolution  of  the  partnership  de- 
clared, and  if  the  court  can  now  see 
that  that  must  be  done,  it  follows 
very  much  of  course  that  a  receiver 
must  be  appointed.  But  if  the  case 
made  stands  in  such  a  state  that 
the  court  can  not  see  whether  it 
will  be  dissolved  or  not,  it  will  not 
take  into  its  own  hands  the  conduct 
of  a  partnership  which  only  may  be 
dissolved.  It  may  be  a  question 
whether  the  court  will  not  restrain 
a  partner,  if  he  has  acted  improp- 
erly, from  doing  certain  acts  in 
future,  but  if  what  he  has  done 
does  not  give  the  other  party  a 
■  right  to  have  a  dissolution  of  the 
partnership,  what  right  has  the 
court  to  appoint  a  receiver,  and 
make   itself  the  manager  of  every 


trade  in  the  kingdom?  Where  part- 
ners differ,  as  they  sometimes  do, 
when  they  enter  into  another  kind 
of  partnership,  they  should  recollect 
that  they  enter  into  it  for  better 
and  worse,  and  this  court  has  no 
jurisdiction  to  make  a  separation 
between  them  because  one  is  more 
sullen  or  less  good-tempered  than 
the  other.  Another  court,  in  the 
partnership  to  which  I  have  alluded, 
can  not,  nor  can  this  court  in  this 
kind  of  partnership,  interfere,  un- 
less there  is  a  cause  of  separation 
which,  in  the  one  case,  must 
amount  to  downright  cruelty,  and 
in  the  other  must  be  conduct 
amounting  to  an  entire  exclusion 
of  the  partner  from  his  interest  in 
the  partnership.  Whether  a  disso- 
lution may  ultimately  be  decreed  I 
will  not  say,  but  trifling  circum- 
stances of  conduct  are  not  sufficient 
to  authorize  the  court  to  award  a 
dissolution." 
80  Smith  V.  Jeyes,  4  Beav.,  503. 


CHAP.  XIII.]  PARTNERSHIPS.  683 

has  been  so  injurious  to  the  firm,  and  so  inconsistent  with  his 
duties  as  a  partner,  as  to  entitle  plaintiff  to  a  dissolution,  a  re- 
ceiver will  be  appointed. ^^ 

§  510.  English  rule  followed  in  this  country;  receiver 
does  not  necessarily  follow  injunction;  disagreement  on 
dissolution;  right  to  use  retiring  partner's  name.  The 
English  rule  as  above  stated  has  been  followed  in  this  country, 
especially  in  the  courts  of  New  York,  where  the  doctrine  is 
well  settled  that  a  receiver  will  not  be  appointed  over  a  sub- 
sisting partnership,  unless  it  satisfactorily  appears  that  plain- 
tiff will  ultimately  be  entitled  to  a  decree  for  a  dissolution 
and  the  winding  up  of  the  firm  business. ^^  The  grounds  re- 
lied upon  by  the  courts  in  granting  receivers  are,  the  neces- 
sity of  winding  up  the  affairs  of  the  firm  and  dividing  the 
surplus,  and  they  do  not  interfere  for  the  purpose  of  continu- 
ing or  managing  the  business,  this  being  a  responsibility  which 
the  courts  will  not  usually  assume.^^  And  although  a  prelim- 
inary injunction  has  been  granted,  ex  parte,  upon  a  bill  by  a 
partner  seeking  a  dissolution  of  the  firm,  it  does  not  necessa- 
rily follow  that  a  receiver  will  be  appointed ;  and  if  the  court 
is  satisfied  that  no  such  case  is  presented  as  to  entitle  plaintiff 
to  a  final  dissolution,  it  will  refuse  a  receiver,  leaving  the  in- 
junction to  be  dissolved  in  due  time  upon  proper  motion. ^^ 
But  when,  upon  the  dissolution  of  a  partnership,  the  mem- 
bers of  the  firm  can  not  agree  upon  the  mode  of  adjusting  its 
affairs,  it  is  the  usual  practice  of  the  courts,  with  a  view  to 
protect  the  rights  of  all  parties  in  interest,  to  exclude  the 
partners  from  participating  in  the  adjustment  of  the  firm  busi- 
ness, and  to  appoint  a  receiver  for  that  purpose,  and  to  grant 

81  Smith  V.  Jeyes,  4  Beav.,  503.  of  defrauding  creditors,  see  Metcalf 

82Garretson  v.   Weaver,  3   Edw.  v.    Moses,    161    N.    Y.,    587,    56    N. 

Ch.,  385;   Jackson  v.   DeForest,   14  E.,  67. 

How.   Pr.,  81.     As  to  the  appoint-  83  Jackson  v.  DeForest,  14  How. 

ment    of    a    receiver    in    an    action  Pr.,  81. 

brought    for    the    dissolution    of    a  ^'^  Garretson  v.   Weaver,  3   Edw. 

partnership  as  a  part  of  a  fraudu-  Ch.,  385. 

lent  scheme  devised  for  the  purpose 


684  RECEIVERS.  [ClIAP.  XIII. 

an  injunction  as  a  necessary  adjunct  of  the  receivership.^^ 
So  when  a  partnership  at  will  is  dissolved,  there  being  no  pro- 
vision in  the  articles  as  to  the  division  of  the  property  or  as 
to  the  manner  of  closing  up  the  firm  affairs,  the  partners  be- 
ing unable  to  agree  upon  such  matters,  and  the  defendant 
partner  claiming  the  entire  interest  in  the  lease  and  good- 
will, a  proper  case  is  presented  for  appointing  a  receiver.^^ 
And  where  a  firm  has  been  dissolved  by  mutual  agreement  and 
part  of  the  assets  have  been  placed  in  the  hands  of  one  of  the 
partners  and  part  in  the  hands  of  the  other  for  the  purpose 
of  winding  up  the  affairs  of  the  firm  and  liquidating  the  as- 
sets, and  afterward  the  partners  are  unable  to  agree  as  to  the 
manner  in  which  the  property  shall  be  sold,  a  receiver  is  prop- 
erly appointed  to  close  up  the  affairs  of  the  firm  under  the 
direction  of  the  court.^'^  And  where,  upon  the  dissolution  of 
a  firm  by  mutual  agreement,  the  retiring  partner  had  given 
the  remaining  partner  the  right  to  continue  the  use  of  the 
former's  name  as  a  part  of  the  firm  name  upon  the  condition 
that  the  defendant  partner  should  incur  no  liability  under  such 
name,  and  the  defendant  partner,  who  was  insolvent,  was  vio- 
lating this  agreement  and  had  incurred  liabilities  in  excess  of 
the  value  of  the  partnership  property,  a  proper  case  was  pre- 
sented for  the  appointment  of  a  receiver  to  dispose  of  the 
stock  under  the  order  of  the  court.^^ 

§  511.  Ground  for  dissolution  not  necessarily  ground 
for  receiver;  relief  refused  when  defendant  has  advanced 
entire  capital;  insolvency  of  defendant.  While  it  is  thus 
seen  that  courts  of  equity,  both  in  England  and  in  America, 
rarely  interfere  by  a  receiver  in  partnership  cases  unless 
it  is  apparent  that  plaintiff  will  ultimately  be  entitled 
to  a  dissolution  of  the  firm,  it  is  to  be  borne  in  mind 
that  the  mere  fact  of  the  case  as  presented  being  suffi- 

85  Van    Rensselaer    v.    Emery,    9  87  Bennett  v.  Smith,  108  Ga.,  466, 
How.  Pr.,  135.    And  see  Fleming  v.      34  S.  E.,  156. 

Carson,  37  Ore.,  252,  62  Pac,  374.  «§  Josclove  v.  Bohrman,  119  Ga., 

86  McElvey  v.   Lewis,  76   N.   Y.,      204.  45  S.  E.,  982. 
373, 


CHAP.  XIII.]  PARTNERSHIPS.  685 

cient  to  warrant  a  decree  for  a  dissolution  does  not  of 
itself  constitute  sufficient  ground  for  a  receiver,  in  the  ab- 
sence of  improper  conduct  or  breach  of  duty  by  the  defend- 
ant partner.89  And  when  a  partnership  is  dissolvable  by 
mutual  consent,  or  determinable  at  the  will  of  either  party, 
equity  will  not,  as  of  course,  assume  control  of  the  business  by 
placing  it  in  the  hands  of  a  receiver,  although  the  party  com- 
plaining is  entitled  to  an  immediate  dissolution,  but  a  re- 
ceiver will  be  withheld  unless  the  relief  appears  to  be  neces- 
sary to  protect  and  preserve  the  interests  of  the  parties-^" 
The  reason  for  the  doctrine  as  here  stated  is  found  in  the 
manifest  injustice  which  would  necessarily  result  if,  in  case 
of  a  partnership  determinable  at  will,  a  court  of  chancery 
would  as  of  course,  and  for  no  other  reason  than  that  such 
was  the  wish  of  one  member  of  the  firm,  assume  control  of 
the  business  and  place  it  in  the  hands  of  a  stranger  to  the 
firm.91  Especially  will  the  court  refuse  to  interfere  by  a  re- 
ceiver when,  by  the  articles  of  copartnership,  the  defendant 
partner  was  required  to  advance  and  has  advanced  the  entire 
capital,  the  business  being  conducted  by  him  in  his  own  name 
and  owned  by  him  individually,  the  plaintiff's  interest  in  the 
property  upon  a  dissolution  being  only  a  share  of  the  profits, 
and  no  suggestion  of  defendant's  insolvency  or  irresponsibility 
being  made,  and  no  proof  of  fraud  appearing.92    When,  how- 

89  Harding  v.  Glover,  18  Ves.,  281.  91  Birdsall  v.  Colie,  2  Stockt.,  63. 
"I  have  frequently  disavowed,"  ^2  Cox  v.  Peters,  2  Beas.,  39.  "The 
says  Lord  Eldon  in  this  case,  "as  a  true  principle,"  says  Green,  Chan- 
principle  of  this  court,  that  a  re-  cellor,  p.  41,  "is  that  adopted  by 
ceiver  is  to  be  appointed  merely  on  Chancellor  Williamson,  viz.,  that 
the  ground  of  a  dissolution  of  a  where  a  partnership  is  dissolved  by 
partnership.  There  must  be  some  mutual  consent,  or  determined  by 
breach  of  the  duty  of  a  partner,  the  will  of  either  party,  a  court  of 
or  of  the  contract  of  partnership."  chancery  will  not  as  of  course  as- 
See,  also.  Cox  z/.  Peters,  2  Beas.,  39;  sume  the  control  of  the  business, 
Renton  v.  Chaplain,  1  Stockt.,  62;  or  place  it  in  the  hands  of  a  re- 
Birdsall  v.  Colie,  2  Stockt.,  63 ;  Wil-  ceiver.  A  receiver  will  be  ap- 
son  V.  Fitchter,  3  Stockt.,  71.  pointed     only     where     it     appears 

90  Cox  V.  Peters,  2  Beas.,  39;  necessary  to  protect  the  interest  of 
Birdsall  v.  Colie,  2  Stockt.,  63.  the    parties."     And    see    Renton    v. 


086  RECEIVERS.  [CIIAP.  XIU. 

ever,  in  addition  to  the  fact  of  a  dissolution,  or  a  right  to 
dissolve  the  firm,  the  plaintiff  partner  shows  that  the  defend- 
ant is  insolvent  and  that  there  is  danger  of  loss  if  the  firm 
assets  are  intrusted  to  his  charge,  sufficient  ground  is  present- 
ed to  entitle  plaintiff  to  the  aid  of  a  receiver.^^ 

§  512.  Relief  refused  purchaser  of  one  partner's  interest 
at  sheriff's  sale.  When  the  partnership  interest  of  one 
member  of  a  firm  is  sold  at  sheriff's  sale  under  execution 
against  him,  the  purchaser  at  such  sale  stands  in  no  better 
position  than  the  partner  himself,  and  a  court  of  equity  will 
not  in  behalf  of  such  purchaser  interfere  with  the  other  part- 
ner, by  appointing  a  receiver  to  wind  up  the  firm  business,  un- 
less his  gross  misconduct  calls  for  such  interference.  Espe- 
cially will  the  court  be  justified  in  withholding  relief,  in  such 
a  case,  when  the  bill  does  not  allege  insolvency  of  the  defend- 
ant partner,  and  it  does  not  appear  that  he  is  unable  to  respond 
for  any  interest  to  which  the  purchaser  may  be  entitled  on 
completion  of  the  accounts,  and  when  it  is  not  shown  that  the 
purchaser  ever  called  upon  the  defendant  for  an  accounting.^'* 

§  513.  Departure  from  agreement,  when  ground  for  re- 
ceiver in  case  of  theater.  While  the  aid  of  a  receiver  in 
partnership  matters  is  usually  confined  to  cases  where  the 
party  aggrieved  appears  to  be  entitled  to  a  dissolution,  there 
are  instances  where  a  departure  from  the  terms  of  the  agree- 
ment between  the  partners  for  the  management  of  their  busi- 
ness has  been  considered  sufficient  ground  for  a  receiver,  even 
though  the  case  as  presented  would  not  justify  a  dissolution 
and  none  was  sought.  Thus,  when  the  proprietors  of  a  thea- 
ter had  executed  an  agreement  regulating  the  management  of 
their  business,  and  providing  that  the  profits  should  be  de- 
voted exclusively  to  certain  purposes,  and  that  the  treasurer 
should  be  directed  so  to  apply  them,  but  by  a  subsequent  agree- 

Chaplain,  1  Stockt.,  62;  Birdsall  v.  94  Renton  v.  Chaplain,  1  Stockt., 

Colie,  2  Stockt.,  63.  62. 

93  Randall  v.  Morrell,  2  C.  E. 
Green,  343.  And  see  Jones  v.  Weir, 
217  Pa.  St.,  321,  66  Atl.,  550. 


CHAP.  XIII.]  PARTNERSHIPS.  687 

ment  the  parties,  then  entitled  under  the  original  proprietors 
to  seven-eighths  of  the  theater,  contracted  for  a  different  ap- 
plication of  the  profits,  and  otherwise  affected  or  varied  the 
rights  of  the  owner  of  the  remaining  one-eighth  interest,  who 
had  refused  to  become  a  party  to  the  new  agreement,  a  receiver 
was  appointed  upon  a  bill  by  the  latter  to  enforce  a  specific 
performance  of  the  covenants  contained  in  the  original  agree- 
ment.^^ 

§  514.  Court  should  be  careful  to  preserve  the  business ; 
relief  not  granted  when  it  would  destroy  value  of  business 
without  benefit  to  either  party.  In  the  case  of  a  valuable 
partnership  business  which  has  been  built  up  by  the  joint  la- 
bors and  contributions  of  all  the  partners,  upon  a  bill  for  a 
dissolution  and  a  receiver,  the  court  should  be  careful  to  pre- 
serve the  business  itself,  if  possible,  and  to  put  all  parties  upon 
a  fair  and  equal  footing  with  regard  to  it.  And  if  it  is  appar- 
ent that  the  appointment  of  a  receiver  to  direct  a  sale  of  the 
entire  business,  and  to  wind  up  the  concern,  would  destroy 
its  value  without  benefit  to  either  party,  the  relief  will  be  de- 
nied. And  this  is  true,  even  though  the  dissensions  which  have 
sprung  up  between  the  partners  are  such  as  to  make  it  manifest 
that  the  business  can  not  be  carried  on  advantageously,  and 
although  the  case  presented  is  otherwise  sufficient  to  warrant 
a  dissolution.^^ 

§  515.  Relief  granted  on  exclusion  from  firm;  refused 
when  answer  denies  bill.  When  both  partners  are  desirous 
of  a  dissolution  of  the  firm,  and  the  circumstances  of  the  case, 
as  disclosed  by  bill  and  answer,  are  such  as  seem  to  require  a 
dissolution,  the  bill  charging  and  the  answer  admitting  that 
plaintiff  is  excluded  from  the  partnership  premises,  sufficient 
cause  is  presented  for  a  receiver  to  collect  the  firm  debts  and 
take  charge  of  the  assets.^'^     But  when  plaintiff  relies  for  a 

95  Const  V.   Harris,  Turn.   &  R.,  "^  Wolbert  v.  Harris,  3  Halst.  Ch., 

496.  605. 

96Slemmer's  Appeal,  58  Pa.  St., 
168. 


688  RECEIVERS.  [chap.  XIII. 

dissolution  and  a  receiver  upon  the  fact  that  defendant  has 
drawn  from  the  business  in  excess  of  the  sum  stipulated  in 
the  copartnership  articles,  and  this  is  denied  by  defendant's 
answer,  which  denies  all  l' c  charges  of  the  bill,  the  court  will 
refuse  an  injunction  and  a  receiver.^^ 

§  516.  Receiver  granted  against  partner  authorized  to 
close  up  firm.  When,  upon  the  dissolution  of  a  partner- 
ship, one  partner  is  authorized,  by  agreement  between  the 
parties,  to  close  up  the  firm  business,  and  its  property  and  as- 
sets are  turned  over  to  him,  upon  his  agreeing  to  hold  the 
other  partners  harmless,  notwithstanding  his  right,  under  the 
contract,  to  exclusive  possession,  if  the  bill  shows  that  he  is 
wasting  or  misapplying  the  funds,  or  that  there  is  danger  to 
the  remaining  partners  from  his  insolvency  or  fraudulent  ^con- 
duct, a  sufficient  case  is  stated  to  justify  a  receiver.99  But  in 
case  of  such  an  agreement  the  court  will  not,  by  appointing 
a  receiver,  take  the  control  and  winding  up  of  the  business 
from  the  hands  of  the  partner  to  whom  it  has  thus  been  in- 
trusted by  stipulation  of  the  parties,  in  the  absence  of  a  clear 
showing  of  fraud  or  misconduct  and  danger  to  the  assets.^ 

§  517.  Assignment  of  assets  by  insolvent  partners  for 
benefit  of  their  creditors,  ground  for  relief.  In  case  of  a 
partnership  dissolvable  at  the  pleasure  of  either  of  the  part- 
ners, and  which  does,  in  fact,  become  dissolved  by  the  insol- 
vency of  certain  members  of  the  firm,  an  attempt  by  the  in- 
solvent partners  to  appropriate  the  firm  assets  to  the  payment 
of  their  private  indebtedness  by  an  assignment  thereof  for 
the  benefit  of  their  creditors,  is  sufficient  to  entitle  the  other 
partners  to  an  injunction  and  a  receiver.  And  in  such  case, 
the  receivership  and  the  injunction  should  extend  to  and  cov- 
er all  of  the  firm  assets  in  the  hands  of  the  defendant  part- 

98  Henn  v.  Walsh,  3  Edw.  Ch.,  charged  on  the  coming  in  of  defend- 
129.  ant's    answer,    denying   the   equities 

99  Drury  v.  Roberts,  2  Md.   Ch.,      of  the  bill. 

157.      But    the    receiver    was    dis-  1  Heflebower  v.  Buck,  64  Md.,  15. 


CHAP.  Xlir.]  PARTNERSHIPS.  689 

ners  and  their  assignee,  in  order  to  prevent  their  misappro- 
priation.^ 

§  518.  General  assignment  for  benefit  of  all  creditors, 
when  receiver  refused.  When,  upon  the  dissoUttion  of  a 
partnership,  the  partners  sign  and  pubhsh  a  notice  of  the  dis- 
solution, giving  one  partner  the  exclusive  right  to  wind  up  and 
settle  the  affairs  of  the  firm,  the  fact  that  such  partner  makes 
a  general  assignment  of  all  the  firm  assets  for  the  benefit  of 
all  the  firm  creditors,  equally  and  without  preference,  will 
not  of  itself  be  deemed  sufficient  cause  for  a  receiver,  when  no 
ground  is  shown  for  believing  that  the  fund  in  the  hands  of 
the  assignee  is  in  danger,  and  when  he  is  abundantly  able  to 
respond  in  damages.^ 

§  519.  Partnership  at  will,  receiver  almost  of  course; 
funds  applied  ratably,  and  without  preference.  When 
either  member  of  a  partnership  has  the  right  to  dissolve  the 
firm  at  will,  and  the  articles  make  no  provision  for  closing  up 
the  concern,  the  appointment  of  a  receiver  on  a  bill  for  that 
purpose,  in  the  event  of  a  disagreement  between  the  partners 
as  to  closing  up  the  firm  business,  is  almost  a  matter  of  course.'* 
And  in  such  a  case,  the  court  will  direct  the  receiver  to  apply 
the  partnership  property  and  funds  in  payment  of  all  debts 
of  the  firm  ratably,  without  preference  to  the  favorite  creditors 
of  either  partner.^ 

§  520.  Appointment  on  final  decree ;  failure  to  give  bond. 
It  is  competent  upon  the  final  judgment,  in  an  action  for  the 
dissolution  of  a  partnership,  to  appoint  a  receiver  as  part  of 
the  decree  or  judgment  of  the  court,  and  to  direct  him  to  take 
possession  of  the  firm  property  and  sell  the  same,  and  to  col- 
lect the  outstanding  debts  and  distribute  the  proceeds  among 
the  partners  according  to  their  respective  shares.  And  it  is 
not  sufficient  ground  for  reversing  such  a  judgment  or  de- 

2  Davis  V.  Grove,  2  Rob.  (N.  Y.),  4  Law  v.  Ford,  2  Paige,  310;  Mar- 
134;  Same  v.  Same,  id.,  635.  ten  7'.  Van  Schaick,  4  Paige.  479. 

3  Hayes  v.   Heyer,  4  Sandf.   Ch.,  5  Law  v.  Ford,  2  Paige,  310. 
485. 

Receivers — 44. 


690  RECEIVERS.  [chap.  XIII. 

cree,  that  the  receiver  thus  appointed  was  not  required  to  give 
bond,  it  being  regarded  as  the  fault  of  the  defendant  in  not 
asking  for  a  bond.^  And  in  an  action  for  the  dissolution  and 
winding  up  of  the  firm,  the  plaintiff  partner  being  himself  one 
of  the  principal  creditors,  upon  a  decree  dissolving  the  firm 
and  establishing  plaintiff's  rights  as  a  creditor,  it  is  error  to 
give  to  the  defendant  partner,  who  is  insolvent,  sole  control  of 
winding  up  the  business,  to  the  exclusion  of  plaintiff,  and  a 
receiver  should  be  appointed  for  that  purpose.*^ 

§  521.  Usually  appointed  on  interlocutory  application; 
injunction  also  granted.  While,  as  is  thus  seen,  the  aid  of 
a  receiver  may  be  granted  as  part  of  the  final  decree  in  the 
cause,  the  relief  is  usually  granted  upon  an  interlocutory  ap- 
plication on  filing  a  bill  for  a  dissolution  and  an  accounting. 
And  it  is  frequently  the  case  that  the  court,  as  a  necessary  ad- 
junct to  the  relief  sought  by  the  bill,  will  also  grant  an  inter- 
locutory injunction  to  restrain  defendant  from  interfering  with 
the  management  of  the  business,  pending  the  proceedings  for 
a  dissolution. 

6  Shulte  V.  Hoffman,  18  Tex.,  678.  7  Watson  v.  McKinnon,  7Z  Tex., 

210,  11  S.  W.,  197. 


CHAP.  XIII.]  PARTNERSHIPS.  691 


III.  Exclusion  from  Firm  as  Ground  for  Receiver. 

§  522.     Exclusion  from  management  of  business  strong  ground  for  re- 
lief. 

523.  Assignment  by  one  partner  and  exclusion  from  firm. 

524.  Employment   with   share   of   profits,  when   a  partnership;   re- 

ceiver granted   on  exclusion  from  profits. 

525.  Exclusion  and  impossibility  of  adjusting  disagreements. 

526.  Receiver  appointed  in  behalf  of  purchaser  of  partner's  interest. 

527.  Dissolution  by  proceedings  in  bankruptcy;  status  of  assignees; 

exclusion. 

528.  Partnership  in  vessel ;  exclusive  profit. 

529.  Exclusion  from  books,  and  fraudulent  conduct. 

§  522.  Exclusion  from  management  of  business  strong 
ground  for  relief.  In  actions  for  the  dissolution  of  part- 
nerships and  the  winding  up  of  their  affairs,  the  fact  that  one 
partner  has  excluded  the  other  from  participation  in  the  profits 
of  the  business,  or  from  his  share  in  its  management  and  con- 
trol, has  always  been  regarded  as  one  of  the  strongest  grounds 
for  equitable  relief  by  the  appointment  of  a  receiver.^  And 
it  was  said  by  Lord  Eldon,  that  the  most  prominent  considera- 
tion on  which  the  court  acts  in  appointing  a  receiver  of  a 
partnership  business  is  the  circumstance  of  one  partner  hav- 
ing taken  upon  himself  the  right  to  exclude  another  from  as 
full  a  share  in  the  management  of  the  firm  business  as  he  who 
assumes  that  power  himself  enjoys.^  And  it  was  said  by  the 
same  authority,  that,  as  in  the  ordinary  course  of  trade,   if 

8  See  Gowan  v.  Jeffries,  2  Ashm.,  628;  Whipple  v.  Lee,  46  Wash., 
296 ;  Wilson  z;.  Greenwood,  1  Swans.,  266,  89  Pac,  712.  See  Bryant  v. 
471 ;  Const  v.  Harris,  1  Turn.  &  R.,  Fitzsimmons,  106  Md.,  421,  67  Atl., 
525 ;  Kirby  v.  Ingersoll,  1  Doug.  356,  for  the  appointment  of  a  re- 
(Mich.),  477;  Katsch  v.  Schenck,  18  ceiver  to  take  possession  of  a  race- 
L.  J.,  N.  S.  Ch.,  386;  Wolbert  v.  horse  which  was  held  to  be  partner- 
Harris,  3  Halst.  Ch.,  605 ;  Katz  v.  ship  property  but  which  was  in  the 
Brewington,  71  Md.,  79,  20  Atl.,  139;  exclusive  possession  of  one  of  the 
Gillett  V.  Higgins,  142  Ala.,  444,  38  partners. 

So.,  664;   Fink  v.   Montgomery,  162  9  See  observations  of  Lord  Eldon 

Ind..  424,  68  N.  E.,   1010;  Redding  in  Const  v.  Harri.s,  Turn.  &  R.,  525. 
V.  Anderson,  37  Wash..  209,  79  Pac, 


692  RECEIVERS.  [chap.  XIII. 

one  partner  seeks  to  exclude  another  from  his  due  share  in 
the  business,  the  court  will  grant  a  receiver,  so  in  the  course 
of  winding-  up  the  partnership  affairs  the  court  will,  when 
necessary,  interpose  on  the  same  principle.  ^'^  And  where  one 
partner  is  fraudulently  mismanaging  the  affairs  of  the  partner- 
ship and  is  excluding  the  other  from  the  business,  and  it  ap- 
pears that  a  dissolution  must  ultimately  be  granted,  a  receiver 
is  properly  appointed  although  there  is  no  allegation  that  the 
defendant  partner  is  insolvent.^^ 

§  523.  Assignment  by  one  partner  and  exclusion  from 
firm.  In  illustration  of  the  general  doctrine  of  exclusion 
from  the  firm  as  ground  for  a  receiver,  it  is  held,  that  where 
one  partner,  without  the  knowledge  or  consent  of  his  copart- 
ner, assigns  and  transfers  all  the  firm  effects,  with  the  evident 
purpose  of  shutting  out  the  other  partner  from  any  participa- 
tion in  the  settlement  of  the  firm  business,  the  assignment  hav- 
ing the  effect  of  discontinuing  the  business  and  of  excluding 
the  other  partner  from  examining  the  books  or  controlling  the 
firm  property,  a  sui^cient  case  is  presented  to  warrant  the  in- 
terposition of  equity  by  a  receiver.  And  in  such  case,  the  as- 
signee can  have  no  claim,  even  as  to  the  interest  of  the  as- 
signing partner,  sufficient  to  defeat  the  application. ^^ 

§  524.  Employment  with  share  of  profits,  when  a  part- 
nership ;  receiver  granted  on  exclusion  from  profits.  When 
defendant  had  entered  into  a  contract  with  plaintiff  that  he 
would  pay  him  a  given  sum  as  salary  for  his  services  in  de- 
fendant's business,  and  in  addition  thereto  would  give  him  a 
certain  proportion  of  the  net  profits  of  all  new  business  ob- 
tained through  him,  the  agreement  was  regarded  as  constitut- 
ing a  partnership;  and  defendant  having  excluded  plaintiff 
from  all  participation  in  the  profits  of  the  business,  upon  a  bill 

10  Wilson  V.  Greenwood,  1  Pac.  153.  overruling  Wales  v.  Den- 
Swans.,  471.  nis,  9  Wash.,  308,  37  Pac,  450. 

11  Cole  V.  Price,  22  Wash.,  18,  60  12  Kirby    v.    Ingersoll,    1    Dong. 

(Mich.),  477. 


CHAP.  XIII.]  PARTNERSHIPS.  693 

for  a  dissolution  and  an  accounting,  a  receiver  was  allowed. 
In  such  a  case,  the  plaintiff,  being  entitled  to  a  share  in  the 
profits,  has  an  interest  in  seeing  that  the  business  out  of  which 
the  profits  arise  is  properly  disposed  of,  and  upon  being  ex- 
cluded therefrom,  he  is  entitled  upon  principle  to  have  a  re- 
ceiver when  the  parties  can  not  come  to  an  amicable  adjust- 
ment of  their  differences.^^ 

§  525.  Exclusion  and  impossibility  of  adjusting  dis- 
agreements. In  the  application  of  the  doctrine  of  exclusion 
as  a  ground  for  appointing  a  receiver  in  partnership  cases,  it  is 
not  absolutely  necessary  that  the  court  should  be  satisfied 
that  the  partnership  fund  is  in  peril.  And  when  the  fund 
in  dispute  is  prima  facie  the  proceeds  of  the  partnership,  and 
the  defendant  refuses  to  allow  his  copartner  to  participate 
therein,  and  excludes  him  from  all  participation  in  the  profits, 
so  that  the  rightful  ownership  of  the  fund  can  not  be  de- 
termined until  a  final  adjustment  of  their  affairs,  it  is  proper 
to  continue  a  receiver  in  possession.  Under  such  circum- 
stances, the  inability  of  the  partners  to  come  to  an  adjust- 
ment of  their  interests  would  seem  to  render  it  a  provident  ex- 
ercise of  the  powers  of  a  court  of  equity  to  continue  in  charge 
of  the  property  until  it  can  finally  determine  the  rights  of  the 
parties.14 

§  526.  Receiver  appointed  in  behalf  of  purchaser  of  part- 
ner's interest.  When  a  partner  sells  his  interest  in  the  busi- 
ness to  a  third  person,  although  such  sale  in  effect  works  a  dis- 

13  Katsch  V.  Schenck,  18  L.  J.,  N.  presumptive  title  in  the  defendant, 

S.  Ch.,  386.  the     court     would     interfere     with 

1*  Speights  V.  Peters,  9  Gill,  472.  great    reluctance,    and    only    where 

Mr.  Justice  Frick  observes,  p.  479 :  the  property  was  in  danger  of  being 

"It    is    assumed    by    the    appellant  materially  injured  or  lost.     But  in 

that    the    court,    as    preliminary   to  respect  to  a  fund  which  is  claimed 

the  appointment  of  a  receiver,  must  and  is  prima  facie  the  proceeds  of 

also    be    further    satisfied    that    the  a  partnership,  it  is  but  a  provident 

property  is  in  imminent  peril.    This,  exercise   of   equity   power    to    place 

however,  is  not  always  a  necessary  the  property  under  the  care  of  the 

condition  of  the  action  of  the  court.  court." 
.^gainst  the  legal  title,  or  a  strong 


594  RECEIVERS.  [chap.  XIII. 

solution  of  the  firm,  the  remaining  partner  is  not  entitled  to 
the  exclusive  use  and  possession  of  the  property,  and  if  he 
excludes  the  purchaser  from  participation  therein,  denying 
not  only  his  rights  but  the  rights  of  the  partner  from  whom 
he  purchased,  and  sets  up  an  adverse  title  to  the  property,  suf- 
ficient cause  is  shown  for  appointing  a  receiver.!^ 

§  527.  Dissolution  by  proceedings  in  bankruptcy ;  status 
of  assignees;  exclusion.  In  case  of  the  dissolution  of  a 
partnership  by  proceedings  in  bankruptcy  against  one  member 
of  the  firm,  the  assignees  of  the  bankrupt  partner  become,  as 
to  his  interest,  tenants  in  common  with  the  solvent  partner. 
And  in  such  a  case,  upon  an  application  for  a  receiver  on  the 
ground  of  exclusion,  a  court  of  equity  will  proceed  upon  the 
same  principles  by  which  it  is  governed  in  all  cases  where  some 
members  of  a  firm  seek  to  exclude  others  from  that  share  in 
the  management  of  the  business  to  which  they  are  entitled.!^ 

§  528.  Partnership  in  vessel;  exclusive  profit.  Where 
there  were  several  partners  jointly  interested  in  a  vessel,  and 
the  defendant  partners  had  been  in  possession,  acting  as  ships- 
husbands  and  brokers,  and  had  acted  in  fraud  of  the  plaintiffs 
by  clandestinely  making  a  profit  from  the  employment  of  the 
vessel  for  their  own  exclusive  benefit,  upon  a  bill  for  an  ac- 
counting, it  was  held  a  sufficient  case  to  warrant  the  appoint- 
ment of  a  receiver  ad  interim,  to  take  possession  of  the  ves- 
sel's machinery,  which  had  been  removed  for  repairs,  and  of 
which  defendants  had  possessed  themselves  to  the  exclusion  of 
plaintiffs. ^'^ 

§  529.  Exclusion  from  books,  and  fraudulent  conduct. 
A  receiver  will  be  appointed  upon  a  bill  by  one  partner  for  a 
settlement  of  the  partnership  affairs,  when  it  is  alleged  that 
defendant  refuses  to  make  any  settlement  and  denies  plaintiff 

15  Seibert  v.  Seibert,  1  Brews.,  don  in  Wilson  v.  Greenwood,  1 
531.  Swans.,  482,  483. 

16  See  observations   of  Lord   El-  17  Brenan  v.  Preston,  2  De  G.,  M. 

&  G.,  813. 


CHAP.  XIII.]  PARTNERSHIPS.  695 

access  to  the  firm  books,  and  that  he  has  failed  to  pay  the  firm 
indebtedness,  and  has  fraudulently  appropriated  the  partner- 
ship funds  to  his  own  use  and  diminished  the  firm  assets.  Such 
a  case  is  regarded  as  presenting  such  elements  of  fraud  and 
imminent  danger,  as  to  clearly  warrant  the  extraordinary  aid 
of  the  court.i^ 

iSHaight  V.   Burr,    19   Md.,    130.       161;    Shannon   v.   Wright,  60   Md., 
See,  also,  Barnes  v.  Jones,  91  Ind.,      520. 


696  RECEIVERS.  [chap.  XIII. 


IV.  Receiver  Upon  Death  of  Partner. 

§  530.     English  doctrine;  receiver  upon  death  of  both  partners. 

531.  Death  of  one  partner  no  ground  for  relief  unless  survivor  guilty 

of  mismanagement. 

532.  Mismanagement  of  survivor;  relief  granted  on  bill  by  adminis- 

trator of  deceased. 

533.  When  administrator  entitled  to  the  relief;  may  himself  be  re- 

ceiver; the  decree. 

534.  Rights  of  the  receiver. 

535.  Legatee  of  deceased  partner,  when  entitled  to  relief. 

536.  Receiver   allowed,  notwithstanding  appointment  of  executor; 

authority  to  sue. 

537.  Relief  allowed  when  answer  admits  facts  alleged  in  bill. 

§  530.  English  doctrine;  receiver  upon  death  of  both 
partners.  The  jurisdiction  of  equity  in  appointing  receiv- 
ers in  partnership  cases  is  sometimes  called  into  exercise  by 
reason  of  the  death  of  one  or  both  partners.  It  was  the  doc- 
trine of  the  English  Court  of  Chancery,  established  at  an  early 
date,  that  upon  the  death  of  both  members  of  a  copartnership, 
a  receiver  would  be  appointed.  And  the  grounds  for  the  re- 
lief in  such  case  were,  that  no  such  confidence  exists  as  be- 
tween the  representatives  of  the  deceased  partners,  as  exist- 
ed between  the  partners  themselves.^^ 

§  531.  Death  of  one  partner  no  ground  for  relief  unless 
survivor  guilty  of  mismanagement.  Ordinarily,  in  case  of 
the  death  of  a  single  member  of  a  copartnership,  since  the  sur- 
viving partner  has  a  legal  right  to  possession  of  the  firm  assets 
and  to  wind  up  the  business,  he  will  not  be  deprived  of  this 
right  by  a  receiver,  unless  upon  proof  of  mismanagement  or 
of  danger  to  the  partnership  effects.^O     And  while  it  is  true 

19  Phillips  V.  Atkinson,  2  Bro.  C.  confidence  between   the   representa- 

C,    272.      "Where    the^    is    a    co-  lives,   and   therefore  the  court   will 

partnership,"     says     Lord     Kenyon,  appoint  a  receiver." 

"there    is    confidence    between    the  20  Connor      v.      Allen,      Harrinsr. 

parties,  and  if  the  one  dies  the  con-  (Mich.),  371;  Walker  v.   House,  4 

fidence    in    the    other    partner    re-  Md.    Ch.,   39;    Dickens   v.    Dickens, 

mains,    and    he    shall    receive;    but  154  Ala.,  440,  45   So.,  630.     To  the 

Vvhen    both    are    dead,    there    is    no  same   effect,    see    Comstock   v.    Mc- 


CHAP.  XIII.]  PARTNERSHIPS.  697 

that  equity  interferes  by  a  receiver  with  much  less  rehictance 
when  the  partnership  has  been  dissolved,  than  when  it  is  still 
in  existence,  yet  where  the  proceedings  are  instituted  against 
a  surviving  partner  by  the  representatives  of  a  deceased  mem- 
ber of  the  firm,  the  court  will  not  interfere  without  being  first 
satisfied,  by  the  mismanagement  or  improper  conduct  of  the 
survivor,  that  the  confidence  reposed  in  him  was  misplaced.^i 
And  where  a  surviving  partner  has  disposed  in  a  valid  and 
binding  manner  of  all  the  partnership  assets  before  the  filing 
of  a  bill  for  a  receiver  by  a  creditor  of  the  firm,  it  is  improper 
to  appoint  a  receiver,  since  there  is  no  property  for  him  to  take 
and  administer. 22 

§  532.  Mismanagement  of  survivor;  relief  granted  on 
bill  by  administrator  of  deceased.  If,  however,  the  surviv- 
ing partner  is  guilty  of  mismanagement  and  of  improper  con- 
duct in  his  control  of  the  firm  business,  a  different  case  is  pre- 
sented, and  courts  of  equity  are,  under  such  circumstances,  in- 
clined to  a  somewhat  liberal  exercise  of  their  extraordinary 
jurisdiction,  in  behalf  of  the  representatives  of  a  deceased 
partner.23  And  in  case  of  the  death  of  one  member  of  a  firm, 
in  the  absence  of  any  partnership  articles,  or  of  any  provision 
for  a  continuance  of  the  business  by  the  administrators  or  rep- 
resentatives of  a  deceased  partner,  if  the  survivor  refuses  to 
proceed  within  a  reasonable  time  to  close  up  the  firm  business, 
and  continues  to  manage  it  in  his  own  name,  and  for  his  own 
benefit,  equity  will  grant  an  injunction  against  its  continu- 
ance and  will  appoint  a  receiver,  upon  a  bill  filed  by  the  ad- 
ministrator of  the  deceased  partner. 24  In  such  a  case,  the 
survivor  is  regarded  as  a  trustee  for  the  creditors  and  repre- 
sentatives of  the  deceased  partner.  And  the  laws  of  the  state 
requiring  an  executor  or  administrator  to  close  up  the  estate 

Donald,  113   Mich.,  626,  71  N.  W.,  2.3  Holdcn's  Adtn'rs  v.  McMakin, 

1087.  Par.    Eq.    Cas.,   270;    Madgwick   v. 

21  Walker  v.  House,  4  Md.  Ch.,  Wimble,  6  Beav.,  495;  Miller  v. 
39.  Jones,  39  111.,  54. 

22  Havens  &  Geddes  Co.  v.  Har-  24  Holden's  Adm'rs  v.  McMakin, 
ris.  140  Tnd.,  387,  39  N.  E.,  49.  Par.  Eq.  Cas.,  270. 


698  RECEIVERS.  [chap.  XIII. 

of  the  deceased  within  one  year,  the  same  rule  was  held  ap- 
pHcable  by  analogy  to  the  surviving  partner,  and  he  having 
delayed  and  refused  a  settlement  for  a  period  of  fourteen 
months,  using  the  firm  property  during  this  entire  period  for 
his  own  benefit,  it  was  held  that  there  had  been  such  improper 
delay  as  to  warrant  the  interposition  of  equity.^^  So  when, 
by  the  terms  of  the  partnership  articles,  it  is  provided  that  in 
case  of  the  death  of  either  partner,  the  option  shall  be  given 
his  representatives  of  continuing  the  business,  but  upon  the 
death  of  one  partner  the  survivors  insist  that  they  are  entitled 
to  continue  the  firm  with  the  funds  of  the  deceased,  and  to 
compel  his  representatives  to  be  partners  therein,  they  are  en- 
titled to  a  receiver  as  against  the  surviving  partners.26 

§  533.  When  administrator  entitled  to  the  relief;  may 
himself  be  receiver;  the  decree.  The  administratrix  of  a 
deceased  partner  has  a  sufficient  interest  in  the  firm  property, 
as  the  personal  representative  of  the  deceased,  to  entitle  her  to 
the  appointment  of  a  receiver  over  the  interest  of  the  deceased 
in  the  firm  assets,  upon  a  bill  for  the  settlement  of  the  partner- 
ship affairs.2''  And  while  the  administrator  of  a  deceased  part- 
ner primarily  has  nothing  to  do  with  the  collection  of  firm 
debts  or  with  the  management  of  firm  assets,  it  being  the  duty 
of  the  survivors  to  settle  the  partnership  affairs,  yet  if  there 
should  be  an  unreasonable  delay  in  the  performance  of  this 
duty,  or  if  the  survivors  are  wasting  the  partnership  property, 
it  becomes  the  right  and  duty  of  the  administrator  to  insti- 
tute proceedings  against  the  survivors  for  an  accounting  and 
a  receiver,  in  order  that  the  affairs  of  the  partnership  may  be 
properly  adjusted.  In  such  case,  the  administrator  may  him- 
self, if  otherwise  a  proper  person,  be  appointed  receiver,  the 
court,  however,  requiring  him  to  give  an  additional  bond  with 
satisfactory  security.^S  The  proper  decree  in  such  a  case  is, 
that  the  receiver  be  appointed  upon  giving  the  required  bond, 

25  Holden's  Adm'rs  v.  McMakin,  27  Clegg  v.  Fishwick,  1  Mac.  &  G., 
Par.  Eq.  Cas.,  270.  294. 

26  Madgwick  v.  Wimble,  6  Beav.,  28  Miller  v.  Jones,  39  111.,  54.  The 
495.  principles  by  which  courts  of  equity 


CHAP.  XIII.]  PARTNERSHIPS.  699 

and  that  the  surviving  partners  pay  over  to  him  such  money 
as  has  cx)me  to  their  hands,  and  has  not  been  expended  by  them 
in  the  payment  of  partnership  debts  and  in  the  legitimate  ex- 
penses of  the  business.  They  should  also  be  required  to  de- 
liver to  the  receiver  all  evidences  of  debt  and  choses  in  ac- 
tion against  debtors  of  the  firm,  and  all  personal  property,  if 
any.  belonging  to  the  firm,  and  should  be  enjoined  from  the 
collection  of  any  debts  due  to  the  partnership.^^ 

§  534.  Rights  of  the  receiver.  In  the  class  of  cases  un- 
der consideration,  when  the  administrator  or  representative  of 
the  deceased  partner  procures  the  appointment  of  a  receiver 
of  the  partnership  effects,  the  receiver  by  virtue  of  his  appoint- 
ment is  invested  with  all  the  rights  and  equities  of  the  de- 
ceased partner,  for  the  purposes  of  the  trust  with  which  he  is 
clothed.  And  he  completely  represents  the  equitable  rights  of 
the  administrator  and  of  the  deceased,  for  the  purpose  of  ad- 
ministering the  assets  of  the  firm  and  applying  them  in  pay- 
ment of  the  partnership  indebtedness.^*^  And  upon  the  ap- 
pointment of  a  receiver  for  the  settlement  of  partnership  af- 
fairs, after  the  death  of  a  partner,  he  becomes  fully  invested 

are  governed,  in  this  class  of  cases,  administrator.  If,  however,  there 
are  very  clearly  stated  in  the  opin-  is  an  unreasonable  delay  on  the  part 
ion  of  the  court  by  Mr.  Justice  of  the  surviving  partners  in  closing 
Lawrence,  p.  60,  as  follows :  "The  the  affairs  of  the  partnership,  or  if 
law  governing  the  relations  of  the  they  are  wasting  the  partnership 
administrator  of  a  deceased  partner  property,  it  is  then  the  right  and 
to  the  surviving  partner,  so  far  as  duty  of  the  administrator,  if  the 
concerns  any  questions  involved  in  partnership  creditors  remain  inac- 
this  case,  is  well  settled.  Prima-  tive,  to  file  a  bill,  as  in  the  present 
rily,  the  administrator  has  nothing  instance,  calling  the  survivors  to  ac- 
to  do  with  either  the  partnership  count  and  praying  for  an  appoint- 
assets  or  the  partnership  debts.  ment  of  a  receiver  and  the  complete 
The  surviving  partners  take  the  ex-  adjustment  of  the  partnership  af- 
clusive  legal  title  to  the  former  for  fairs.  The  administrator  himself, 
the  payment  of  the  latter.  If  any  if  a  proper  person,  may  be  made  re- 
assets  remain  in  their  hands  after  ceiver,  but  in  that  event  the  court 
payment  of  all  liabilities,  they  should  require  him  to  give  a  new 
should  account  to  the  administrator  bond  as  such." 
for  the  distributive  share  of  the  29  Miller  v.  Jones,  39  111.,  54. 
tlcccased,  which  then  becomes,  for  "0  Tillinghast  i'.  Champlin,  4  R.  I., 
the  first  time,  assets  in  his  hands  as  173. 


700  RECEIVERS.  [chap.  XIII. 

with  the  possession  and  control  of  the  assets,  the  surviving 
partner  having  no  further  authority  to  adjust  the  affairs  of 
the  firm.  In  such  case,  a  judgment  recovered  by  a  former 
creditor  for  services  rendered,  in  a  suit  against  the  surviving 
partner  to  which  the  receiver  was  not  a  party,  is  not  binding  or 
conchisive  as  against  the  receiver,  and  the  court  may  re-inves- 
tigate the  merits  of  such  demand,  and  may  determine  for  it- 
self the  amount  which  is  justly  due  to  such  creditor.^l 

§  535.  Legatee  of  deceased  partner,  when  entitled  to 
relief.  When  a  legatee  of  a  deceased  partner  was  entitled 
to  his  share  of  the  profits  accruing  from  the  partnership  busi- 
ness, and  continued  the  business  with  the  surviving  member 
of  the  firm  for  a  long  period  of  years,  being  treated  as  a  part- 
ner and  receiving  his  share  of  the  profits,  and  he  afterward 
filed  a  bill  for  a  dissolution,  and  defendant  denied  his  right  to 
an  accounting  or  to  any  relief,  upon  the  ground  that  plaintiff, 
being  a  minister,  was  incapacitated  under  an  act  of  parliament 
from  engaging  in  any  trading  business,  defendant  also  claim- 
ing the  entire  property  for  himself,  a  receiver  was  allowed. ^2 

§  536.  Receiver  allowed,  notwithstanding  appointment 
of  executor;  authority  to  sue.  In  Louisiana  it  is  held,  that 
a  court  having  jurisdiction  of  an  action  for  the  settlement  of 
partnership  affairs,  has  power  to  appoint  a  receiver,  notwith- 
standing the  death  of  one  partner  and  the  appointment  of 
an  executor  or  administrator  of  his  estate ;  and  that  such  ap- 
pointment is  of  itself  sufficient  authority  for  the  receiver  to 
institute  an  action  to  recover  money  due  to  the  firm.^^ 

§  537.  Relief  allowed  when  answer  admits  facts  alleged 
in  bill.  When  a  bill  in  equity  is  filed  by  creditors  of  a  part- 
nership against  the  surviving  members  of  the  firm,  for  the  set- 
tlement of  the  firm  accounts  and  for  a  receiver,  and  the  answer 
admits  all  the  material  facts  alleged  in  the  bill,  it  is  proper  to 
appoint  a  receiver  to  take  charge  of  the  partnership  assets.^^ 

31  Kirkpatrick  v.  McElroy,  41  N.  33  Helme  v  Littlejohn,  12  La.  An., 
J.  Eq..  539,  7  Atl.,  647.                           298. 

32  Hale  v.  Hale,  4  Beav.,  369.  ^^  Dick  v.  Laird,  4  Cranch  C.  C, 

667. 


CHAP.  XIII.]  PARTNERSHIPS.  701 


V.  Functions  and  Duties  of  the  Receiver. 

§  538.     Duty  to  collect  debts;  entitled  to  assets;  will  not  be  enjoined; 
rights  of  third  persons. 

539.  Takes  whole  equitable  title  to  firm  property;  may  bring  suit, 

suo  motu,  to  obtain  possession;   choses  in  action;   when   re- 
ceiver can  not  recover  individual  property  of  partner. 
539a.  Extent  of  receiver's  title. 

540.  Selection;  partner  allowed  to  act  without  salary;  holds  funds 

as  officer  of  court. 

541.  Court  will  aid  receiver  in  obtaining  assets  in  hands  of  surviv- 

ing partners. 

542.  Partner  acting  as  receiver  can  not  withhold  funds   as  due  to 

him  personally. 

543.  Sale  not  allowed  by  receiver  of  inferior  court,  pending  appeal 

as  to  its  jurisdiction. 

544.  Receiver  required  to  produce  books  and  accounts  for  examina- 

tion. 

545.  Payment  of  partnership  debts. 

546.  Appointed  to  collect  debts  which  defendants  are  enjoined  from 

collecting;  payment  to  plaintiff. 

547.  Insane  hospital;  sale  of  lease  and  good-will;  injunction  against 

continuing  same  business. 

548.  Receiver  over  husband  on  bill  for  divorce,  not  entitled  to  part- 

nership property. 

549.  Receiver  over  brewing  business,  functions  of. 

550.  Retiring    partner   compelled    to    pay   notes,    may   have    action 

against  receiver  of  new  firm. 

551.  Purchaser  of  partner's  interest  not  allowed  to  interfere  with  re- 

ceiver. 

552.  Funds  in  receiver's  hands  not  subject  to  garnishment. 
552a.  When  receiver  not  required  to  pay  deposit  in  full. 

§  538.  Duty  to  collect  debts;  entitled  to  assets;  will  not 
be  enjoined;  rights  of  third  persons.  Upon  the  appoint- 
ment of  a  receiver  in  an  action  for  the  dissolution  of  a  part- 
nership, it  is  his  duty  to  proceed  without  delay  to  collect 
the  outstanding  debts.^^  And  when  a  receiver  of  part- 
nership effects  is  appointed  in  proceedings  under  judgments 
against  the  firm,  and  the  appointment  has  become  perfected 
by  his  giving  the  requisite  security,  he  becomes  at  once  en- 

35  Jackson  v.  De  Forest,  14  How.   Pr.,  81. 


702  RECEIVERS.  [chap.  XIU. 

titled  to  possession  of  the  firm  assets,  which  are  regarded  as 
being-  in  the  custody  of  the  court,  and  not  to  be  disposed  of 
without  a  hearing-  of  all  i)artics  in  interest.  And  it  is  improp- 
er, in  such  case,  to  enjoin  the  receiver  from  the  management 
of  the  property  or  fund,  since  this  would  be  in  effect  equiv- 
alent to  restraining  the  court  itself  from  disposing  of  the 
funds  which  may  come  into  the  hands  of  its  officer.^^  But 
the  appointment  of  a  receiver,  in  an  action  for  an  accounting 
and  settlement  of  partnership  affairs,  will  not  be  extended  so  as 
to  include  and  direct  the  taking  possession  of  specific  property 
alleged  to  belong  to  the  firm,  when  the  question  of  whether  it 
is  or  is  not  partnership  property  is  directly  in  issue  by  the 
pleadings,  and  is  one  of  the  points  in  controversy  in  the  liti- 
gation.^^ And  upon  an  application  for  a  receiver  in  partner- 
ship cases,  the  court  will  not  undertake  to  determine  what  is 
and  what  is  not  partnership  property,  as  between  members  of 
the  firm  and  third  persons,  and  if  disputes  arise  with  refer- 
ence to  any  particular  property  claimed  by  third  persons,  the 
proper  course  is  to  determine  the  controversy  by  an  action 
either  for  or  against  the  receiver.^^ 

§  539.  Takes  whole  equitable  title  to  firm  property; 
may  bring  suit,  suo  motu,  to  obtain  possession ;  choses  in 
action;  when  receiver  can  not  recover  individual  property 
of  partner.  A  receiver  of  the  effects  of  a  partnership,  ap- 
pointed in  an  action  for  the  settlement  of  the  firm  business, 
is  regarded  as  vested  with  the  whole  equitable  title  to  the  part- 
nership property,  without  any  assignment  for  that  purpose, 
and  in  an  action  to  obtain  possession  of  the  property  he  repre- 
sents the  interests  therein  of  all  parties  to  the  suit  in  which 
he  was  appointed.  And  it  is  held,  that  to  enable  him  to  prop- 
erly discharge  his  trust,  he  may,  suo  motu,  and  without  special 
leave  of  the  court,  bring  an  action  to  possess  himself  of  the 

36  Van    Rensselaer    v.    Emery,    9  -^8  Higgins  v.  Bailey,  7  Rob.    (N. 

How.    Pr.,    135.  Y.),  613. 

•^7  Gregory  v.  Gregory,  1  Sweeny, 
613. 


CHAP.  XIII.]  PARTNERSHIPS.  703 

property  to  which  he  is  officially  entitled,  incurring  no  risk 
thereby  except  as  to  costs,  and,  least  of  all,  have  the  persons 
against  whom  he  brings  such  action  the  right  to  object  that 
he  brings  suit  without  leave  of  court. ^^  The  appointment  of  a 
receiver  upon  the  insolvency  of  the  firm  operates,  in  effect,  as 
an  assignment  of  the  firm  assets,  with  all  securities  incident 
thereto,  for  the  benefit  of  firm  creditors."*^  But  since  a  re- 
ceiver's authority  is  conferred  by  law,  and  is  not  like  that  of  a 
voluntary  assignee  of  the  parties,  a  receiver  of  a  partnership 
succeeds,  not  only  to  the  legal  title  of  the  partners  as  joint 
tenants,  but  also  to  the  equitable  rights  and  remedies  of  the 
firm  and  of  its  beneficiaries. '^^  Ordinarily,  however,  the  re- 
ceiver is  not  entitled  to  sue  for  the  recovery  of  debts  due  to 
the  firm  without  leave  of  court.'^^  B^t  in  an  action  brought 
by  the  receiver  to  foreclose  a  vendor's  lien  upon  real  estate 
which  has  been  sold  by  him,  it  constitutes  no  defense  that  one 
of  the  partners  was  not  a  party  to  the  suit  in  v^hich  the  re- 
ceiver was  appointed,  when  it  is  not  shown  that  such  partner 
was  then  alive  and  within  the  jurisdiction  of  the  court,  or  that 
he  had  a  substantial  interest  in  the  partnership.^^  And  when 
the  receiver  is  authorized  to  sell  all  the  property,  choses  in  ac- 
tion and  effects  of  the  firm  within  the  jurisdiction  of  the  court, 
a  purchaser  at  such  sale  will  acquire  a  good  title  to  choses  in 
action  and  accounts  due  to  the  firm  from  persons  resid- 
ing beyond  the  limits  of  the  state,  the  partners  themselves 
residing  within  the  state  and  the  court  having  full  jurisdiction 
over  them.  In  such  case,  the  members  of  the  firm  can  not 
afterward  maintain  an  action  against  the  purchaser  to  compel 

30  Tillinghast   v.    Champlin,   4   R.  recover  firm  goods  which  have  been 

I.^  173.  seized    under    a    chattel    mortgage 

40Winslow  V.  Wallace,  116  Ind.,  executed  by  one  member  of  the  firm 

317,  17  N.  E.,  923.  after  the  other  partner  has  become 

41  Wallace  v.  Yeager,  4  Phila.  R.,  insolvent   and   assigned   his   interest 
251  ;  Pearce  v.  Gamble,  72  Ala.,  341.  for  the  benefit  of  his  creditors,  Og- 

42  Fincke  v.  Fnnke,  25  Hun,  616.  den  v.  Gregg.  29  Hun.  146. 

And  see  as  to  the  right  of  such  a  43  Stclzer   v.    La    Rose,    79    Ind., 

receiver   to   maintain   an   action    to      435. 


704  RECEIVERS.  [chap.  XIII. 

him  to  account  for  the  proceeds  which  he  has  collected  from 
parties  resithiig"  beyond  the  state."^^  But  since  the  receiver 
takes  only  the  firm  assets  and  collects  only  the  debts  due  to  the 
firm,  it  is  improper  for  the  court  to  direct  him  to  collect  for 
the  benefit  of  firm  creditors  from  an  assignee  of  an  individual 
partner,  not  indebted  to  the  firm,  the  surplus  which  may  re- 
main in  the  hands  of  such  assignee  after  payment  of  the  in- 
dividual creditors  of  such  partner."*^  For  the  same  reason,  a 
receiver  appointed  to  take  charge  of  the  property  of  an  insol- 
vent partnership  can  not  maintain  a  bill  to  set  aside  a  convey- 
ance made  by  a  member  of  the  firm  of  his  individual  property 
which  had  been  conveyed  by  him  to  defraud  the  creditors  of 
the  firm. 4 6 

§  539(7.  Extent  of  receiver's  title.  It  has  been  shown 
elsewhere  that  a  receiver  appointed  in  a  judgment  creditors' 
suit  is  regarded  as  a  trustee  and  representative  of  the  creditors 
and  that  he  may  accordingly  maintain  all  necessary  actions 
to  set  aside  fraudulent  conveyances  and  transfers  executed  by 
the  debtor  prior  to  the  receivership.'*'^  Where,  however,  the 
receiver  is  appointed  for  the  settlement  of  the  affairs  of  a 
partnership,  not  at  the  instance  and  for  the  benefit  of  creditors 
but  upon  the  application  of  one  of  the  partners  against  the 
other,  such  receiver  is  in  no  sense  a  representative  of  the  cred- 
itors of  the  firm  and  he  accordingly  occupies  no  better  posi- 
tion than  the  firm  with  respect  to  its  property,  and  he  can  as- 
sert no  greater  right  or  title  with  reference  to  the  business 
and  property  of  the  partnership  than  could  the  members  of 
the  firm  themselves. ^^     Thus,  a  receiver  appointed  in  such  a 

44Loney   v.    Penniman,    43    Md.,  seniles  v.    Dunn,   61    N.   J.    Eq., 

130.  391,  48  Atl.,  315. 

45  Wallace  v.   Milligan,   110  Ind.,  "^^  %  ASA,  ante. 

498,  11  N.  E.,  599.     See,  as  to  the  48  Security  Title  &  Trust  Co.  v. 

liability   of   a   co-partnership   for   a  Schlender,   190   111.,  609,  60  N.   E., 

loan  made  to  the  firm  by  one  of  its  854;  Weber  v.  Weber,  90  Wis.,  467, 

members  out  of  funds  held  by  him  63  N.  W.,  757. 
as  a  receiver,   R3'an  z*.   Morrill,  83 
Ky.,  352. 


CHAP.  XIII.]  PARTNERSHIPS.  705 

proceeding  can  not  maintain  an  action  to  set  aside  a  fraudulent 
conveyance  made  by  the  partnership  prior  to  the  receivership.^^ 
§  540.  Selection;  partner  allowed  to  act  without  salary; 
holds  funds  as  officer  of  court.  As  regards  the  selection  of 
a  proper  person  to  be  appointed  receiver  over  a  copartnership, 
upon  the  dissolution  of  the  firm,  the  general  principles  gov- 
erning in  the  selection  of  receivers  are  applicable,  and  these 
have  been  elsewhere  discussed.^^  A  plaintiff  partner,  in  an 
action  for  a  dissolution  of  the  firm,  has  sometimes  been  ap- 
pointed receiver,  although  the  practice  in  this  country  is  an 
unusual  one,  and  only  to  be  justified  upon  the  implied  condi- 
tion that  he  will  discharge  the  duties  of  his  trust  free  of  charge. 
Such  a  receiver  will  not,  therefore,  be  allowed  any  compensa- 
tion for  his  services  in  managing  the  property  intrusted  to  his 
charge.^l  But  if  the  partners  having  a  three-fourths  interest 
in  the  firm  agree  upon  one  of  their  number  as  receiver,  and 
the  principal  creditors  of  the  firm  unite  in  the  application  for 
his  appointment,  he  being  otherwise  well  qualified  for  the  posi- 
tion, it  is  proper  to  appoint  him  upon  his  undertaking  to  act 
without  compensation.^^  fhe  English  practice  seems  to  be  to 
give  each  of  the  partners  liberty  to  propose  himself  to  act  as 
receiver  without  salary.^^  But  the  partner  who  may  be  ap- 
pointed no  longer  acts  in  the  capacity  or  sustains  the  relation 
of  a  partner,  but  is  an  officer  of  the  court,  having  given  due 
security  to  account  for  the  moneys  which  he  may  receive  in 
his  official  capacity,  and  being  responsible  directly  to  the  court 
for  his  conduct.^"*  When,  therefore,  the  defendant  partner  is 
appointed  receiver,  in  an  action  for  the  settlement  of  partner- 
ship affairs,  and  uses  a  part  of  the  firm  assets  in  private  spec- 
ulations for  his  own  benefit,  the  other  partner  can  not  main- 
tain a  bill  in  equity  for  a  division  of  the  profits  realized  out  of 

4fi  Weber  v.  Weber,  90  Wis.,  467,  52  Todd  v.  Rich,  2  Tenn.  Ch.,  107. 

63  N.  W.,  757.  53  Blakeney  v.  Diifaur,  15  Bcav., 

50  See  chapter  III,  ante,  Of  Selec-  40:  Sargant  v.  Read,  1  Ch.  D.,  600. 
tion  and  Eligibility.  •'^"^  Blakeney  v.  Dufaur,   15   Beav., 

51  Brien    v.    Harriman,    1    Tenn.  40. 
Ch.,  467. 

Receivers — 45. 


706  RECEIVERS.  [chap.  XIII. 

the  speculation,  the  defendant  holding  the  funds  not  in  the 
capacity  of  a  partner,  but  as  a  receiver  and  officer  of  the 
court.  55 

§  541.  Court  will  aid  receiver  in  obtaining  assets  in 
hands  of  surviving  partners.  A  receiver  in  partnership 
cases  is  entitled  to  and  will  be  allowed  by  decree  of  court  the 
possession  of  all  money  in  the  hands  of  the  surviving  partners, 
as  well  as  all  evidences  of  indebtedness  and  choses  in  action 
due  to  the  firm,  and  all  assets  and  personal  property  of  the 
firm.  And  the  court  may,  if  necessary,  enforce  its  decree  for 
the  delivery  of  such  assets  by  the  surviving  partners  to  the  re- 
ceiver, by  process  of  attachment. 56 

§  542.  Partner  acting  as  receiver  can  not  withhold  funds 
as  due  to  him  personally.  When,  pending  an  action  for 
the  dissolution  of  a  firm  and  the  settlement  of  its  affairs,  one 
of  the  partners  is  appointed  receiver,  he  will  not  be  allowed, 
by  virtue  of  his  appointment,  to  withhold  partnership  funds, 
collected  in  his  capacity  as  receiver,  upon  the  ground  that  they 
are  due  to  him  personally,  since  to  allow  such  an  application 
of  the  funds  would  necessarily  defeat  the  very  object  of  his 
appointment,  and  would  constitute  a  flagrant  breach  of  trust. 
And  the  partner  acting  as  receiver  has  no  greater  right  to  the 
control  of  funds  collected  by  him  in  that  capacity  than  have 
his  copartners,  the  entire  fund  being  under  the  control  and 
subject  to  the  disposal  of  the  court.57 

55  Whitesides  v.  Lafferty,  3  tween  a  receiver  and  a  party  to  a 
Humph.,  150.  The  court,  Turley,  suit,  as  makes  him  liable  for  profits 
J.,  say,  p.  151 :  "There  is  no  pre-  made  by  a  use  of  the  money  dur- 
tense  for  saying  that  complainant  ing  the  continuance  of  his  receiver- 
is  entitled  to  this  division,  upon  the  ship;  he  is  an  officer  appointed  by 
ground  that  it  was  a  partnership  the  court,  responsible  to  the  court 
transaction;  the  relation  of  part-  for  the  discharge  of  his  duties,  and 
ners  did  not  exist  between  the  par-  personally  liable  for  any  loss  of  the 
ties  at  the  time;  it  had  been  dis-  funds  in  his  hands." 
solved,  and  defendant  held  the  56  Miller  v.  Jones,  39  111.,  54. 
moneys,  not  as  partner,  but  as  re-  57  Gridley  v.  Conner,  2  La.  An., 
ceiver.  We  know  of  no  principle  87.  Eustis,  C.  J.,  says,  p.  89: 
which   creates   such   a   relation   be-  "...    We    deem    it    proper   to 


CHAP.  XIII.] 


PARTNERSHIPS. 


707 


§  543.  Sale  not  allowed  by  receiver  of  inferior  court, 
pending  appeal  as  to  its  jurisdiction.  When  proceedings 
are  pending  in  a  court  of  inferior  common-law  jurisdiction  for 
the  settlement  of  partnership  affairs,  and  a  receiver  has  been 
appointed,  but  the  question  of  the  jurisdiction  of  the  inferior 
court  is  in  doubt,  it  is  improper  for  that  court,  pending  an 
appeal  for  the  determination  of  its  jurisdiction,  to  direct  its 
receiver  to  sell  the  partnership  property,  and  such  sale  should 
be  held  in  abeyance  until  the  question  of  jurisdiction  is  prop- 
erly determined. 58  And  it  is  improper,  upon  an  interlocutory 
order  and  in  advance  of  a  final  hearing,  to  direct  a  sale  by  the 
receiver  of  property  as  assets  of  the  firm,  when  its  title  to  such 


state  what  we  conceive  to  be  the 
law  in  relation  to  the  obligations  of 
a  partner,  who,  pending  a  suit  for  a 
settlement  anrf  liquidation  of  a  part- 
nership, collects  money  belonging  to 
the  partnership  under  the  appoint- 
ment from  the  court.  A  partner  so 
receiving  it  has  no  right  to  withhold 
it  from  the  action  and  control  of  the 
court,  under  any  plea  or  pretense 
personal  to  himself.  He  can  not  be 
permitted  to  defeat  the  very  object 
of  his  appointment,  by  violating  or 
evading  his  trust.  If  receivers, 
partners  or  others  are  thus  permit- 
ted to  retain  the  fund  from  credit- 
ors, and  as  the  cause  progresses,  in- 
volving them  in  new  litigation,  how 
can  the  partnership  be  settled  in 
the  presence  of  these  hydra  preten- 
sions? The  retention  of  funds  col- 
lected under  the  authority  of  the 
court  is  a  flagrant  breach  of  trust, 
and  the  power  to  compel  their  im- 
mediate subjection  to  its  control  it- 
self unquestionable;  and  without 
the  vigilant  and  eflficient  exercise  of 
this  power  on  all  proper  occasions, 


the  judicial  settlement  of  the  con- 
cerns of  a  partnership  would  be- 
come a  mere  farce.  After  the  dis- 
solution of  a  partnership,  and  pend- 
ing its  liquidation,  a  partner  is  not 
permitted  to  do  any  act,  still  less 
make  use  of  the  partnership  funds 
in  a  manner  inconsistent  with  the 
purpose  of  a  just  and  proper  settle- 
ment; and  it  has  been  held  that, 
where  a  partner  has  collected  part- 
nership money  under  circumstances 
from  which  an  agreement  on  his 
part  not  to  receive  it  can  be  inferred, 
and  where  his  receiving  it  was 
contrary  to  good  faith,  he  may  be 
held  to  pay  the  money  into  court. 
In  this  case  Conner  was  permitted 
to  retain  as  a  partner  the  money 
he  has  collected  as  receiver,  and 
confound  it  with  the  partnership 
affairs.  We  think  the  money  thus 
collected  ought  to  have  been  paid 
into  court,  and  that  Conner  had  no 
more  right  over  it  than  his  copart- 
ners had." 

58McNab    V.    Noonan,    28    Wis., 
434. 


708  RECEIVERS.  [chap.  XIII. 

property  is  denied  by  answer,  and  is  one  of  the  issues  to  be 
determined  in  the  action. ^^ 

§  544.  Receiver  required  to  produce  books  and  accounts 
for  examination.  A  receiver  of  a  partnership  may  be  re- 
quired by  order  of  court,  upon  the  apphcalion  of  defendants 
in  the  cause,  to  produce  for  examination  before  a  master  in 
chancery  all  books  of  accounts  relating  to  his  management  of 
the  firm  business,  or  to  receipts  and  payments  made  by  him  in 
and  about  the  business;  but  the  court  will  not  order  him  to 
submit  to  an  inspection  of  the  books  upon  his  own  premises, 
since  it  can  not  order  that  defendants  may  enter  another  man's 
house.^^ 

§  545.  Payment  of  partnership  debts.  In  Louisiana,  it 
has  been  held  that  the  payment  of  partnership  debts  by  a  re- 
ceiver appointed  by  consent  of  the  partners,  out  of  funds  col- 
lected by  him  in  his  official  capacity,  constitutes  a  sufficient 
answer  to  a  rule  upon  the  receiver  to  show  cause  why  he 
should  not  pay  the  money  into  court,  the  receiver  being  treated 
as  the  agent  of  the  parties  for  the  purposes  of  such  payment. 
It  was  accordingly  held  to  be  error,  on  the  hearing  of  the  rule 
to  show  cause,  to  reject  testimony  offered  by  the  receiver  to 
prove  that  he  had  paid  the  firm  debts  and  that  they  were  just- 
ly due.61 

§  546.  Appointed  to  collect  debts  which  defendants  are 
enjoined  from  collecting;  payment  to  plaintiff.  Upon  a 
bill  by  one  member  of  a  firm  for  a  dissolution,  a  receiver 
should  be  appointed  to  collect  such  debts  as  the  remaining 
partners  are  enjoined  from  collecting;  and  the  receiver  thus 
appointed  may  be  required,  by  order  of  court,  to  pay  over  to 
plaintiff  such  proportion  of  the  collections  as  he  is  entitled 
to  receive.^2 

59  Brush  V.  Jay,  113  N.  Y.,  482,  62  Maher  v.  Bull,  44  Ifl.,  97.  As 
21  N.  E.,  184.  to   the   right   of  the   partners   to  a 

60  Maund  v.  Allies,  4  Myl.  &  Cr.,  participation  in  the  profits  realized 
503.  by   the   receiver  during  his   contin- 

61  Kellar  v.  Williams,  3  Rob.  nance  of  the  business,  see  McMahon 
(La.),  321.  V.  McCIernan,  10  W.  Va.,  419. 


CHAP.  XIII.]  PARTNERSHIPS.  709 

§  547.  Insane  hospital;  sale  of  lease  and  good-will;  in- 
junction against  continuing  same  business.  When  the 
chief  value  of  a  partnership  business  is  its  good-will,  which 
has  been  built  up  by  the  joint  efforts  of  all  the  partners,  and 
the  business  is  of  such  a  nature  that  it  is  impossible  for  a  re- 
ceiver to  conduct  it,  as  in  the  case  of  a  partnership  for  carry- 
ing on  an  insane  hospital  and  lazaretto  for  foreign  immigrants, 
it  is  proper  for  the  court  to  direct  the  receiver  to  sell  the  lease 
of  the  premises  where  the  business  is  conducted,  together  with 
the  good  will.  And  in  such  case,  for  the  purpose  of  giving 
efficacy  to  the  sale  of  the  good-will,  the  court  will  permit  either 
of  the  parties  to  become  a  purchaser,  and  will  enjoin  the  re- 
maining parties  from  conducting  the  same  business  in  that 
locality.  ^^ 

§  548.  Receiver  over  husband  on  bill  for  divorce,  not 
entitled  to  partnership  property.  When,  upon  a  bill  for 
divorce,  filed  by  the  wife  against  her  husband  who  has  ab- 
sconded, a  receiver  is  appointed  to  take  charge  of  the  hus- 
band's effects,  his  appointment  does  not  divest  the  husband's 
title  to  partnership  property,  and  the  receiver  has  no  right  to 
dispossess  the  other  partner.  If,  therefore,  he  has  taken  pos- 
session of  the  firm  property  under  a  misapprehension  of  his 
rights  and  duties,  he  will  be  required  to  make  restitution  there- 
of to  the  other  partner.^^ 

§  549.  Receiver  over  brewing  business,  functions  of. 
A  receiver  appointed  over  a  partnership  stock  in  trade,  in  the 
business  of  brewing,  has  been  directed  to  act  as  clerk  in  the 
trade,  and  to  collect  in  debts  according  to  the  course  of  the 
business,  to  pay  excise  duties  and  other  charges,  and  to  bring 
actions  in  the  name  of  the  partners. ^^ 

§  550.  Retiring  partner  compelled  to  pay  notes,  may 
have  action  against  receiver  of  new  firm.  When,  upon  dis- 
solving a  partnership,  it  is  agreed  between  the  partners  that 
the  firm  notes  shall  be  paid  by  the  members  continuing  in 

63  Williams  v.   Wilson,  4   Sandf.  64  Hamill  v.  Hamill,  27  Md.,  679. 

Ch.,  379.  cr,  skipp  v.   Harwood,  Dick.,  114 


710  RECEIVERS.  [chap.  XIII. 

business  under  a  new  partnership,  a  part  of  the  consideration 
for  such  agreement  being  the  sale  of  the  retiring  partner's  in- 
terest, who  is  afterward  compelled  to  pay  the  notes,  he  has  the 
same  remedy  against  a  receiver  of  the  assets  of  the  new  firm 
to  recover  the  amount  paid,  that  he  would  have  had  against 
the  new  firm  itself  before  the  appointment  of  a  receiver,  and 
may  maintain  an  action  against  the  receiver  to  recover  the 
amount  paid.^^ 

§  551.  Purchaser  of  partner's  interest  not  allowed  to  in- 
terfere with  receiver.  Where,  in  an  action  to  dissolve  a 
partnership  and  to  wind  up  its  affairs,  a  receiver  is  appointed 
and  takes  possession  of  the  firm  property,  a  subsequent  pur- 
chaser of  one  partner's  interest  in  the  firm  can  not,  as  assignee 
or  purchaser  of  such  interest,  interfere  with  the  rights  and  du- 
ties of  the  receiver,  or  with  any  property  in  his  hands,  since 
he  acquires  by  his  purchase  only  such  interest  as  his  vendor 
might  have  had  in  the  partnership  assets,  after  all  liabilities 
of  the  finn  were  discharged.^*^ 

§  552.  Funds  in  receiver's  hands  not  subject  to  garnish- 
ment. A  receiver  appointed  on  a  bill  for  the  dissolution  of 
a  partnership,  being  an  officer  of  court,  and  the  funds  in  his 
hands  being  in  custody  of  the  law,  it  has  been  held  that  such 
funds  are  not  subject  to  attachment  or  garnishment  by  the 
firm  creditors,  and  can  only  be  disposed  of  by  direction  of  the 
court,  not  being  subject  to  the  action  of  the  parties  to  the  liti- 
gation or  of  their  creditors.^^ 

66  Allyn  V.  Boorman,  30  Wis.,  until  a  dissolution  of  the  partnership 
684.  has  been  judicially  declared  and  a 

67  Noonan  v.  McNab,  30  Wis.,  receiver  ordered  to  make  a  pro  rata 
277.  distribution  of  the  assets  among  the 

68  Receiver  of  Adams  &  Co.  v.  creditors,  they  are  not  prevented 
Roman,  unreported,  cited  in  opin-  from  resorting  to  adverse  proceed- 
ion  of  Terry,  J.,  in  Adams  v.  Hack-  ings,  and  may  thereby  gain  a  pref- 
ett,  7  Cal.,  187;  Longstaff  v.  Hurd,  erence  over  less  diligent  creditors. 
66  Conn.,  350.  34  Atl.,  911.  But  see  And  see  Adams  v.  Woods,  8  Cal., 
opinion  of  Burnett,  J.,  in  Adams  v.  152;  Same  v.  Same,  9  Cal.,  24;  Nag- 
Hackett,  7  Cal.,   187,  holding  that,  lee  v.  Minturn,  8  Cal.,  540. 


CHAP.  XIII.]  PARTNERSHIPS.  711 

§  552fl.  When  receiver  not  required  to  pay  deposit  in 
tull.  The  receiver  of  an  insolvent  copartnership  will  not  be 
required  to  pay  in  full  a  balance  due  from  such  firm  to  cred- 
itors who  had  deposited  money  with  the  firm  from  time  to 
time  as  security  for  advances,  the  deposit  not  being  a  special 
one,  or  of  any  specific  money,  and  neither  the  firm  nor  the  re- 
ceiver having  any  specific  fund  upon  which  such  creditors 
have  a  charge  or  lien.^^ 

69  Butler  z..   Sprague.  66   N.  Y.,      Continental  Life  Insurance  Co.,  71 
oyj.    bee,  also,  Attorney-General  v.      N.  Y.,  325. 


CHAPTER  XIV. 

OF  RECEIVERS  OVER  REAL  PROPERTY. 

I.  Principles  Upon  Which  the  Relief  is  Granted §  553 

II.  Receivers  as  Between  Tenants  in  Common   603 

III.  Receivers  as  Between  Vendors  and  Purchasers  609 

IV.  Functions  of  the  Receiver  618 

I.  Principles  Upon  Which  the  Relief  is  Granted. 

§  553.  The  jurisdiction  well  established,  but  cautiously  exercised; 
courts  averse  to  interfering  in  limine  with  possession  under 
title. 

554.  English  doctrine  of  interference  only  in  aid  of  equitable  title; 

distinction  as  to  personalty  and  realty;  conflicting  claimants, 
heirs  at  law. 

555.  Relief  refused  when  there  is  adequate  remedy  at  law. 

556.  Appointment  does  not  affect  title  of  either  party;  does  not  pre- 

vent statute  of  limitations  from  running. 

557.  Receiver  rarely  granted  against  defendant  in  possession,  claim- 

ing under  legal  title;  the  general  rule  stated. 

558.  Exceptions  to  the  rule  based  on  probability  that  plaintiff  will 

prevail,  and  upon  danger  to  the  property. 

559.  Receiver  refused  when  plaintiff's  right  is  doubtful  and  no  dan- 

ger is  shown. 

560.  Probability  of  plaintiff's  success  not  sufficient,  as  against  long 

acquiescence,  and  when  no  danger  is  shown. 

561.  Not  granted  when  notice  of  lis  pendens  will  protect  plaintiff's 

rights. 

562.  The  rule  applied  to  case  of  lessor  and  lessee. 

563.  Danger  to  property  an  important  element;  dissensions  in  re- 

ligious  society. 

564.  Distinction  between  appointing  receivers,  and  continuing  those 

already  in  possession. 

565.  Departure  from  rule;  fraud  by  defendant  in  obtaining  posses- 

sion; inadequate  consideration  and  undue  influence. 

566.  Title    shown    by   plaintiff,    none   by   defendant;    prevention    of 

vexatious  litigation;  abuse  of  trust  and  insolvency  of  de- 
fendant; receiver  of  rents  and  profits  pending  litigation  in 
another  state. 

712 


CHAP.    XIV.]  REAL    PROPERTY.  713 

§  567.  Appointed  on  bill  by  creditors  when  no  personalty  shown; 
rights  of  judgment  creditors  in  possession  not  prejudiced; 
probable  title  in  plaintiff  and  danger  to  rents. 

568.  Receiver  in  proceedings  to  determine  widow's  dower;  receiver  may 

compel  assignment  of  dower. 

569.  Receiver  in  proceedings  to  establish  will,  or  to  execute  trusts 

of  will. 

570.  When  granted  in  contest  between  heir-at-law  and  devisee  un- 

der will. 

571.  Appropriation  of  rents  and  profits  as  against  heirs;  objection 

to  administration  by  pretended  heirs. 

572.  When  granted  as  against  tenant  for  life;  devise  to  wife;  set- 

tlement upon  daughter. 

573.  Vendor  not  allowed  relief  because  of  vendee's  insolvency  and 

commission  of  waste. 

574.  When  granted  for  protection  of  annuitants. 

575.  Relief  generally  refused  in  actions  of  ejectment. 

576.  When    granted    in    ejectment,   for   preservation    of   rents    and 

profits  pendente  lite. 

577.  Plaintiff  allowed  receiver  after  recovery  of  lands,  when  neces- 

sary to  preserve  rents  and  profits. 

578.  When  granted  over  leasehold  interest. 

579.  Assignee  of  lease  not  entitled  to  receiver. 

580.  Not    granted    over    house    on    leased    ground    because    of    in- 

solvency of  defendant  in  possession. 

581.  Landlord  may  re-enter  on  expiration  of  term;  discharge  of  re- 

ceiver. 

582.  When  same  receiver  extended  to  subsequent  applications. 

583.  Right  to  rents  as  afifected  by  order  extending  receiver. 

584.  Receiver  in  behalf  of  cestui  que  trust  as  against  trustees. 

585.  Relief  granted  for  protection  of  rent  charge. 

586.  Denied  plaintiff  in  suit  to  enforce  mechanic's  lien. 

587.  Granted  in  aid  of  proceedings  in  bankruptcy. 

588.  Granted  in  action  to  apply  trust  property  in  payment  of  debts 

equal  in  priority. 

589.  Nature    of  defendant's   interest   in    real   property;   benefice  of 

clergyman. 

590.  When  refused  over  ungathered  crop;  when  allowed. 

591.  Refused  in  cases  of  marriage  settlements;  when  allowed  after 

divorce. 

592.  Difficulty  in  collection  of  rent  no  ground  for  receiver. 

593.  Plaintiff's   acquiescence,  and   participation  in  fraud,  a  bar  to 

relief. 

594.  Granted  when  property  has  escheated  to  state. 

595.  Refused  on  defendant  paying  rents  and  profits  into  court. 

596.  One  not  party  to  the  cause  can  not  object;  remainder-man  and 

tenants  can  not  restrain  receiver  from  turning  them  out  of 
possession. 


714  RECEIVERS.  [chap.  XIV. 

§  597.     Practice  in  placing    receiver  in  possession;  who  responsible  for 
loss  by  owner  remaining  in  possession. 

598.  When  granted  before  answer. 

599.  Effect  of  appointing  receiver  over  corporation  upon  title  to  its 

real  estate. 

600.  Order  should  state  precisely  over  what  property  receiver  is  ap- 

pointed; appointment  may  be  over  part  only. 

601.  When  plaintiff  entitled  to  funds  in  receiver's  possession. 

602.  Real  estate  subject  to  judgment  and  execution  on  termination 

of  receiver's  functions. 
602a.  When  receiver  allowed  against  plaintiff  suing  in  forma  pauperis. 

§  553.  The  jurisdiction  well  established,  but  cautiously 
exercised ;  courts  averse  to  interfering  in  limine  with  pos- 
session under  title.  The  power  which  is  exercised  by- 
courts  of  equity  in  appointing  receivers  over  real  property,  for 
its  better  protection  and  to  secure  the  rents  and  profits  pen- 
dente lite,  although  well  established  both  in  England  and  in 
America,  is  yet  regarded  as  an  extremely  delicate  branch  of 
equity  jurisdiction,  and  one  whose  exercise  should  be  guard- 
ed with  the  utmost  caution.  It  will  hereafter  be  shown  that 
the  courts  are  exceedingly  averse  to  any  interference  in  limine 
with  the  possession  of  real  estate  by  a  defendant,  claiming 
under  legal  title,  and  that  equity  will  only  interpose  a  receiv- 
er, as  against  such  possession,  in  cases  of  great  emergency, 
the  general  rule  being  that  conflicting  questions  of  title  should 
be  determined  in  courts  of  law.l  And  while,  as  will  be  shown, 
there  are  frequent  cases  where  the  relief  is  granted,  upon  spe- 
cial circumstances  of  an  equitable  nature  appealing  strongly 
to  the  conscience  of  the  court,  such  cases  will  be  found  upon 
investigation  to  illustrate  and  strengthen  the  general  tendency 
already  indicated. 

§  554.  English  doctrine  of  interference  only  in  aid  of 
equitable  title;  distinction  as  to  personalty  and  realty; 
conflicting  claimants,  heirs  at  law.  It  was  the  established 
doctrine  of  the  English  Chancery,  that  the  court  would  never 
exercise  its  extraordinary  powers  by  appointing  a  receiver 
over  real  property,  in  behalf  of  a  claimant  out  of  possession, 

iSee,  post,  §  557. 


CHAP.    XIV.]  REAL    PROPERTY.  715 

except  in  aid  of  an  equitable  title.2  And  a  broad  distinction 
is  recognized  between  interfering  with  the  possession  of  real 
estate  by  a  receiver,  and  cases  where  the  relief  is  extended  for 
the  preservation  of  personal  property  pendente  lite;  since  in  the 
case  of  personalty  it  is  the  whole  property,  the  corpus,  which 
equity  is  called  upon  to  protect  by  a  receiver,  and  which  may 
be  lost  without  the  interference  of  the  court,  while  in  the  case 
of  real  property  the  court  is  only  asked  to  preserve  the  rents 
and  profits,  which  are  merely  the  proceeds  of  the  property 
de  anno  in  annum,  and  which  do  not,  therefore,  demand  the 
same  summary  interference.^  When,  therefore,  there  are  sev- 
eral conflicting  claimants  to  an  estate  asserting  their  title  as 
heirs-at-law  of  the  deceased  owner,  and  no  impediment  is 
shown  to  a  trial  of  their  rights  at  law,  equity  will  not  enter- 
tain jurisdiction  of  the  controversy  by  appointing  a  receiver 
in  behalf  of  one  of  the  claimants  not  in  possession  who  pre- 
sents no  equitable  title,  but  a  mere  legal  title  or  right  which 
may  be  asserted  and  established  in  a  court  of  law.  Nor  does 
the  fact  that  there  are  outstanding  terms,  in  such  case,  pre- 
sent any  additional  ground  for  relief  in  equity  by  a  receiver.^ 

2  Carrow  v.  Ferrior,  L.  R.,  3  Ch.  three  claimants,  none  of  whom  has 
App.,  719.  established  his  title  as  heir-at-law. 

3  Carrow  v.  Ferrior,  L.  R.,  3  Ch-  There  is  no  privity  or  contract  be- 
App.,  719.  And  see  opinion  of  tween  them.  There  is  nothing  bind- 
Vice-Chancellor  Wood  in  Talbot  v.  ing  any  of  them  to  take  any  other 
Hope  Scott,  4  Kay  &  J.,  132.  course  than  that  of  standing  on  his 

4  Carrow  v.  Ferrior,  L.  R.,  3  Ch.  strict  rights,  and  we  are  asked  to 
App.,  719.  This  was  a  contest  be-  decide  that  one  of  them  can  come 
tween  three  claimants  as  heirs-at-  here  and  ask  the  court  to  put  a  re- 
law  of  a  deceased  lunatic,  two  of  ceiver  in  possession,  though  there 
the  heirs  having  filed  separate  bills,  is  no  allegation  of  any  impediment 
alleging  the  existence  of  outstand-  to  a  trial  at  law  beyond  the  exist- 
ing terms,  and  praying  for  a  re-  ence  of  outstanding  terms.  I  con- 
ceiver  of  the  real  estate  until  the  sidered  this  point  much  in  Talbot 
question  of  heirship  could  be  deter-  v.  Hope  Scott,  4  K.  &  J.,  96,  but 
mined,  the  third  claimant  proceed-  do  not  regret  having  heard  it  re- 
ing  by  a  petition  in  lunacy.  The  argued,  though  considering  the  vast 
right  to  a  receiver  was  denied.  Lord  amount  of  property  involved  in 
Justice  Wood  observing  as  follows,  that  case,  and  the  hostile  feeling  bc- 
p.    728:      "In    this    case    there    are  tween  the  parties,  the  fact  of  there 


716 


RECEIVERS. 


[chap.  XIV. 


§  555.  Relief  refused  when  there  is  adequate  remedy  at 
law.  It  necessarily  follows  from  the  doctrines  above  con- 
sidered, as  well  as  from  the  general  principles  governing  the 
extraordinary  jurisdiction  of  courts  of  equity,  that  the  aid  of 
an  injunction  and  a  receiver  will  not  be  granted  in  a  contest 
concerning  the  possession  of  real  property,  when  adequate 
redress  may  be  had  at  law  in  the  usual  forms  of  action  appro- 


having  been  no  appeal  is  significant. 
I  then  came  to  the  conclusion  that 
there  was  no  jurisdiction  to  appoint 
a  receiver  on  the  application  of  a 
claimant  who  was  out  of  possession 
and  did  not  claim  by  an  equitable 
title,  and  I  am  still  of  the  same 
opinion.  The  plaintiflF's  case  was 
there  rested  on  the  ground  of  the 
court's  jurisdiction  to  interfere  for 
the  protection  of  property  pending 
litigation,  but  that  question  had 
been  fully  discussed  in  Jones  v. 
Jones,  3  Meriv.,  161,  which  seemed 
to  me  to  have  so  settled  the  law 
that  I  ventured  to  say  there  had 
been  no  case  for  twenty  years  in 
which  a  person  claiming  by  a  dry, 
legal  title  as  heir-at-law,  and  out  of 
possession,  had  ever  attempted  to 
obtain  the  appointment  of  a  re- 
ceiver. The  question  as  to  the  ef- 
fect of  outstanding  terms  is  dis- 
posed of  by  Bainbrigge  v.  Baddeley, 
3  Mac.  &  G.,  413.  The  vice-chan- 
cellor has  observed,  upon  this  de- 
cision, as  being  the  reversal  by  the 
lord  chancellor  of  a  decision  by  a 
judge  having  much  greater  expe- 
rience than  himself  in  courts  of 
equity,  but  I  can  only  look  at  it 
as  a  judgment  of  a  lord  chancellor 
differing  from  an  inferior  judge. 
It  was  held  in  that  case  that  the 
existence  of  outstanding  terms 
makes  no  difference  as  to  the  ap- 
pointment of  a  receiver,  the  course 


of  the  court  being  merely  to  put  the 
outstanding  terms  out  of  the  way, 
and  not  to  treat  them  as  introducing 
any  new  equities.  It  was  urged  that 
this  was  not  a  case  where  the  court 
is  asked  to  turn  any  one  out  of  pos- 
session, but  a  case  where  the  pos- 
session is  vacant,  and  that  the  court 
will  interfere  to  protect  the  prop- 
erty as  it  does  to  protect  personal 
estate  pending  a  litigation  as  to 
probate.  I  had  occasion  to  consider 
this  in  Talbot  v.  Hope  Scott,  4  K.  & 
J.,  96,  and  I  observed  that  the  two 
cases  were  different.  It  may  be 
true,  on  the  highest  general  prin- 
ciples, that  there  ought  to  be  no 
difference  in  this  respect  between 
real  and  personal  property,  but  our 
law  clearly  regards  them  very  dif- 
ferently, and  looks  upon  the  person 
in  possession  of  real  estate  as  en- 
titled to  ke^  it  till  some  one  else 
shows  a  better  title.  Unless  the 
person  in  possession  of  real  estate 
is  affected  by  some  equity,  this 
court  will  not  interfere.  The  con- 
sideration is  not  unimportant  that 
personal  estate  may  be  made  way 
with  altogether,  if  this  court  does 
not  interfere,  but  only  the  rents  of 
real  estate  can  be  lost.  But,  in  my 
opinion,  the  leading  principle  gov- 
erning the  case  is  that  this  court 
does  not  interfere  as  to  real  estate 
unless  there  is  an  equity." 


CHAP.    XIV.]  REAL    PROPERTY. 


717 


priate  to  such  end;  and  in  all  such  cases,  equity  will  leave  the 
parties  aggrieved  to  pursue  their  legal  remedy.  Thus,  upon 
a  bill  by  a  devisee  of  real  estate,  claiming  title  and  right  of 
possession,  and  alleging  that  defendant  has  unlawfully  intrud- 
ed n.to  possession,  and  has  continued  to  hold  without  right 
or  authority,  receiving  the  products  and  depriving  plaintiff  of 
all  means  of  support,  the  bill  seeking  an  injunction  and  a  re- 
ceiver and  to  quiet  and  declare  plaintiff's  title,  no  sufficient 
cause  is  presented  to  warrant  the  aid  of  equity,  even  though 
it  is  alleged  that  the  defendant  in  possession  is  insolvent.  In 
such  a  case,  plaintiff,  claiming  the  legal  title,  should  assert 
that  title  in  a  court  of  law  by  some  appropriate  action,  and 
equity  will  not  interfere.^ 

§  556.  Appointment  does  not  affect  title  of  either  party; 
does  not  prevent  statute  of  limitations  from  running.     In 
actions  affecting  the  title  to  real  property,  when  a  receiver  is 
sought  to  take  charge  of  the  property,  and  to  preserve  the  rents 
and  profits  pending  litigation,  the  appointment  of  the  receiv- 
er in  no  manner  affects  the  title  of  either  party  to  the  litiga- 
tion, although  the  relief  will  be  granted  only  in  behalf  of  one 
having  an  acknowledged  interest,  or  when  there  is  a  strong 
probability  of  his  ultimate  recovery.     The  receiver  is  appoint- 
ed for  the  benefit  of  the  person  making  the  application,  and 
for  any  other  parties  in  interest  who  may  choose  to  avail  them- 
selves of  the  proceedings.     The  primary  object  in  making 
such  appointment  is  the  preservation  of  the  property,  or  of 
Its  rents  and  profits,  from  waste  and  destruction,  while  the 
ulterior  objects  had  in  view  are  those  contemplated  by  the 
suit  itself.    And  if  plaintiff  ultimately  succeeds  in  establishing 
his  title  to  the  entire  property,  the  appointment  may  be  re- 
garded as  having  been  entirely  for  his  benefit.^    And  it  would 
seem  that  the  appointment  of  a  receiver  does  not  so  alter  the 
possession  of  the  estate  in   controversy,   in   the  person  who 
may  finally  be  adjudged  to  have  been  entitled  thereto  at  the 

5  Pfeltz  V.  Pfeltz,  14  Md.,  376.  6  Chase's  Case,  1  Bland,  206. 


718  RECEIVERS.  [CIIAP.  XIV. 

time  of  the  appointment,  as  to  prevent  the  operation  of  the 
statute  of  hmitations  dnring  the  controversy.'^ 

§  557.  Receiver  rarely  granted  against  defendant  in  pos- 
session, claiming  under  legal  title ;  general  rule  stated.  It 
has  ah'eady  been  shown,  that  equity  is  extremely  averse  to 
any  interference  with  the  possession  of  real  property,  by  a  de- 
fendant claiming  under  a  legal  title.  And  it  may  be  laid 
down  as  a  general  proposition,  supported  by  an  overwhelming 
array  of  authority,  both  in  England  and  in  America,  that 
courts  of  equity  proceed  with  extreme  caution  in  granting  re- 
ceivers as  against  a  defendant  in  possession,  and  will  rarely 
interfere  with  such  possession  by  appointing  a  receiver  in  lim- 
ine, upon  a  mere  legal  title  asserted  by  plaintiff.  And  when- 
ever the  contest  is  simply  a  question  of  disputed  title  to  the 
property,  plaintiff  asserting  a  legal  title  in  himself,  against 
a  defendant  in  possession  and  receiving  rents  and  profits  un- 
der claim  of  legal  title,  equity  refuses  to  lend  its  extraordinary 
aid  by  interposing  a  receiver,  just  as  it  refuses  an  injunction 
under  similar  circumstances,  leaving  the  plaintiff  to  assert  his 
title  in  the  ordinary  forms  of  procedure  at  law.  And  while,  as 
will  hereafter  be  shown,  there  are  special  circumstances  of 
fraud  or  of  imminent  danger  of  loss  or  of  irreparable  injury, 
which  may  sometimes  warrant  a  departure  from  the  general 
rule,  yet  in  the  absence  of  any  such  controlling  circumstances, 
the  courts  insist  upon  its  rigid  enforcement,  and  refuse  to  de- 
prive a  defendant  of  his  possession,  under  claim  of  title,  until 
plaintiff's  right  is  established  at  law.^    A  departure  from  the 

7  Anonymous,  2  Atk.,  IS.  &  Cr.,  162 ;  Municipal  Commission- 

8  Lloyd  V.  Passingham,  16  Ves.,  ers  of  Carrickfergus  v.  Lockhart, 
59;  S.  C,  3  Meriv.,  697;  Mordaunt  Ir.  Rep.,  3  Eq.,  515;  Parkin  v.  Sed- 
V.  Hooper,  Amb.,  311;  Owen  v.  Ho-  dons,  L.  R.,  16  Eq.,  34;  Foxwell  v. 
man,  3  Mac.  &  G.,  378,  affirmed  by  Van  Grutten,  (1897),  1  Ch.,  64; 
the  House  of  Lords,  4  H.  L.  Rep.,  Vause  v.  Vl'^oods,  46  Miss.,  120; 
997;  Bainbrigge  z;.  Baddeley,  3  Mac.  Schlecht's  Appeal,  60  Pa.  St.,  172; 
&  G.,  413 ;  Talbot  v.  Hope  Scott,  4  W^illis  v.  Corlies,  2  Edw.  Ch.,  281 ; 
Kay  &  J.,  96 ;  Lancashire  v.  Lan-  Gregory  v.  Gregory,  33  N.  Y.  Supr. 
cashire,  9  Beav.,  120;  Skinners  Ct.  R.,  1;  Clark  v.  Rtdgely,  1  Md. 
Company  v.   Irish    Society,    1    Myl.  Ch.,   70;   Chicago  &  Allegheny  Oil 


CHAP.    XIV.] 


REAL    PROPERTY. 


719 


rule  can  only  be  justified  upon  strong  grounds  of  judicial  ne- 
cessity, or  in  case  of  fraud  clearly  proven,  or  of  imminent  dan- 
ger unless  immediate  possession  is  taken  by  the  court.9  And 
the  burden  rests  upon  complainant  to  make  out  a  clear  case  to 
justify  the  relief,  and  the  court  should  be  reasonably  satisfied 
that  he  will  finally  recover  and  that  the  benefit  of  such  recovery 
will  be  lost  to  him  without  a  receiver,  before  it  will  interfere; 
and  an  affidavit  upon  information  and  belief  is  not  sufficient 
ground  for  interposing. lO  Nor  will  defendant  be  deprived 
of  his  possession  by  a  receiver,  unless  it  is  made  to  appear 
that  there  is  great  risk  of  ultimate  loss  to  the  property,  and  of 
insolvency  on  the  part  of  defendant,  so  that  he  will  be  unable 
to  respond  to  a  final  decree. ^  And  in  the  absence  of  fraud, 
or  of  any  privity  between  the  parties,  or  of  any  equities  touch- 
ing the  conscience  of  defendants  in  possession,  equity  inva- 
riably refuses  to  extend  the  aid  of  a  receiver,  until  plaintiff  has 
established  his  title  at  law.i2    And  where  a  defendant  in  eject- 


&  Mining  Co.  v.  U.  S.  Petroleum 
Co.,  57  Pa.  St.,  83;  S.  C,  6  Phila. 
521 ;  Cofer  v.  Echerson,  6  Iowa, 
502;  Emerson  and  Wall's  Appeal, 
95  Pa.  St.,  258 ;  De  Walt  v.  Kinard, 
19  S.  C,  286;  Rollins  v.  Henry,  77 
N.  C,  467;  Twitty  v.  Logan,  80  N. 
C,  69;  Bryan  v.  Moring,  94  N.  C, 
694;  Sengfelder  v.  Hill,  16  Wash., 
355,  47  Pac,  757,  58  Am.  St.  Rep., 
36;  Spokane  v.  Amsterdanisch  T. 
K.,  18  Wash.,  81,  50  Pac,  1088;  Kel- 
ly V.  Steele,  9  Idaho,  141,  72  Pac, 
887;  Ryder  v.  Bateman,  93  Fed., 
16.  See  PulHs  v.  Pullis,  157  Mo., 
565,  57  S.  W.,  1095 ;  Freer  v.  Davis, 
52  West  Va.,  35,  43  S.  E.,  172,  94 
Am.  St.  Rep.,  910.  As  to  the  right 
to  a  receiver  over  real  property  and 
the  circumstances  which  will  justify 
the  relief,  under  the  code  of  pro- 
cedure of  North  Carolina,  which 
provides  that  a  receiver  may  be  ap- 
pointed   "before   judgment,    on    the 


application  of  either  party,  when  he 
establishes  an  apparent  right  to 
property,  which  is  the  subject  of  the 
action,  and  which  is  in  the  posses- 
sion of  an  adverse  party,  and  the 
property  or  its  rents  and  profits 
are  in  danger  of  being  lost,  or  mate- 
rially injured  or  impaired,"  see  Mc- 
Nair  v.  Pope,  96  N.  C,  502,  2  S.  E., 
54.  As  to  the  appointment  of  a  re- 
ceiver at  the  instance  of  the  holder 
of  a  tax  certificate  covering  prem- 
ises involved  in  a  foreclosure  suit, 
see  Walker  v.  Fitzgerald,  69  Neb., 
52,  95  N.  W.,  32. 

9  Lloyd  V.  Passingham,  16  Ves., 
59.  And  see  S.  C,  3  Meriv.,  697, 
where  a  subsequent  application  for 
a  receiver  was  also  refused. 

10  Davis  V.  Reaves,  2  Lea,  649. 

11  Vause  V.  Woods,  46  Miss.,  120. 

12  Talbot  V.  Hope  Scott,  4  Kay  & 
J.,  96,  a  leading  case,  in  which  the 
English     authorities     are    carefully 


720 


RECEIVERS. 


[chap.  XIV. 


ment  succeeds  in  the  trial  court  in  establishing  his  defense 
that  he  is  in  possession  as  a  purchaser  and  not  as  a  tenant  of 
the  plaintiff,  as  claimed  by  the  latter,  the  court  will  refuse  a 
receiver  for  the  rents  and  profits  pending  an  appeal  from  the 
judgment  of  the  trial  court. ^^ 

§  558.  Exceptions  to  the  rule  based  on  probability  that 
plaintiff  will  prevail,  and  upon  danger  to  the  property.  The 
grounds  of  the  exceptions  to  the  general  rule,  as  above  stated, 


reviewed.  Vice-Chancellor  Wood 
observes,  p.  Ill :  "With  regard  to 
the  first  part  of  the  relief  prayed 
by  the  bill,  namely,  the  receiver, 
which  is  really  the  substantial  part 
of  the  case,  I  apprehend  that,  as  to 
the  settled  estates,  it  is  too  clear 
for  any  contention  at  the  present 
day,  that  this  court  will  not  inter- 
fere at  the  instance  of  a  person 
alleging  a  merely  legal  title  in  him- 
self against  other  persons  in  pos- 
session of  the  estates,  to  grant  a 
receiver  and  put  them  out  of  pos- 
session. In  Lord  Fingal  v.  Blake,  2 
Moll.,  78,  and  in  the  subsequent 
case  of  Lloyd  v.  Lord  Trimleston, 
id.,  81,  there  are  some  observations 
of  Sir  A.  Hart,  which  seem  to  have 
a  leaning  in  favor  of  such  interfer- 
ence, and  to  which  I  shall  refer 
presently;  but  there  is  no  decision 
which  in  the  least  bears  out  the 
proposition  that  the  court  will  in- 
terfere under  such  circumstances, 
for  it  is  manifest  that,  in  the  first 
of  these  cases,  the  receiver  was 
granted  by  consent.  That  there 
may  be  a  possible  case  in  which 
this  court  would  interfere  to  pre- 
vent absolute  destructive  waste, 
where  the  value  of  the  property 
would  be  destroyed  if  no  steps  were 
taken,  I  can  understand ;  but  I  have 
found  nothing  that  bears  any  re- 
semblance    to     the     doctrine     con- 


tended for,  that  at  the  instance  of 
a  person  alleging  a  mere  legal  title, 
this  court  will  interfere  against  an- 
other who  is  in  possession,  to  de- 
prive him  of  that  possession.  I 
have  known,  and  everybody  must 
have  known,  numerous  instances 
where  ejectment  has  been  brought 
for  very  valuable  property,  upon  a 
merely  legal  title;  yet  I  think  I 
may  say  that,  for  the  last  twenty 
years,  if  not  for  longer,  no  one  has 
ever  dreamt  of  approaching  this 
court,  however  heavy  the  litigation 
between  the  parties,  for  the  pur- 
pose of  obtaining  a  receiver,  until 
he  had  established  his  right  at  law 
to  possession  of  the  estates.  The 
ground  of  the  rule  adopted  by  the 
court,  in  this  respect,  I  conceive  to 
be  extremely  sound ;  the  general 
ground  being  that  the  court  can 
not  interfere  with  a  legal  title  of 
any  description,  unless  there  be 
some  equity  by  which  it  can  affect 
the  conscience  of  the  defendant. 
Where  there  is  an  entire  want  of 
privity  between  the  plaintiff  and 
the  defendant,  and  the  defendant  is 
simply  a  wrong-doer  at  law,  this 
court  does  not  take  upon  itself  to 
interpose,  unless  in  very  exceptional 
cases." 

13  Corbin  v.  Thompson,  141  Ind., 
128,  40  N.  E.,  533. 


CHAP.    XIV.] 


REAL    PROPERTY. 


721 


will  be  found,  upon  examination,  to  resolve  themselves  into 
two  general  conditions,  both  of  which  must  combine  to  war- 
rant a  court  of  equity  in  granting  a  receiver  as  against  a  de- 
fendant in  possession.  These  conditions  are,  first,  that  plain- 
tiff must  show  a  strong  ground  of  title,  with  a  reasonable 
probability  that  he  wall  ultimately  prevail;  and  second,  that 
there  is  imminent  danger  to  the  property,  or  to  its  rents  and 
profits,  unless  the  court  shall  interpose.^^  Especial  importance 
is  attached  by  the  courts  to  the  first  of  the  conditions  here 
named,  and  when  the  parties  are  litigating  the  right  to  real 
property,  and  the  litigation  depends  upon  questions  to  be  de- 
cided at  law,  defendant  beiag  in  possession  and  standing  on 
his  legal  title,  it  is  regarded  as  an  indispensable  condition  to 
the  exercise  of  the  jurisdiction  of  equity  by  a  receiver,  that  a 
reasonable  probability  be  shown  to  the  court  that  the  par- 
ties claiming  to  disturb  the  possession  will  ultimately  estab- 
lish their  title  to  the  property.i^     And  when  this  question  is 


14  Mordaunt  v.  Hooper,  Amb., 
311 ;  Bainbrigge  v.  Baddeley,  3  Mac. 
&  G.,  414;  John  v.  John,  (1898),  2 
Ch.,  573;  Ryder  v.  Bateman,  93 
Fed.,  16.  See,  also.  Mayo  v.  Mc- 
Phaiil,  71  Ga.,  758.  In  Mordaunt 
V.  Hooper,  Amb.,  311,  Lord  Hard- 
wicke  stated  that  a  motion  for  a 
receiver  was  very  uncommon  where 
the  matters  in  dispute  depended  on 
a  mere  legal  title,  although  a  case 
might  be  so  circumstanced  as  to  in- 
duce the  court  to  grant  it.  And 
both  the  grounds  stated  in  the  text 
being  fully  made  out  by  affidavit  and 
by  defendant's  answer,  a  receiver 
was  allowed.  But  the  reporter 
adds,  that  "it  was  a  very  strong 
case,  and  almost  all  the  facts  in- 
sisted on  by  defendant  in  his  answer 
were  denied  by  affidavits."  In 
Whyte  V.  Spransy,  19  App.  D.  C, 
450,  a  receiver  was  held  properly 
appointed  to  collect  the  rents  and 
Receivers — 46. 


profits  of  real  estate  pending  an  ac- 
tion of  ejectment  to  recover  the 
possession  of  the  property,  where  it 
appeared  that  the  plaintiff,  who  had 
made  to  the  defendants  a  loan  upon 
the  property  secured  by  a  trust  deed, 
had  purchased  the  property  at  fore- 
closure sale  upon  default  in  the  pay- 
ment of  Interest  and  taxes  by  the 
defendants,  who  were  insolvent  and 
were  refusing  to  deliver  up  pos- 
session of  the  property  and  were 
converting  the  rents  and  profits 
thereof  to  their  own  use,  thereby 
compelling  the  plaintiff  to  resort 
to  an  action  of  ejectment  which,  ow- 
ing to  the  crowded  condition  of  the 
dockets  of  the  courts,  could  not  be 
tried  for  a  year. 

15  Bainbrigge  v.  Baddeley,  3  Mac. 
&  G.,  414.  See,  also,  Gofer  v. 
Echerson,  6  Iowa,  502 ;  Gregory  v. 
Gregory,  33  N.  Y.,  Supr.  Ct.  R.,  1. 
Bainbrigge  v.   Baddeley,  3   Mac.   & 


722 


RECEIVERS. 


[chap.  XIV. 


involved  in  much  obscurity,  and  is  dependent  upon  the  con- 
struction of  deeds,  which  is  attended  with  doubt  and  difficulty, 
the  court  may  properly  refuse  to  interfere.^^ 


G.,  414,  was  an  action  to  set  aside 
a  will,  under  which  defendant 
claimed  title  to,  and  was  in  posses- 
sion of,  the  property  in  dispute. 
The  Master  of  the  Rolls  having  ap- 
pointed a  receiver  of  the  property 
upon  the  application  of  plaintiff,  the 
order  was  discharged  on  motion 
before  the  lord  chancellor.  Lord 
Truro  observes,  p.  417:  "It  is  ad- 
mitted that,  if  the  will  of  1818, 
under  which  the  defendant  claims, 
can  be  substantiated  as  a  valid  will, 
the  plaintiff  has  no  case.  The  valid- 
ity of  the  will  is  a  question  which, 
from  its  nature,  must  be  decided  at 
law.  .  .  .  Now,  it  appears  to 
me  that  the  jurisdiction  of  the 
court  to  grant  a  receiver  can  not  be 
denied,  nor  do  I  understand  it  to 
be  denied.  There  are  few  cases  that 
can  be  stated  in  which  the  court 
has  not  jurisdiction  when  it  is  es- 
sential to  the  justice  of  the  case  to 
interfere  to  preserve  the  property 
for  the  party  entitled.  But  that 
jurisdiction  is  governed  by  circum- 
stances applicable  to  the  different 
stages  of  proceedings,  and  to  differ- 
ent cases;  but  when  the  parties  are 
litigating  the  right  to  property,  and 
the  litigation  depends  upon  ques- 
tions then  to  be  decided  at  law, 
what  are  the  circumstances  in  which 
the  jurisdiction  is  to  be  exercised 
and  is  properly  applicable  in  grant- 
ing a  receiver?  There  are,  I  appre- 
hend, two  grounds,  and  two  only; 
first,  that  there  is  a  reasonable  prob- 
ability of  success  on  the  part  of  the 
plaintiff;  and  secondly,  that  the 
property,  the  subject  of  the  suit,  is 
in  danger.     This  motion,  however, 


is  made  against  a  party  who  is  in 
possession;  that  possession  is  not 
shown  to  have  been  obtained  by 
violence  or  by  wrong,  using  the 
word  'wrong'  in  the  sense  of  being 
without  color  of  title,  but  under  the 
sanction  of  the  court.  What,  under 
such  circumstances,  is  it  proper  for 
me  to  presume?  What  is  the  prima 
facie  case,  as  far  as  concerns  his 
title?  Am  I  warranted  in  presum- 
ing that  the  will  under  which  he 
claims  is  bad  or  good?  I  apprehend 
I  ought  to  presume,  until  I  have  the 
case  so  before  me  as  to  enable  me 
judicially  to  form  an  opinion  upon 
the  subject,  that  the  will  is  good. 
This  court  ought  not,  in  any  case, 
to  disturb  the  possession  of  a  party 
who  stands  upon  his  legal  title, 
without  a  reasonable  probability 
that  the  plaintiff  will  ultimately 
succeed.  I  consider,  therefore,  that 
one  indispensable  ground  for  the 
exercise  of  the  jurisdiction  is  the 
reasonable  probability  shown  to 
the  court  that  the  parties  claim- 
ing to  disturb  the  possession  will 
ultimately  establish  a  title  to  it.  I 
do  not  see  any  such  reasonable 
probability  here;  not  at  all  using 
that  expression  to  prejudice  the 
plaintiff's  title,  or  to  express  any 
opinion  upon  it.  His  case  may  be 
the  strongest  that  ever  was  pre- 
sented ;  it  may,  when  it  comes  to 
be  laid  before  the  proper  tribunal, 
entitle  him  to  a  verdict  without 
any  doubt  or  hesitation;  but  I  have 
not  the  materials  before  me  to  war- 
rant me  in  coming  to  that  conclu- 
sion." 
16  Owen  V.  Homan,  3  Mac.  &  G., 


CHAP.    XIV.]  REAL   PROPERTY.  723 

§  559.  Receiver  refused  when  plaintiff's  right  is  doubt- 
ful and  no  danger  is  shown.  As  illustrating  the  general 
doctrine  already  stated,  it  is  held  that  when  the  defendant  is 
in  possession,  having  the  legal  estate,  without  fraud,  and  also 
claims  to  be  the  equitable  owner,  there  being  a  doubt  as  to 
the  question  of  right  between  the  parties,  and  no  danger  al- 
leged or  shown  as  to  the  rents  and  profits,  the  court  will  refuse 
a  receiver.!'''  So  when  the  contest  before  the  court  is  merely 
as  to  the  right  of  possession,  and  plaintiffs  show  no  peculiar  cir- 
cumstances or  immediate  danger  to  the  property,  requiring 
the  intervention  of  a  receiver,  the  only  ground  relied  upon  be- 
ing the  alleged  insolvency  of  defendant  in  possession,  equity 
will  not  interfere,  especially  if  there  is  doubt  as  to  plaintiff's 
right  to  recover.l^ 

§  560.  Probability  of  plaintiff's  success  not  sufficient, 
as  against  long  acquiescence,  and  when  no  danger  is  shown. 
While  the  probability  that  plaintiff  will  ultimately  succeed  in 
establishing  his  title  is  an  important  element  in  determining 
whether  a  receiver  shall  be  allowed  as  against  a  defendant  in 
possession,  yet  such  probability  is  not  of  itself  sufficient  ground 
for  interfering,  when  defendant's  possession  has  been  acqui- 
esced in  for  a  long  series  of  years,  and  no  danger  to  the  prop- 
erty is  shown  from  a  continuance  of  such  possession. ^^  And 
when  the  property  in  controversy  has  been  held  and  managed 
and  its  proceeds  have  been  applied  by  a  corporation,  in  a  par- 
ticular manner  and  for  a  long  period  of  years,  equity  will  not 
disturb  such  possession  by  a  receiver  and  an  injunction,  upon 
the  ground  that  such  application  is  a  breach  of  trust,  unless 
the  court  is  perfectly  satisfied  that  defendant  in  possession 

378,  affirmed  on  appeal  to  the  House  growing  upon  it,  see  Smith  v.  Liisk, 

of  Lords,  4  H.  L.  Rep.,  997.     See,  119  Ala.,  394,  24  So.,  256. 

also,    Cofer    v.    Echerson,    6    Iowa,  18  Cofer  v.  Echerson,  6  Iowa,  502. 

502.  19  Municipal     Commissioners     of 

17  Lancashire     v.     Lancashire,     9  Carrickfcrgus  v.  Lockhart,  Ir.  Rep., 

Beav.,  120.    As  to  the  right  to  a  re-  3  Eq.,  515. 
ceiver    over    real    estate    the    chief 
value   of  which   consists  of  timber 


724  RECEIVERS.  [chap.  XIV. 

is  a  mere  naked  trustee,  without  any  right  or  discretion  in 
the  management  of  the  property.^O 

§  561.  Not  granted  when  notice  of  lis  pendens  will 
protect  plaintiff's  rights.  It  has  already  been  shown  that 
equity  will  not  disturb  the  possession  of  a  defendant  holding 
under  claim  of  legal  title,  by  appointing  a  receiver  when  ade- 
quate redress  may  be  had  at  law.  In  accordance  with  this 
principle,  it  is  held  where  plaintiff  shows  no  probable  cause 
for  his  ultimate  recovery,  and  where  it  is  apparent  that  the 
filing  of  a  notice  of  lis  pendens,  in  accordance  with  the  prac- 
tice of  the  state,  will  operate  effectually  to  prevent  a  transfer 
of  the  lands  in  controversy  pendente  lite,  and  will  protect 
plaintiff's  equitable  interest  therein,  if  any,  that  a  receiver  will 
not  be  granted. 2^ 

§  562.  The  rule  applied  to  case  of  lessor  and  lessee.  The 
general  rule  already  stated,  denying  the  aid  of  a  receiver  in  a 
contest  as  to  title  as  against  a  defendant  in  possession,  is  ap- 
plicable to  the  case  of  a  lessor  and  lessee  of  real  estate,  and 
equity  rarely  interferes  with  the  lessee's  possession  by  grant- 
ing a  receiver.  The  lessee,  being  clothed  with  title  and  posses- 
sion under  his  lease,  and  being  in  the  enjoyment  of  rights  ap- 
parently legal,  will  not  be  deprived  of  his  possession  by  a  re- 
ceiver, unless  under  very  urgent  and  peculiar  circumstances. 
And  to  entitle  him  to  relief  in  such  a  case,  the  plaintiff  or  lessor 
must  show  a  clear  right,  with  such  attending  circumstances 
of  danger  or  of  probable  loss  as  will  move  the  conscience  of  a 
chancellor.  Thus,  in  the  case  of  a  lease  of  certain  premises, 
conferring  upon  the  lessee  the  right  to  bore  for  and  take  oil 
therefrom,  the  lessee  returning  as  rent  one-fourth  of  the  product 
to  the  lessor,  in  an  action  by  the  latter  in  equity  for  an  account- 
ing and  an  injunction  against  the  lessee,  in  aid  of  an  action  at 
law  for  the  forfeiture  of  the  lease,  equity  will  refuse  an  injunc- 

20  Skinners  Company  v.  Irish  So-  Supr.  Ct.  R.,  1 ;  Spokane  v.  Amster- 
ciety,  1  Myl.  &  Cr.,  162.  danisch  T.  K.,  18  Wash.,  81,  50  Pac. 

21  Gregory  v.  Gregory,  33  N.  Y.       1088. 


CHAP.    XIV.] 


REAL   PROPERTY. 


725 


tion  and  a  receiver  of  the  lessee's  portion  of  the  proceeds.22 
But  in  an  action  by  a  lessor  against  lessees  for  the  recovery  of 
possession  after  the  expiration  of  the  term,  the  title  being-  in 
plaintiff  and  possession  being  wrongfully  withheld  by  defend- 


22  Chicago  &  Allegheny  Oil  & 
Mining  Co.  v.  The  United  States 
Petroleum  Co.,  57  Pa.  St.,  83;  S.  C, 
6  Phila.,  521.  The  court,  Agnew,  J., 
say,  in  the  case  as  reported  in 
57  Pa.  St.,  at  p.  89:  "The  orig- 
inal bill,  in  this  case,  prayed  for  a 
decree  of  forfeiture  of  the  lease 
held  by  the  defendants,  and  for  the 
appointment  of  a  receiver  for  the 
lessee's  share  of  the  oil.  The 
amended  bill  avers  breaches  of  the 
covenant  in  the  lease,  and  a  forfei- 
ture thereby;  states  that  an  action 
at  law  has  been  brought  to  enforce 
the  forfeiture,  and  that  this  bill  is 
in  aid  thereof;  and  then  prays  for 
an  account  of  all  the  oil,  and  for  the 
appointment  of  a  receiver  as  be- 
fore, and  in  the  meantime  that  the 
defendants  shall  be  restrained  from 
taking  and  disposing  of  any  oil  ob- 
tained upon  the  land.  The  prayer 
for  an  account  being  withdrawn, 
the  relief  prayed  for  is  the  appoint- 
ment of  a  receiver  of  the  defend- 
ants' portion  of  the  oil,  and  an  in- 
junction to  restrain  the  defendants 
in  the  meantime,  that  is,  until  the 
suit  at  law  is  determined.  .  .  . 
What,  then,  are  we  called  upon  to 
do?  Simply  to  appoint  a  receiver 
to  take  into  custody  and  to  deprive 
the  lessee  of  his  share  of  the  prod- 
uct until  the  plaintiffs  can  see 
whether  they  will  be  successful  in 
obtaining  a  judgment  of  forfeiture 
in  a  doubtful  case.  No  receiver  is 
asked  for  the  landlord's  portion, 
and  plainly  because  as  to  it  the 
purpose  is  to  require  delivery  with- 


out interruption.  The  actual  pur- 
pose is  to  take  into  custody  that 
which  will  be  mesne  profits  in  the 
event  of  establishing  the  forfeiture. 
Took  at  the  case  in  any  direction, 
and  all  that  is  in  it  is  to  obtain  our 
assistance  in  giving  effect  to  an 
alleged  forfeiture,  and  to  restrain 
the  defendants  from  the  exercise  of 
their  legal  rights  under  the  lease, 
while  the  plaintiffs  are  engaged  in 
experimenting  at  law  for  the  for- 
feiture. It  is  not  for  the  protection 
of  a  clear  and  well  defined  right, 
and  to  prevent  an  irremediable  in- 
jury which  may  ensue  if  we  do  not 
intervene,  nor  is  it  the  ordinary  case 
of  one  who  shows  an  equitable 
right  in  the  subject  of  custody,  and 
asks  the  court  to  interfere  for  its 
security  until  the  termination  of 
litigation.  The  appointment  of  a 
receiver  is  the  exercise  of  a  power 
in  aid  of  a  proceeding  in  equity, 
and  is  the  subject  of  sound  discre- 
tion. The  court  must  be  convinced 
that  it  is  needful  and  is  the  appro- 
priate means  of  securing  a  proper 
end.  Such  an  appointment  is  a 
strong  measure,  and  not  to  be  ex- 
ercised doubtingly.  Where  a  party 
is  clothed  with  title  and  possession 
such  as  are  conferred  by  a  lease  in 
writing,  and  is  in  the  enjoyment  of 
rights  apparently  legal,  a  receiver 
will  not  be  appointed  unless  under 
urgent  and  peculiar  circumstances. 
The  plaintiff  must  show  a  clear 
right  in  such  a  case,  or  a  prima 
facie,  with  such  attending  circum- 
stances of  danger  or  probable  loss 


726  RECEIVERS.  [chap.  XIV. 

ants,  who  are  insolvent,  a  receiver  may  properly  be  appoint- 
ed.23 

§  563.  Danger  to  property  an  important  element;  dis- 
sensions in  religious  society.  Upon  an  application  for  a 
receiver  to  take  charge  of  real  estate  and  receive  the  rents  and 
profits,  pending  a  litigation  as  to  the  right  of  conflicting  claim- 
ants, a  vital  point  of  inquiry,  as  already  indicated,  is,  as  to 
whether  there  is  danger  to  the  property  by  suffering  it  to  re- 
main in  possession  of  the  party  controlling  it.  Or,  in  other 
words,  are  there  any  special  circumstances  rendering  it  neces- 
sary for  the  better  preservation  of  the  property,  pendente  lite, 
that  it  should  b«i  taken  under  custody  of  the  court.  And  when 
no  such  circumstances  are  shown,  the  court  will  not  exercise 
its  summary  jurisdiction  by  a  receiver.  For  example,  when  an 
unincorporated  religious  society  holds  certain  real  estate,  the 
legal  title  to  which  is  vested  in  trustees  for  the  use  of  the  so- 
ciety, and  a  dissension  occurs  resulting  in  the  withdrawal  of 
one  portion  of  the  society  from  the  other,  and  the  members 
withdrawing  claim  to  hold  the  original  faith  of  the  society 
and  to  be  entitled  to  the  realty,  upon  a  bill  filed  by  them  to 
establish  their  right  to  the  property  as  against  the  trustees  in 
possession,  a  receiver  will  not  be  granted  when  there  is  neither 
proof  nor  allegation  before  the  court  of  danger  to  the  proper- 
ty from  waste  or  destruction  by  defendants,  and  no  apprehen- 
sion of  injury  in  consequence  of  the  property  remaining  in 
their  possession,  or  under  their  control,  pending  the  litiga- 
tion.24 


as   will   move   the  conscience   of   a  (1902)    1   Ch.,   387;   Leney  v.   Cal- 

chancellor    to    interfere.      Finding  lingham,  (1908)   1  K.  B.,  79. 

no   such   elements   in  this  case,   the  24  Willis  v.   Corlies,  2  Edw.   Ch., 

bill  is  dismissed,  and  the  costs  or-  281.        McCoun,      Vice-Chancellor, 

dered  to  be  paid  by  the  plaintiffs."  says,  p.  286:     "The  defendants,  as 

23  Nesbitt  V.  Turrentine,  83  N.  C,  trustees  and  as  such  committee,  have 

535.     As  to  the  right  of  the  lessor  the  present  possession,  and  assume 

of  a  hotel  to  a  receiver  for  the  li-  the  exercise  of  rights  in  those  ca- 

cense  and  for  the  rents  and  profits,  pacities.    Believing  themselves  to  be 

see     Charrington   &    Co.    v.    Camp,  the  rightful  trustees  and  managers. 


CHAP.    XIV.] 


REAL    PROPERTY. 


727 


§  564.  Distinction  between  appointing  receivers,  and 
continuing  those  already  in  possession.  While  courts  of 
equity,  as  is  thus  shown,  are  extremely  averse  to  interfering 
by  a  receiver  with  the  possession  of  real  property  held  by  de- 
fendants under  a  claim  of  legal  title,  and  will  not  ordinarily 
interpose  unless  there  be  some  clear  equity  afifecting  the  con- 
science of  the  party  in  possession,  yet  when  the  property  is  ac- 
tually in  possession  of  the  court  by  its  receivers,  and  a  propo- 
sition is  pending  for  a  com])romise  and  a  division  of  the  prop- 
erty between  the  different  claimants,  it  is  proper  for  the  court 
to  continue  its  custody  of  the  property  already  assumed,  until 
the  rights  of  the  parties  may  be  adjusted.  The  question  pre- 
sented, in  such  case,  is  not  the  creation  but  the  continuance  of 
the  receivership,  and  the  burden  falls,  not  upon  the  applicant 
to  continue,  but  upon  those  who  seek  to  rescind  the  action  of 
the  court.  It  is  proper,  therefore,  under  such  circumstances, 
to  continue  the  receiver  until  further  order.25 


they  take  care  to  preserve  the  prop- 
erty as  their  own;  and  there  is 
neither  proof  nor  allegation  before 
me  of  the  danger  to  it  from  acts 
of  waste  or  destruction  by  defend- 
ants, or  any  apprehension  of  injury 
in  consequence  of  the  property 
being  in  their  possession  or  under 
their  control  pending  the  litiga- 
tion. Nor  is  it  alleged  that  the 
defendants  are  irresponsible  men, 
and  unable  to  make  good  the  loss 
of  rents  to  the  complainants,  if 
they,  the  defendants,  should  be  de- 
creed to  account  for  rents  which 
they  may  in  the  meantime  receive. 
Under  circumstances  like  these,  it 
appears  unnecessary  to  appoint  a 
receiver,  nor  would  such  appoint- 
ment be  consistent  with  the  prin- 
ciples by  which  this  court  is  gov- 
erned. .  .  After  all,  it  comes 
back  to  the  only  inquiry  which  I 
apprehend    can    be    made    in    this 


stage  of  the  cause:  is  there  danger 
to  the  property?  In  other  words, 
is  there  evidence  of  fraud  in  ob- 
taining the  possession,  or  any  spe- 
cial circumstances  to  render  it  nec- 
essary for  the  preservation  of  the 
property  pendente  lite,  or  proper  in 
the  exercise  of  a  sound  discretion 
for  the  interference  of  the  court  in 
this  summary  manner?  As  there 
is  scarcely  a  color  of  pretense  for 
this  application  on  any  of  the  above 
grounds,  I  must  refuse  it  with 
costs." 

25  State  V.  Allen,  1  Tenn.  Ch.,  512. 
The  distinction  is  clearly  stated 
by  Cooper,  Chancellor,  as  follows, 
p.  514:  "If  this  application  was  to 
have  a  receiver  for  the  first  time 
upon  property  in  possession  of  the 
defendants  under  an  adverse  claim 
as  heirs  and  devisees  of  W.  P. 
Downs,  I  should  probably  refuse  it. 
The  court  is  very  slow  to  appoint  a 


728 


RECEIVERS. 


[chap.  XIV. 


§  565.  Departure  from  rule;  fraud  by  defendant  in  ob- 
taining possession ;  inadequate  consideration  and  undue  in- 
fluence. Having  thus  considered  the  general  doctrine  of 
courts  of  equity,  denying  the  aid  of  a  receiver  as  against  a  de- 
fendant in  possession,  in  a  contest  concerning  the  legal  title, 
it  remains  to  examine  those  cases  where  a  departure  from  the 
rule  has  been  allowed,  upon  grounds  of  a  purely  equitable 
nature,  appealing  strongly  to  the  conscience  of  a  chancellor. 
The  element  of  fraud  in  obtaining  possession  by  a  defendant 
has  been  treated  by  the  courts  as  an  important  feature  in 
cases  where  a  departure  from  the  general  rule  has  been  sanc- 
tioned.     And  when  it  is  sought  to  annul  a  conveyance  of  real 


receiver  of  realty  in  the  peaceable 
possession  of  defendants  under  a 
claim  of  right,  and  when  the  con- 
test is  between  claimants  of  the 
legal  title.  For  the  court  can  not 
interfere  with  the  legal  title,  unless 
there  be  some  equity  by  which  it 
can  affect  the  conscience  of  the 
party  in  possession.  And  such  in- 
terference is,  to  a  certain  extent, 
giving  relief,  and  upon  a  prelimi- 
nary motion,  depriving  the  defend- 
ant of  a  present  use  and  enjoyment 
of  the  estate,  and  pro  tanto  and 
pro  tempore,  giving  a  decision 
against  him.  The  property  was 
not,  however,  at  the  filing  of  this 
bill,  in  the  peaceable  possession  of 
the  defendants.  On  the  contrary, 
it  was  in  the  custody  of  this  court, 
by  its  receivers,  at  the  instance  of 
several  of  these  defendants  setting 
up  adverse  claims  to  each  other. 
If  now,  in  this  attitude  of  affairs, 
the  claimants  choose,  in  view  of  a 
claim  hostile  to  all  of  them,  to 
agree  upon  a  division  of  the  prop- 
erty among  themselves  by  a  com- 
promise, and  not  by  a  judicial 
decision  of  their   respective  rights, 


the  question  of  the  appointment  of 
a  receiver  could  scarcely  be  said 
to  turn  upon  peaceable  possession 
under  a  legal  title.  The  previous 
litigation  and  the  previous  receiv- 
erships demonstrate  that  no  one  of 
the  claimants  is  yet  in  peaceably 
under  legal  right.  The  very  fact 
that  each  of  these  claimants  has 
been  able,  as  against  the  other,  to 
have  a  receiver  appointed,  proves 
the  existence  of  some  equity  to  af- 
fect the  conscience  of  each,  and 
authorizes  the  appointment  of  a  re- 
ceiver, not  to  deprive  them  of  a 
previous  legal  possession,  but  to  con- 
tinue the  custody  already  assumed 
by  the  court  until  the  rights  of  the 
parties  can  be  adjudicated.  The 
question  is  not  the  creation  but  the 
continuance  of  the  receivership; 
not  the  deprivation  of  an  existing 
right,  but  the  prevention  of  the  ac- 
quiring a  new  right,  it  may  be  by 
collusion.  The  burden  is  not  upon 
the  applicant  to  continue,  but  upon 
those  who  seek  to  rescind  the  re- 
ceivership. The  present  receiver 
will  be  continued  until  further 
order." 


CHAP.    XIV.] 


REAL    PROPERTY. 


729 


estate  made  by  plaintiff,  upon  the  ground  of  fraud  and  undue 
influence  in  obtaining  the  conveyance,  if  upon  bill  and  answer 
there  is  a  strong  probability  of  plaintiff  maintaining  his  cause 
and  ultimately  obtaining  the  relief  sought,  a  receiver  may  be 
appointed  in  the  first  instance. ^6  And  when,  in  such  an  action, 
the  bill  shows  that  the  grantor  was  a  person  of  weak  intel- 
lect; young  and  inexperienced,  of  constant  habits  of  intoxica- 
tion, and  ignorant  of  the  real  value  of  the  property  conveyed ; 
that  the  consideration  paid  was  grossly  inadequate  to  the  value 
of  the  property  and  that  he  was  persuaded  to  execute  the  deeds 


26  Huguenin  v.  Baseley,  13  Ves., 
105;  Sthwell  v.  Williams,  6  Madd., 
49,  1st  American  Edition,  38,  af- 
firmed by  the  lord  chancellor,  sub 
nom.  Stilwell  v.  Wilkins,  Jac,  280. 
In  Huguenin  v.  Baseley,  13  Ves., 
105,  Lord  Erskine  observes,  p.  106: 
"Two  distinct  questions  arise :  1st, 
whether  so  strong  a  probability  of 
title  appears  upon  this  bill  and  an- 
swer, as  will  induce  the  court,  upon 
the  principles  on  which  it  acts,  to 
consider  this  plaintiff  as  having  a 
strong  interest  to  have  the  estate 
secured,  in  case  she  should  obtain 
a  decree ;  2dly,  whether  this  de- 
fendant, having  the  legal  estate  by 
adverse  title,  not  being  a  trustee  by 
his  admission,  a  receiver  ought  to 
be  appointed  by  interlocutory  order 
on  motion.  .  .  I  admit,  I  am 
not  in  this  way  to  decide  or  preju- 
dice this  cause.  All  that  it  is  nec- 
essary to  say  is,  that  there  is  a  very 
strong  probable  title  in  the  plaintiff 
to  call  back  this  estate,  upon  such 
terms  as  may  seem  proper  at  the 
hearing,  which  she  appears  to  have 
conveyed  under  such  circum- 
stances, reserving  only  an  interest 
for  life.  The  question  then  is, 
whether,  whatever  may  be  my 
opinion  of  the  complexion   of  this 


case  upon  the  bill  and  answer,  I 
ought  to  interfere  by  appointing  a 
receiver.  A  very  strong  case  has 
been  produced  in  favor  of  that. 
In  Vann  v.  Barnett,  2  Bro.  C.  C, 
158,  the  defendant  had  the  legal 
estate  in  trust  to  pay  himself.  But, 
as  one  of  the  ruling  principles  of 
this  court  is  that  there  must  be 
some  evil  actually  existing,  or  some 
evidence  of  danger  to  the  property 
if  the  court  should  not  interfere,  to 
induce  it  to  act  in  this  stage  of  a 
cause,  as  in  the  instance  of  waste, 
though  I  have  a  strong  inclination 
to  grant  a  receiver,  I  will  look  into 
the  authorities  before  I  determine." 
Upon  a  subsequent  day  Lord  Er- 
skine observed :  "Under  all  the 
circumstances  of  the  case,  I  have 
no  doubt  of  the  jurisdiction  to  ap- 
point a  receiver.  But,  in  order  to 
avoid  the  expense  of  that,  the 
plaintiff  being  entitled  for  her  life 
to  an  annuity,  admitted  to  be  very 
near,  if  not  quite,  equal  to  the 
rents,  I  propose  an  inquiry  what 
arrears  of  the  annuity  are  due; 
the  defendant  to  pay  the  amount 
forthwith,  to  give  security  for  the 
future  payments,  and  to  account 
for  the  rents  and  profits."  The 
order  was  drawn  up  accordingly. 


730  RECEIVERS.  [chap.  XIV. 

under  the  impression  that  he  was  conveying  only  a  life  estate, 
an  appropriate  case  is  presented  for  a  receiver,  when  the  an- 
swers of  defendants  in  possession  merely  allege  their  igno- 
rance of  the  facts  charged  in  the  bill,  without  denying  those 
facts.2'  So  the  relief  has  been  granted  in  an  action  to  set  aside 
a  conveyance  alleged  to  have  been  procured  by  fraud  and  un- 
due influence  exercised  over  the  grantor,  a  person  of  weak 
intellect,  and  the  grantee  being  insolvent  aside  from  the  prop- 
erty in  question. 28 

§  566.  Title  shown  by  plaintiff,  none  by  defendant;  pre- 
vention of  vexatious  litigation;  abuse  of  trust  and  insol- 
vency of  defendant;  receiver  of  rents  and  profits  pending 
litigation  in  another  state.  When  plaintiff  shows  an  equi- 
table title  to  a  part  of  the  property  in  controversy,  and  a  legal 
and  equitable  title  to  the  remainder,  and  defendant  shows  no 
title,  either  legal  or  equitable,  a  receiver  may  be  appointed 
pending  the  litigation.  And  an  additional  ground  for  the  relilf 
is  presented,  in  such  case,  where  it  appears  that  the  interfer- 
ence of  equity  may  prevent  vexatious  litigation,  there  being  a 
great  number  of  tenants  of  the  property,  and  a  probability  of 
prolonged  litigation,  unless  the  matter  is  determined  by  a  court 
of  equity.29  So  an  abuse  of  trust  by  the  party  in  possession, 
by  which  the  safety  of  the  property  is  endangered,  coupled 
with  his  insolvency  and  consequent  insecurity  of  the  rents 
and  profits,  will  warrant  the  court  in  extending  the  aid  of  a  re- 
s' Stilwell  V.  Wilkins,  Jac,  280.  than  probable  that  it  is  true,  the 
affirming  S.  C,  sub  nom.  Stitvvell  inadequacy  was  so  monstrous,  the 
V.  Williams,  6  Madd.,  49,  1st  Amer-  situation  of  the  young  man  and 
ican  Edition,  38.  In  the  case  as  the  state  of  his  intellect  were  such, 
reported  in  Jac,  280,  Lord  Eldon  that  it  is  hardly  possible  to  suppose 
says,  p.  283:  "I  am  ready  to  admit  that  the  transaction  can  stand;  and 
that  I  do  not  remember  any  in-  I  think,  therefore,  that  this  is  a 
stance  of  a  receiver  being  so  ap-  case  where  such  an  order  may  be 
pointed,  but  still  the  question  is,  made,  though  it  is  not  the  general 
whether  there  may  not  be  a  case  habit  of  the  court." 
where  it  ought  to  be  done.     If  the  28  Mitchell  v.  Barnes,  22  Hun,  194. 

case  stated  be  true,  and  it  is  more  29  Cole  v.  O'Neill,  3  Md.  Ch.,  174. 


CHAP.    XIV.]  REAL    PROPERTY.  731 

ceiver.30  And  where  complainant,  in  whom,  in  an  action  of 
ejectment,  the  title  to  certain  realty  had  been  adjudged  to  be, 
had  been  enjoined  by  the  court  of  another  state  from  taking 
possession  of  the  land  and  the  defendant  who  was  hopelessly 
insolvent  was  proceeding  to  collect  the  rents  and  profits  arising 
from  the  property,  a  receiver  was  properly  appointed  to  collect 
the  rents  and  profits  until  the  final  determination  of  the  litiga- 
tion in  the  other  state.^^ 

§  567.  Appointed  on  bill  by  creditors  when  no  per- 
sonalty shown ;  rights  of  judgment  creditors  in  possession 
not  prejudiced;  probable  title  in  plaintiff  and  danger  to 
rents.  It  was  the  doctrine  of  the  English  Court  of  Chan- 
cery, that  upon  a  bill  by  creditors  claiming  satisfaction  against 
both  the  real  and  personal  estate  of  the  debtor,  if  it  appeared 
probable  from  defendant's  answer  that  there  was  no  personal 
estate,  and  that  both  the  realty  in  defendant's  possession  and 
the  rents  and  profits  thereof  must  become  responsible  for  the 
demands,  the  court  might  appoint  a  receiver  in  the  first  in- 
stance, although  the  power  was  recognized  as  a  delicate  one.^^ 
But  when  an  incumbrancer  seeks  the  aid  of  equity  by  a  re- 
ceiver over  defendant's  real  estate,  and  there  are  judgment 
creditors  of  the  defendant  in  possession,  the  appointment  will 
be  made  without  prejudice  to  the  rights  of  such  creditors.^^ 
And  in  the  Irish  Court  of  Chancery,  the  doctrine  is  held  that  the 
court  has  full  jurisdiction  to  grant  a  receiver,  even  against  a 
defendant  in  possession  of  real  property,  in  an  action  for  the 
recovery  of  lands,  when  plaintiff  shows  a  probable  title  and 
danger  of  the  rents  being  lost.^*  But  the  relief  will  not  be 
granted  to  the  owners  of  real  estate  merely  because  of  the  diffi- 
culty of  collecting  rents  from  their  tenants. ^^ 


30  Chase's  Case,  1  Bland,  213.  32  Jones  v.  Pugh,  8  Ves.,  71. 

31  Atlas  Savings  &  Loan  Assn.  v.  3.3  Davis  v.  Duke  of  Marlborough, 
Kirklin,  110  Ga.,  572,  35  S.  E.,  772.  1  Swans.,  74. 

And  see  Fisher  v.  Graham,  113  Ga.,  34  Scott  v.  Scott,  13  Ir.  Eq.,  212. 

851,  39  S.  E.,  305.  35  /„  re  Madden,  3  L.  R.,  Ir.,  172. 


7Z2  RECEIVERS.  [chap.  XIV. 

§  568.  Receiver  in  proceedings  to  determine  widow's 
dower;  receiver  may  compel  assignment  of  dower.     The 

aid  of  equity  by  a  receiver  is  sometimes  invoked  for  the  pro- 
tection of  dower  interests  in  the  estate  of  a  deceased  husband. 
And  in  a  proceeding  by  a  widow  to  have  her  dower  set  aside, 
if  it  is  shown  that  the  property  is  in  possession  of  and  con- 
trolled by  a  person  who  is  insolvent,  and  who  has  taken  the 
benefit  of  the  state  insolvent  laws  pending  the  litigation,  and 
that  the  rents  and  profits  are  exposed  to  imminent  danger  or 
to  inevitable  loss,  a  receiver  may  be  allowed. ^^  But  upon  a  bill 
by  an  heir-at-law  and  devisee  of  a  deceased  person  to  determine 
the  widow's  dower,  in  order  to  warrant  an  injunction  against 
the  disposal  of  the  property,  and  a  receiver  of  the  rents  and 
profits,  it  is  not  sufficient  merely  to  allege  that  the  rents  are  in 
jeopardy,  but  it  must  be  shown  how  they  are  jeopardized.  And 
when  there  is  no  allegation  that  the  rents  and  profits  of  the  real 
estate,  which  is  supposed  to  be  subject  to  the  dower  interest, 
will  be  lost  by  reason  of  insolvency  of  those  receiving  them, 
or  that  plaintiff  has  not  an  adequate  remedy  at  law  for  such 
of  the  rents  as  he  may  be  entitled  to,  a  receiver  should  not  be 
granted. ^'^  But  where  a  widow  has  fraudulently  and  without 
consideration  and  in  order  to  hinder  her  creditors,  released 
her  dower  right  to  her  children,  a  receiver  is  properly  ap- 
pointed, who  may,  in  the  name  of  the  widow  compel  her 
dower  to  be  assigned  for  the  purpose  of  ripening  the  dower 
right  into  an  estate  and  applying  it  to  the  payment  of  her 
debts. ^^ 

§  569.  Receiver  in  proceedings  to  establish  will,  or  to 
execute  trusts  of  will.  The  jurisdiction  of  equity  by  the 
appointment  of  a  receiver  is  sometimes  invoked  for  the  pro- 
tection of  heirs  or  devisees,  or  for  the  enforcement  of  trusts 
created  by  the  ancestor's  will.  And  upon  a  bill  by  children  of 
a  testator  to  establish  his  will,  and  to  enforce  the  performance 

36  Chase's  Case,  1  Bland,  206.  ^^  Tenbrook  v.   Jessup,  60  N.  J. 

37  Knighton  v.  Young,  22  Md.,  359.      Eq.,  234,  46  Atl,  516. 


CHAP.    XIV.]  REAL    PROPERTY.  733 

of  certain  trusts  in  favor  of  plaintiffs  upon  which  the  testator 
devised  his  property,  and  for  an  account  of  rents  and  profits, 
a  receiver  has  been  allowed  of  the  rents  and  profits,  when  it 
was  manifest  that  the  testator's  intentions  had  been  disre- 
garded.^9  And  a  receiver  has  been  granted  upon  a  bill  filed 
by  parties  interested  in  the  execution  of  the  trusts  of  a  will, 
alleging  that  rents  had  not  been  collected,  and  that  incum- 
brancers were  threatening  to  take  possession  of  the  estate  or 
otherwise  proceed  for  the  recovery  of  their  mortgage  debts, 
unless  a  receiver  should  be  appointed. ^^  When,  however,  the 
heir-at-law  is  in  possession,  equity  will  not  ordinarily  grant  a 
receiver  in  an  action  to  carry  into  execution  the  trusts  of  the 
will  of  a  deceased  testator,  until  the  will  has  been  proven, 
when  it  is  not  admitted  by  answer,  since  the  court  will  not  dis- 
place the  possession  of  the  heir-at-law  until  his  title  has  been 
displaced. ^1  So  in  a  proceeding  to  establish  a  will,  the  con- 
troversy being  as  to  which  of  two  instruments  is  the  last  will 
of  the  testator,  it  is  improper  to  appoint  a  receiver  to  take  pos- 
session of  the  lands  of  the  testator,  especially  when  it  is  not 
shown  that  the  defendant  in  possession  is  insolvent,  or  unable 
to  respond  to  final  judgment  in  the  cause.^^  -q^^  \^  jg  held, 
when  the  heir-at-law,  disputing  the  will  of  his  ancestor,  enters 
into  possession  of  the  devised  estates,  and  a  court  of  equity 
directs  an  issue  to  be  tried  at  law  as  to  the  validity  of  the  will, 
devisavit  vel  non,  upon  a  bill  by  the  executors  against  the 
heir  to  establish  the  will,  that  the  court  may  properly  appoint 
a  receiver  against  the  heir  in  possession,  and  may  enjoin  him 
from  committing  waste.^^  But  a  legatee  under  a  will,  whose 
legacy  is  a  charge  upon  the  estate  of  the  testator,  subject  to 
prior  mortgages  and  other  charges,  is  not  entitled  to  a  receiver 
over  the  estate,  because  the  rents  and  proceeds  are  being  ap- 
plied to  keep  down  the  interest  on  such  charges."** 

89  Podmore  v.   Gunning,   5   Sim.,  ^2  Bryan  v.  Moring,  94  N.  C.  694. 

485.  4SFingal  v.  Blake,  1  Mol.,  11.1 

40  Hart  v.  Tulk,  6  Hare,  611.  44  Faulkner  v.  Daniel,  3  Hare,  204. 

41  Dobbin  v.  Adams,  8  Ir.  Eq.,  157.  note. 


734  RECEIVERS.  [chap.  XIV. 

§  570.  When  granted  in  contest  between  heir-at-law 
and  devisee  under  will.  As  between  the  heir-at-law  and  a 
devisee  under  the  will  of  the  ancestor,  pending  litigation  con- 
cerning the  relative  rights  of  the  parties,  equity  does  not  in- 
terfere as  of  course  by  appointing  a  receiver  of  the  estate 
against  a  devisee  in  possession ;  and  in  the  absence  of  any  spe- 
cial circumstances  of  mismanagement  or  danger  to  the  estate,  a 
receiver  will  be  refused,  and  the  parties  will  be  left  to  pursue 
their  remedy  at  law.'*^  In  such  cases,  the  court  proceeds  upon 
the  principle  that  the  heir,  if  he  recovers  at  all,  must  recover 
upon  the  strength  of  his  title  at  law,  and  the  possession  of  the 
devisee  under  the  will  is  regarded  as  a  lawful  possession,  which 
the  court  will  not  disturb  by  a  receiver.^^  Nor  will  a  receiver 
be  granted  upon  the  application  of  one  claiming  as  a  devisee 
under  a  will,  upon  a  bill  against  other  devisees  and  an  heir-at- 
law  to  establish  the  will  and  enforce  its  trusts,  when  its  validity 
is  disputed  and  it  is  not  shown  that  the  property  is  exposed 
to  any  danger  by  remaining  in  possession  of  defendants. ^"^  But 
as  between  an  heir-at-law  in  possession  and  a  devisee  under 
the  will  of  the  ancestor,  which  is  being  contested  by  the  heir, 
equity  may  interpose  for  the  protection  of  the  devisee  in  a 
strong  case  by  granting  a  receiver  of  the  rents  and  proceeds, 
when  the  court  is  satisfied  that  the  heir  is  entirely  shut  out 
from  inheriting  by  the  terms  of  the  will.  But  such  a  state  of 
facts  is  not  to  be  regarded  as  affecting  the  right  of  an  heir 
from  whom  the  testator  has  not  taken  away  the  legal  estate.^^ 
And  when,  in  such  a  case,  the  heir-at-law  has  obtained  a  ver- 
dict against  the  will,  he  will  be  regarded  as  entitled  to  posses- 
sion of  the  estate,  and  equity  will  refuse  to  disturb  his  posses- 
sion by  appointing  a  receiver  in  behalf  of  a  devisee  under  the 
will,  notwithstanding  a  new  trial  has  been  directed  in  the  action 
to  test  the  validity  of  the  will.^^ 

4o  Schlecht's   Appeal,  60   Pa.    St.,  47  Clark  v.  Drew,  1  Russ.  &  M., 

172;    Knight   v.   Dnplessis,    1    Ves.,  103. 

324.     See  S.  C,  2  Ves.,  360.  48  Fingal  v.  Blake,  2  Mol.,  SO. 

46  Knight  v.  Duplessis,  2  Ves.,  360.  49  Lloyd  v.  Trimleston,  2  Mol.,  81. 


CHAP.    XIV.]  REAL    PROPERTY.  735 

§  571.  Appropriation  of  rents  and  profits  as  against 
heirs;  objection  to  administration  by  pretended  heirs. 
When  a  conveyance  of  real  estate  is  made  in  trust  for  the 
benefit  of  the  grantor's  wife  during  her  hfe,  with  remainder  to 
his  children  equally,  to  receive  the  rents  and  profits  for  life, 
and  after  the  wife's  death  the  grantor  takes  possession  and  ap- 
propriates the  rents  and  profits  to  his  own  use,  no  sufficient 
ground  is  presented  for  a  receiver,  when  it  is  not  shown  that 
the  person  alleged  to  be  in  wrongful  possession  is  insolvent, 
or  that  the  rents  and  profits  are  in  danger  of  being  lost  to  the 
heirs.50  Nor  is  it  sufficient  ground  for  appointing  a  receiver 
over  the  estate  of  a  deceased  person,  upon  a  bill  by  the  next  of 
kin,  that  the  defendants,  pretending  to  be  heirs  of  the  deceased, 
are  opposing  plaintiff's  application  for  letters  of  administra- 
tion, when  the  bill  states  no  grounds  of  opposition  on  the  part 
of  defendants,  and  nothing  appears  to  show  that  plaintiff  may 
not  in  due  course  obtain  the  administration.  A  demurrer, 
therefore,  to  such  a  bill  for  want  of  equity  will  be  sustained. ^^ 

§  572.  When  granted  as  against  tenant  for  life;  devise 
to  wife;  settlement  upon  daughter.  Where  plaintiffs  were 
entitled,  as  younger  children  of  a  deceased  ancestor,  to  certain 
portions  allowed  them  in  the  settlement  of  his  estate,  raised 
out  of  a  term  of  years,  and  had  obtained  a  decree  for  a  sale  of 
the  term  for  that  purpose,  but  the  tenant  for  life  obstructed 
the  enforcement  of  the  decree,  a  receiver  of  the  rents  and 
profits  was  allowed  as  against  the  tenant  for  life.^^  And  where 
the  holder  of  the  life  estate  rented  the  premises,  and,  after  her 
death,  the  tenant  continued  in  possession,  claiming  to  own  the 
premises  as  heir,  upon  a  bill  against  the  tenant  for  an  account- 
ing and  payment  of  the  rents  accruing  after  the  death  of  the 
owner  of  the  life  estate,  and  for  a  receiver,  the  case  was  re- 


50  Clark  v.  Ridgely,  1  Md.  Ch.,  70.  St.   Paul  Trust  Co.  v.   Mintzer,  65 

51  Jones   V.    Frost,    3   Madd.,    1st  Minn.,   124,  67   N.   W.,  657,   32  L. 
American  Edition,  9.  R.    A.,    756,    and    note,    6   Am.    St. 

52  Brigstocke  v.  Mansel,  3  Madd.,  Rep.,  444. 
1st  American  Edition,  32.     And  see 


7o6  RECEIVERS.  [CHAP.  XIV. 

garded  as  an  appropriate  one  for  the  relief,  and  a  reference 
was  made  to  a  master  to  appoint  a  receiver. ^-^  But  when  by 
his  will  a  husband  directed  the  appropriation  of  so  much  of 
the  rents  and  income  of  certain  real  property  to  the  support  of 
his  widow  as  might  be  necessary  for  that  purpose,  a  receiver  of 
the  rents  was  refused  at  the  suit  of  a  judgment  creditor  of 
the  widow,^*  And  when  a  father  conveyed  to  his  daughter 
for  life  an  undivided  one-half  interest  in  certain  real  property, 
with  the  right  to  a  specified  share  of  the  rents,  but  reserving 
to  himself  the  control  and  management  of  the  property  during 
his  life,  a  receiver  was  refused  in  an  action  by  the  daughter 
against  the  father  to  establish  her  rights,  defendant  not  being 
shown  to  be  insolvent,  or  unable  to  respond  for  the  rents  col- 
lected.55 

§  573.  Vendor  not  allowed  relief  because  of  vendee's 
insolvency  and  commission  of  waste.  The  owner  of  land, 
who  has  contracted  for  its  sale,  and  executed  a  bond  for  title, 
conditioned  upon  the  payment  of  vendee's  notes  for  the  pur- 
chase-money, can  not,  on  the  ground  of  vendee's  insolvency 
and  commission  of  waste,  obtain  a  receiver  to  hold  the  property 
pending  an  action  to  rescind  the  contract ;  since,  however  im- 
prudent the  contract  of  sale  may  have  been,  the  vendor  can 
not,  because  of  his  own  imprudence,  obtain  such  relief,  and 
must  be  left  to  pursue  his  remedy  at  law.^^ 

53  Anonymous,  Amb.,  311,  note  1.  the  vendor,  on  the  ground  of  that 

54  Barnett  v.  Montgomery,  79  Ga.,  insolvency,  simply,  ask  for  the  ap- 
726,  4  S.  E.,  874.  pointment   of   a   receiver   who   shall 

55  Crockett  v.  Crockett,  75  Ga.,  hold  the  property  until  a  decree 
202.  can  be  had  cancelling  the  contract 

56  Jordan  v.  Beal,  51  Ga.,  602.  of  sale?  There  was  no  fraud 
The  court,  Trippe,  J.,  say,  p.  604:  charged.  The  charge  as  to  waste, 
"All  questions  were  eliminated  etc.,  was  denied  by  the  answer  and 
from  the  case  at  the  hearing  by  the  by  affidavits.  No  authority  was 
answer  of  defendants  and  the  sup-  referred  to  showing  that  such  a 
pletory  affidavits,  but  one.  That  remedy  exists,  and  we  can  see 
question  is,  can  the  vendee  of  lands,  much  danger  and  unlimited  trouble 
who  sells  and  gives  a  bond  for  title  that  would  be  given  to  the  courts 
to  an  insolvent  vendor,  one  who  if  the  principle  contended  for  were 
has  no  property,  and  so  known  to  a  correct  one.     The  owner  of  prop- 


CHAP.    XIV.]  REAL    PROPERTY.  IZl 

§  574.  When  granted  for  protection  of  annuitants.    The 

aid  of  equity  by  a  receiver  is  sometimes  extended  in  behalf  of 
annuitants,  or  creditors  whose  demands  are  an  annual  charge 
upon  the  real  estate  of  their  debtor,  the  efifect  of  such  appoint- 
ment being  virtually  to  attach  the  rents  due  from  tenants  of 
the  premises  on  which  the  annuity  is  charged.^^  And  upon  a 
bill  for  an  accounting  of  arrears  of  an  annuity  charged  upon 
defendant's  real  estate,  equity  may  grant  a  receiver  in  limine, 
to  take  charge  of  the  rents  until  the  rights  of  the  parties  can 
be  finally  ascertained,  when  it  is  shown  that  the  annuity  is  in 
arrears,  and  the  premises  are  an  insufficient  security.^^  So 
when  an  annuity  is  a  charge  upon  the  benefice  of  a  clergyman, 
in  the  nature  of  an  equitable  mortgage,  the  annuitant  is  en- 
titled to  a  receiver  of  the  income  from  the  benefice,  in  prefer- 
ence to  later  judgment  creditors.^^  And  where  plaintiff 
claimed  an  annuity  which  defendant  had  by  deed  charged  upon 
certain  of  his  property  by  name,  and  generally  upon  all  other 
of  his  property,  and  plaintiff,  upon  a  bill  to  raise  the  arrears 
of  his  annuity,  had  obtained  a  receiver  over  a  portion  of  de- 
fendant's premises,  the  value  of  which  was  insufficient  to  satis- 
fy the  annuity,  and  plaintiff  subsequently  discovered  other 

erty  thus  selling  it  does  so  with  his  made,   as   is   invoked  by  complain- 

eyes  open.     He  takes  the  risk.     He  ants,   under  the   facts  as   they   ap- 

reserves  the  title  as  security.     His  peared    at    the    hearing   before    the 

lien  is  higher  than  any  other.     A  chancellor,    every    vendor    of    land 

specific    remedy    is    given    him    by  who    makes    a    rash    or    imprudent 

statute:  Code,  sees.  3684,  3886.    No  sale  would   at  once  seek  the  rem- 

fraud   in   the   contract   is  practiced  edy,  and  there  would  be  a  harvest 

upon  him.    He  has  simply  made  an  of  suits  for  relief  from  one's  own 

imprudent  bargain,  or  comes  to  the  improvidence  or  error.    This  would 

conclusion    he    has,    as    his    debtor,  work    a    greater    evil    than    is    the 

the  purchaser,  does  not  pay  him  at  hardship  of  waiting  six  months  on 

the  time  agreed  on,  and  then  asks  a  suit  at  law  and  a  sale  as  provided 

a  court  of  equity  to  take  the  land  by  law." 

at  once  out  of  the  possession  of  the  57  Hayden  v.  Shearman,  2  Ir.  Cli., 

purchaser  and  hold  it  for  him  until  N.  S.,  137;  Beamish  v.  Austen,  Ir. 

he  can  have  a  decree  to  set  aside  Rep.,  9  Eq.,  361. 

the    whole    bargain,    and    then    to  ■''>8  Kelly  v.  Butler,  1  Ir.  Eq..  435. 

give    him    back    his    land.      If   this  ^9  Eattersby  v.  Homan,  2  Ir.  Ch., 

were  the  rule,  or  if  a  holding  were  N.  S.,  232. 
Receivers — 47. 


738  RECEIVERS.  [chap.  XIV. 

prop^ty  belonging  to  defendant,  the  receiver  was  extended  to 
such  other  property. ^'^  But,  in  conformity  with  the  general 
principle  denying  the  aid  of  a  receiver  when  the  party  ag- 
grieved has  an  adequate  remedy  at  law,  an  annuitant,  whose 
annuity  is  a  charge  upon  real  property,  will  not  be  allowed  a 
receiver  because  his  annuity  is  in  arrears,  if  he  has  the  power 
of  distraining  upon  the  land ;  since  the  remedy  by  distraint  is 
ample,  and  equity  will  not  grant  a  receiver  in  behalf  of  one 
who  does  not  need  such  aid.^^  And  when  a  testator  has  by  his 
will  charged  an  annuity  upon  real  property,  a  court  of  equity 
will  not,  pending  a  controversy  as  to  the  validity  of  the  will, 
appoint  a  receiver  in  behalf  of  the  annuitant,  while  there  appear 
to  be  prior  charges  and  incumbrances  upon  the  property,  which, 
in  the  event  of  the  will  being  declared  valid,  must  be  first  paid 
out  of  the  property.^2  g^t  if  an  annuity  charged  upon  real 
property  is  in  arrears,  and  there  is  doubt  as  to  the  remedy  at 
law,  a  receiver  may  be  appointed,  the  jurisdiction  in  equity,  in 
such  cases,  being  regarded  as  concurrent  with  the  jurisdiction 
at  law.^^  And  upon  a  bill  by  a  father  against  his  children  to 
set  aside  conveyances  to  the  latter,  upon  the  ground  that  they 
were  fraudulently  obtained,  and  that  defendants  had  refused 
to  pay  the  father  an  annuity  charged  upon  the  premises  con- 
veyed, the  case  was  regarded  as  a  proper  one  for  a  receiver, 
unless  defendants  would,  without  delay,  pay  the  amount  of  the 
annuity.^"* 

§  575.  Relief  generally  refused  in  actions  of  ejectment. 
As  regards  the  appointment  of  receivers  in  aid  of  actions  of 
ejectment,  or  suits  for  the  recovery  of  real  property,  there  is 
some  apparent  conflict  in  the  decisions  of  the  courts,  which 
may  be  harmonized  only  by  keeping  in  view  the  general  prin- 

60  Lyne  v.  Lockwood,  2  Mol.,  -IQS.  62  D'Alton  v.  Trimleston,  2  Dr.  & 

But  in  this  case,  a  reference  was  or-  War.,  531. 

dcred  to  a  master,  to  report  whether  63  Beamish  v.  Austen,  Ir,  Rep.,  9 

any  other  creditors  were  entitled  to  Eq.,  361. 

priority.  64  Probasco  v.  Probasco,  30  N.  J. 

6lSollory  V.  Leaver,  L.  R.,  9  Eq.,  Eq.,  108. 
22. 


CHAP.    XIV.] 


REAL    PROPERTY. 


739 


ciples  already  established  as  governing  applications  for  receiv- 
ers over  real  property  pendente  lite.  The  better  doctrine  un- 
doubtedly is,  that  in  ordinary  actions  of  ejectment,  or  suits 
for  the  recovery  of  real  property  in  the  nature  of  ejectment  at 
common  law,  when  no  especial  equities  exist  in  favor  of  plain- 
tiff, the  contest  being  merely  as  to  the  legal  title  of  the  premises 
in  dispute,  a  receiver  of  the  rents  and  profits  will  not  usually 
be  appointed  pendente  lite.  Unless,  therefore,  some  equitable 
grounds  are  made  to  appear,  entitling  plaintiff  to  the  rents  and 
profits  as  such,  or  unless  it  is  shown  that  their  sequestration  is 
essential  to  his  protection,  equity  will  refuse  to  lend  its  aid  by 
a  receiver,  since  the  interference  would,  in  effect,  amount  to  a 
complete  ouster  of  the  defendant,  by  taking  away  from  him  the 
subject-matter  of  the  litigation,  without  trial  or  judgment.^^ 
And  in  such  case,  a  valid  legal  title  in  the  plaintiff  is  not  of  it- 
self a  sufificient  ground  for  the  relief.^^ 

§  576.  When  granted  in  ejectment,  for  preservation  of 
rents  and  profits  pendente  lite.  When,  however,  the  plain- 
tiff, in  an  action  for  the  recovery  of  real  estate,  shows  an  ap- 


65  People  v.  Mayor  of  New  York, 
Supreme  Court,  General  Term,  10 
Ab.  Pr.,  Ill,  reversing  S.  C,  Su- 
preme Court,  Special  Term,  8  Ab. 
Pr.,  7;  Thompson  v.  Sherrard,  35 
Barb.,  593;  S.  C,  22  How.  Pr.,  155; 
Corey  v.  Long,  12  Ab.  Pr.,  N.  S., 
427;  Whitworth  v.  Wofford,  73  Ga., 
2.S9;  Davis  v.  Taylor,  86  Ga.,  506, 
12  S.  E.,  881 ;  Rollins  v.  Henry,  77 
N.  C,  467;  Mapest;.  Scott,  4  Bradw., 
268;  State  v.  District  Court,  13 
Mont.,  416,  34  Pac,  609;  Foxwell 
V.  Van  Grutten,  (1897)  1  Ch.,  64. 
And  see  to  the  same  effect,  under 
the  code  of  civil  procedure  in  Cali- 
fornia, Bateman  v.  Superior  Court, 
54  Cal.,  285.  .And  see,  also,  San 
Jose  Safe  Deposit  Bank  v.  Bank  of 
Madera,  121  Cal.,  543.  54  Pac,  85. 
.As  to  the  right  to  a  receiver  of  the 
rents   and   profits  of  real  property, 


pending  an  action  of  ejectment,  un- 
der the  statutes  of  North  Carolina, 
see  Kron  v.  Dennis,  90  N.  C,  327. 
In  Smith  v.  White,  62  Neb.,  56,  86 
N.  W.,  930,  it  was  held,  under  a 
statute  providing  for  the  appoint- 
ment of  receivers  ".  .  .  in  all  other 
cases  where  receivers  have  hereto- 
fore been  appointed  by  the  usages 
of  courts  of  equity,"  that  a  receiver 
should  not  be  appointed  in  an  action 
of  ejectment  before  judgment.  And 
the  same  rule  has  been  announced 
in  New  Jersey  under  the  statute  of 
that  state.  Oehme  v.  Rucklchaus, 
50  N.  J.  Law,  84,  11  Atl.,  145. 

66  People  V.  Mayor  of  New  York, 
Supreme  Court,  General  Term,  10 
Ab.  Pr.,  Ill,  reversing  S.  C.  Su- 
preme Court,  Special  Term,  8  .\b. 
Pr.,  7. 


740  RECEIVERS.  [chap.  XIV. 

pareiitly  good  title,  and,  in  addition  thereto,  that  there  is  immi- 
nent danger  of  loss  of  rents  and  profits  because  of  the  misman- 
agement and  insolvency  of  defendant  in  possession,  a  different 
case  is  presented,  and  a  receiver  may  be  granted  for  the  better 
preservation  of  the  rents  and  profits  pendente  litc.^'^  And 
when,  pending  his  action  of  ejectment,  plaintiff  files  a  bill  show- 
ing a  good  legal  title  to  the  premises,  which  is  not  successfully 
controverted  by  the  answer,  and  it  is  shown  that  plaintiff  is 
in  great  danger  of  losing  the  rents  and  profits,  by  reason  of 
defendant's  negligent  and  wasteful  management,  and  that  the 
property  is  depreciating  in  value  and  not  paying  interest  on  its 
incumbrances,  because  of  the  bad  management  of  defendant, 
who  is  himself  in  insolvent  circumstances,  a  fitting  case  is  pre- 
sented for  the  aid  of  equity  by  a  receiver.  In  such  a  case,  de- 
fendant being  regarded  as  holding  over  as  against  his  own 
deed,  and  not  being  responsible  for  mesne  profits  or  permissive 
waste,  by  reason  of  his  insolvency,  the  aid  of  equity  is  neces- 
sary to  protect  the  holder  of  the  legal  title.^^  And  in  an  equi- 
table action  to  recover  real  estate,  upon  the  ground  that  the 
proceedings  by  which  plaintiff's  ancestor  had  been  divested  of 
the  title  were  void  for  fraud,  mistake  and  want  of  jurisdiction 
in  the  court  in  which  the  proceedings  were  had,  an  injunction 
and  a  receiver  have  been  allowed  when  it  was  shown  that 
defendants  in  possession  were  irresponsible  and  were  collect- 
ing the  rents,  and  that  the  premises  were  in  a  ruinous  condi- 
tion and  would  continue  to  deteriorate  if  left  to  defendant's 
possession  pending  the  litigation,  such  a  case  being  distin- 
guished from  an  ordinary  action  of  ejectment. ^^  And  a  re- 
ceiver has  been  allowed  to  take  charge  of  the  rents  and  profits 
of  coal  mines  pendente  lite,  even  without  allegations  of  mis- 
management or  insolvency,  where  there  was  no  attempt  to 

6"  Payne   v.    Atterbury,    Harring.  68  Payne   v.    Atterbury,    Harriiig. 

(Mich.),  414;  Ireland  v.  Nichols,  37  (Mich.),  414. 

How.   Pr.,  222;    S.   C,   1   Sweeney,  69  Rogers  v.  Marshall,  6  Ab.  Pr., 

208;  Vizard  v.  Moody,  117  Ga,  67,  N.  S.,  4^57. 
43  S.  E.,  426.     See,  also,  Rogers  v. 
Marshall,  6  Ab.  Pr.,  N.  S.,  457. 


CHAP.    XIV.]  REAL    PROPERTY.  741 

take  the  possession  of  the  land  away  from  the  defendant  but 
the  action  was  merely  ancillary  to  a  pending  action  of  eject- 
ment brought  to  determine  the  title. "^^  g^t  the  appointment 
of  a  receiver,  in  an  action  to  recover  possession  of  real  prop- 
erty, is  not  regarded  as  a  special  proceeding  or  an  independent 
action  in  itself,  but  rather  as  a  part  of  the  original  action  and 
auxiliary  thereto,  having  no  independent  existence  of  its  ownJ^ 
§  577.  Plaintiff  allowed  receiver  after  recovery  of  lands, 
when  necessary  to  preserve  rents  and  profits.  After 
plaintiff,  in  an  action  for  the  recovery  of  lands,  has  recovered 
a  verdict  and  judgment  in  his  favor,  his  right  to  a  receiver  of 
the  rents  and  profits  would  seem  to  be  based  upon  stronger 
grounds,  and  there  are  frequent  cases  where  the  relief  has  been 
extended  under  such  circumstances,  when  necessary  to  pre- 
serve the  rents  and  proceeds  from  loss.'^2  Thus^  in  an  action 
to  recover  possession  of  lands  on  which  are  located  valuable 
mineral  springs,  the  chief  value  of  the  land  consisting  in  the 
proceeds  derived  from  sales  of  these  waters,  after  verdict  and 
judgment  for  plaintiff,  and  pending  a  motion  for  a  new  trial, 
it  is  proper  to  appoint  a  receiver  upon  satisfying  the  court 
that  the  relief  is  necessary  to  protect  the  plaintiff's  rights  in 
the  property,  and  that  defendant  is  wasting  the  waters  and 
otherwise  impairing  the  value  of  plaintiff's  interest  therein, 
and  that  he  is  insolvent  and  unable  to  respond  to  a  judgment 
in  damages.'^^  And  when  defendants  are  in  possession  of  land, 
under  a  contract  for  its  purchase  made  with  plaintiff's  intestate, 
but  fail  to  make  the  necessary  payments,  and  plaintiff  brings 
his  action  and  recovers  judgment  for  the  return  of  the  land 
upon  payment  of  a  specified  sum,  upon  a  bill  by  plaintiff  for  an 

''^  Ulman  v.  Clark,  75  Fed.,  868.  collected  by  a  receiver  appointed  in 

71  Whitney  v.   Buckman,  26   Cal.,  aid  of  an  action  of  ejectment,  after 

447.  judgment  for  plaintiff  and  pending 

'^-  Frisbee    v.    Timanus,    12    Fla.,  an   appeal,   see   Garniss  v.   Superior 

300;    Collier   v.    Sapp,   49   Ga.,   93;  Court,  88  Cal.,  413,  26  Pac,  351. 

Whitney  v.  Buckman,  26  Cal.,  447.  73  Whitney  v.  Buckman,  26  Cal., 

As  to  the  right  to  rents  and  profits  447. 


742  RECEIVERS.  [chap.  XIV. 

accounting-  of  the  rents  and  profits  of  the  land  durint^  defend- 
ants' occupancy,  the  bill  alleging  that  defendants  are  insolvent, 
a  receiver  may  be  appointed  until  the  determination  of  the  ques- 
tions involved.'^'*  So  when  plaintiff  in  ejectment  recovers  judg- 
ment in  a  state  court,  and  defendant  obtains  a  writ  of  certiorari 
to  remove  the  proceedings  to  the  United  States  court,  and  the 
state  court,  to  prevent  a  conflict  of  jurisdiction,  suspends  exe- 
cution of  the  judgment  in  ejectment,  plaintiff  is  entitled  to  a  re- 
ceiver of  the  rents  and  profits,  upon  a  bill  against  the  adminis- 
trators of  the  defendant  in  ejectment,  alleging  that  they  are  re- 
ceiving the  rents  and  profits ;  that  the  property  is  depreciating 
in  value;  that  there  is  no  judge  of  the  United  States  court  in 
office,  and  that  the  proceedings  in  certiorari  are  merely  a  pre- 
tense to  maintain  a  harassing  litigation  for  the  purpose  of 
keeping  possession  of  the  premises  and  enjoying  the  rents. 
Such  a  state  of  facts  presents  a  case  requiring  that  the  rents 
and  profits  shall  be  held  by  some  indifferent  person,  under 
security,  until  the  title  can  be  determined  and  the  rights  of  the 
respective  parties  adjusted.  And  the  case  is  regarded  as  fall- 
ing within  that  class  of  cases  in  which  a  court  of  equity  will 
interpose  for  the  protection  of  parties  when  no  adequate  remedy 
exists  at  law^'^^ 

§  578.  When  granted  over  leasehold  interest.  The  ju- 
risdiction of  equity  by  the  appointment  of  receivers  of  the  rents 
and  profits  accruing  from  real  property  is  not  confined  to  cases 
where  the  estate  or  interest  sought  to  be  protected  is  the  fee 
simple,  but  extends  also  to  leasehold  interests,  over  which  a 
receiver  may  be  granted  in  proper  cases.  And  when  a  leasehold 
interest  in  lands  is  conveyed  to  a  trustee  in  trust  to  secure  an  in- 
debtedness due  to  creditors  of  the  lessee  or  assignor,  but  such 
trustee  declines  to  undertake  the  performance  of  the  trust,  a 
receiver  may  be  appointed  in  behalf  of  the  creditors  to  carry 
into  execution  the  trusts  of  the  deed  under  the  direction  of  the 
court. "^^     And  a  receiver  may  be  appointed,  before  answer, 

74  Collier  v.  Sapp,  49  Ga.,  93.  76  Taylor  v.   Emerson,  6  Ir.  Eq., 

75  Frisbee    v.    Timanus,    12    Fla.,      224. 
300. 


CHAP.    XEV.]  REAL    PROPERTY.  743 

over  a  leasehold  interest  of  a  minor,  when  there  is  danger  of 
eviction  for  non-payment  of  rents  due  to  the  landlord,  and 
when  it  is  manifestly  for  the  minor's  benefit  that  the  relief 
shall  be  granted."^"^  So  where  one  has  advanced  money,  with 
the  consent  of  the  owner  of  a  leasehold,  to  redeem  the  lands 
from  eviction  under  a  judgment,  he  acquires  an  equitable 
lien,  and  may  have  a  receiver  for  its  protection  when  there  is 
danger  of  eviction  by  the  landlord  for  non-payment  of  rent 
due."^^  And  on  a  bill  against  a  tenant  for  life,  to  restrain  the 
disposal  of  the  property  and  to  keep  down  assessments  and 
taxes  thereon,  it  is  proper  for  the  court,  on  being  satisfied  that 
the  tenant  for  life  in  possession  has  permitted  the  taxes  to  be 
in  arrears,  to  appoint  a  temporary  receiver  of  so  much  of  the 
rents  and  income  as  may  be  necessary  to  pay  off  the  taxes  due 
and  in  arrear,  unless  defendant  shall  within  a  specified  time 
pay  such  taxes. '''^ 

§  579.  Assignee  of  lease  not  entitled  to  receiver.  Not- 
withstanding the  aid  of  a  receiver  is  thus  freely  granted  for 
the  preservation  of  leasehold  interests,  in  proper  cases,  an  as- 
signee of  the  lease  is  not  entitled  to  a  receiver,  although  en- 
titled to  the  rents  accruing  from  the  demised  premises,  since  he 
acquires  no  lien  by  virtue  of  the  assignment,  and  has  no  interest 
or  title  in  the  land  sufficient  to  warrant  the  aid  of  equity.  Nor 
is  the  right  of  such  an  assignee  to  have  a  receiver  strengthened 
by  the  fact  that  he  also  claims  to  be  the  owner  of  the  estate 
in  remainder,  since  no  legal  or  equitable  claim  to  have  the  rents 
sequestered  and  put  into  the  hands  of  a  receiver  can  arise 
from  an  accidental  union  of  the  ownership  of  the  term  for 
years  and  the  estate  in  remainder  in  the  same  person. ^^^ 

§  580.  Not  granted  over  house  on  leased  ground  be- 
cause of  insolvency  of  defendant  in  possession.    When  the 

77  Whitelaw  v.  Sandys,  12  Ir.  Eq.,  vails    in    Michigan.      See    Jenks    v. 
393.  Horton,  96  Mich.,  13,  55  N.  W.,  372. 

78  Fetherstone   v.    Mitchell.   9   Ir.  80  Huerstcl    v.    Lorillard,    7    Rob. 
Eq.,  480.  (N.  Y.),  251,  affirming  S.  C,  6  Rob. 

79  Cairns  v.  Chabert.  3  Edw.  Ch.,  (N.  Y.),  260. 
312.     But   a  different   doctrine  pre- 


744  RECEIVERS.  [chap.  XIV, 

litigation  concerns  the  title  to  a  chattel  real,  as  in  the  case  of  a 
house  standing  upon  leased  ground,  it  is  not  sufficient  cause 
for  putting  the  property  into  the  hands  of  a  receiver,  that  the 
defendants,  who  are  in  possession  under  claim  of  title,  are  al- 
leged to  be  insolvent,  and  that  they  have  suffered  the  ground 
rent  to  fall  greatly  in  arrear.^i 

§  581.  Landlord  may  re-enter  on  expiration  of  term; 
discharge  of  receiver.  When  a  receiver  has  been  appoint- 
ed over  a  leasehold  interest  in  lands,  on  the  expiration  of  the 
term  for  which  the  lands  were  demised  the  landlord  is  at  liberty 
to  re-enter  into  possession  without  obtaining  leave  of  court 
for  that  purpose.^2  g^t  when,  in  such  a  case,  a  motion  is  made 
to  discharge  the  receiver  as  to  that  portion  of  the  premises  the 
lease  of  which  has  expired,  defendant  in  the  action  should  be 
served  with  notice  of  such  motion. ^^ 

§  582.  When  same  receiver  extended  to  subsequent  ap- 
plications. A  court  of  equity  will  not,  ordinarily,  appoint 
different  receivers  over  the  same  real  estate,  the  proper  course 
being,  where  one  is  already  appointed  and  subsequent  applica- 
tions are  made  for  a  receiver  over  the  same  estate,  to  extend 
the  former  receiver  to  the  subsequent  applications.  And  upon 
being  so  extended,  he  will  be  required  to  give  additional  se- 
curity, or,  in  default  thereof,  he  will  be  removed  and  another 
appointment  made.^*  And  when  different  receivers  have  been 
appointed,  on  the  application  of  different  creditors,  over  the 

81  Kipp   V.    Hanna,   2   Bland,   26.  turned  out  of  possession,  but  must 

Bland,  Chancellor,  says,  p.  31  :     "A  see   some    imminent    danger   to   the 

receiver   may   be   appointed   against  property  and  the  intermediate  rents 

the   legal   title  in  a   strong  case  of  and  profits,  from  not  acting  rather 

fraud,  combined  with  danger  to  the  prematurely,    and    if    the    property 

property.     In   such   case,   the   court  should  not  be  taken  under  the  care 

may,  on  affidavits,  interfere  before  of  the  court."     And  see  Horner  v. 

the  hearing.     But  the  court  inter-  Bell,  105  Md.,  113,  66  Atl.,  39. 

poses     by     appointing     a     receiver  82  Britton  v.  M'Donnell,  5  Ir.  Eq., 

against  the  legal  title  with  reluct-  275. 

ance.     It  must  not  only  be  morally  8.3  Johnston  v.   Henderson,   8   Ir. 

sure  that   at  the   hearing  the  party  Eq.,  521. 

would  upon  those  circumstances  be  84  Wise  v.  Ashe,  1  Ir.  Eq.,  210. 


CHAP.    XIV.]  REAL    PROPERTY.  745 

same  estate  and  property  of  defendant,  the  hardship  and  ex- 
pense of  such  a  state  of  facts,  as  against  the  owner  of  the  estate, 
are  sufficient  grounds  to  warrant  the  court  in  removing  all  the 
receivers  but  one,  and  extending  him  over  the  entire  estate.^^ 
But,  while  a  receiver  over  real  property,  appointed  for  the  pro- 
tection of  creditors,  is  frequently  extended  in  aid  of  other  cred- 
itors, this  will  not  be  done  before  answer  merely  upon  consent 
of  defendant,  when  the  effect  of  thus  extending  the  receiver 
would  be  to  prejudice  rights  of  the  creditors  first  obtaining  a 
receiver  of  the  rents  of  the  premises.^^ 

§  583.  Right  to  rents  as  affected  by  order  extending  re- 
ceiver. When  a  receiver  over  the  real  property  of  a  de- 
fendant debtor  is  thus  extended,  for  the  benefit  of  other  parties 
claiming  an  interest  in  the  debtor's  estate,  the  extension,  as  re- 
gards the  parties  on  whose  application  it  is  made,  is  deemed  a 
new  appointment,  and  rents  received  before  the  extending  order 
are  for  the  benefit  of  those  only  who  are  entitled  to  relief  in  the 
proceeding  in  which  the  receiver  was  acting  when  such  rents 
came  to  his  hands.  The  extending  order,  therefore,  attaches 
only  the  rents  thereafter  received,  for  the  benefit  of  parties  ob- 
taining relief  in  the  proceeding  to  which  the  receiver  is  extend- 
ed.87 

§  584.  Receiver  in  behalf  of  cestui  que  trust  as  against 
trustees.  When  real  estate  has  been  conveyed  to  trustees, 
to  hold  and  manage  and  receive  the  rents  for  the  benefit  of  the 
cestui  que  trust,  a  child  of  the  grantor,  if  disputes  and  dis- 
sensions arise  among  the  trustees  as  to  the  management  of  the 
property,  in  consequence  of  which  the  rents  are  not  collected, 
the  cestui  que  trust  is  entitled  to  a  receiver  to  secure  the  re- 
covery of  arrears  of  rent  due,  and  the  punctual  payment  of  the 
accruing  rents. ^^     But  when  plaintiff  seeks  the  appointment 

85  Kelly  v.  Rutledge,  8  Ir.  Eq.,  nauze  v.  Belfast,  Holywood  & 
228.  Bangor  R.  Co.,  id.,  454. 

86  Brown  v.  Nolan,  10  Ir.  Eq.,  57.  »8  Wilson  v.  Wilson,  2  Keen,  249. 

87  Agra  &  Masterman's  Bank  v.  As  to  the  circumstances  which  will 
Barry,    Ir.    Rep.,    3    Eq.,    443;    La-  warrant   a   receiver   npon   a   bill   to 


746  RECEIVERS.  [chap.  XIV. 

of  a  receiver  over  property  in  the  hands  of  defendants,  aheging 
that  they  hold  it  in  trnst  for  him,  a  denial  of  the  trnst  does  not 
of  itself  render  it  necessary  to  appoint  a  receiver  on  the  estab- 
lishment of  the  trust.  Under  such  circumstances,  if  no  ground 
of  apprehension  is  shown  that  loss  may  occur  by  permitting 
the  property  to  remain  in  its  appropriate  use  in  the  occupancy 
of  defendant,  and  his  ability  to  respond  for  its  use  is  admitted, 
and  he  has  already  been  ordered  by  the  court  to  account  for  the 
rents  and  prohts  that  he  may  have  received,  a  receiver  will  be 
refused. ^^ 

§  585.  Relief  granted  for  protection  of  rent  charge.  Re- 
ceivers are  sometimes  granted  over  real  property  for  the  pro- 
tection of  equitable  .incumbrancers,  or  creditors  whose  de- 
mands are  a  charge  upon  the  property,  when  the  aid  of  equity 
is  necessary  for  the  protection  of  their  rights.  And  when 
plaintiff  in  an  action  to  raise  the  arrears  of  a  rent-charge,  due 
him  out  of  defendant's  real  estate,  obtains  a  decree  for  a  sale 
of  the  property,  but  defendant  obstructs  the  decree,  and  does 
not  comply  with  the  requirement  of  court  to  produce  his  deeds, 
thus  preventing  a  sale  of  the  property,  a  receiver  may  be  al- 
lowed.^0  So  it  would  seem,  where  a  person  takes  a  conveyance 
of  a  legal  estate,  subject  to  certain  prior  equitable  interests 
consisting  of  rent-charges  thereon,  if  he  refuses  to  satisfy  such 
claims,  that  a  receiver  may  be  appointed  upon  application  of 
the  person  entitled  to  the  rent-charges.^l  And  when  a  re- 
ceiver is  sought  of  the  rents  and  profits  of  real  property,  by  an 
equitable  creditor  or  incumbrancer,  having  a  charge  upon  the 
property,  but  having  no  right  of  entry  or  possession,  if  the 
court  is  satisfied  in  the  preliminary  stage  of  the  cause  that  the 
relief  sought  by  the  bill  will  be  given  when  the  final  decree  is 
pronounced,  it  will  not  expose  parties  claiming  such  relief  to 

set  aside  a  deed  of  trust  executed  by  v.  Edsall.  3  Halst.  Ch.,  298;  S.  C,  4 

an  incompetent  person,  over  whose  Halst.  Ch.,  141. 

affairs    a    guardian    has    been    ap-  f>0  Shee  z;.  Harris,  1  Jo.  &  Lat.,  91. 

pointed,  see  Hodges  ?'.   McDuff.  69  ^1  Pritchard      V.      Fleetwood,      1 

Mich..  76.  36  N.  W.,  704.  Meriv.,  54. 
89  Hamburgh    Manufacturing   Co. 


CHAP.    XIV.]  REAL    PROPERTY.  747 

the  danger  of  losing  the  rents  by  not  appointing  a  receiver. 
But  when,  in  such  case,  the  amount  due  plaintiff  from  defend- 
ant is  tendered  and  accepted,  the  receiver  previously  appointed 
will  be  discharged. ^2 

§  586.  Denied  plaintiff  in  suit  to  enforce  mechanic's  lien. 
In  New  York,  it  is  held  that  the  plaintiff  in  an  action  for  the 
foreclosure  of  a  mechanic's  lien,  under  the  laws  of  the  state, 
is  not  entitled  to  a  receiver  of  the  rents  and  profits  of  the 
property  pendente  lite,  even  though  it  is  alleged  that  the  owner 
of  the  premises  is  insolvent  and  is  collecting  the  rents,  and  that 
there  are  prior  incumbrances  on  the  property,  the  interest  on 
which  the  owner  neglects  to  pay.^^ 

§  587.  Granted  in  aid  of  proceedings  in  bankruptcy.  A 
special  receivership  for  the  purpose  of  collecting  rents  accruing 
out  of  real  estate,  is  sometimes  necessary  in  aid  of  proceedings 
in  bankruptcy.  And  although  the  courts  seem  to  be  averse 
to  appointing  receivers  in  such  proceedings,  yet  if  it  is  manifest 
that  the  apparent  titles  to  property,  in  which  the  bankrupt 
estate  is  interested,  are  on  their  face  such  that  the  rents  can 
not,  under  the  usual  warrant  in  bankruptcy,  be  efficiently  and 
successfully  collected,  a  receiver  will  be  allowed.^*  And  a  cir- 
cuit court  of  the  United  States,  upon  a  bill  for  that  purpose  by 
the  assignee  in  bankruptcy,  will  appoint  a  receiver  to  take 
charge  of  the  real  estate  owned  by  the  bankrupt  to  which  there 
are  conflicting  claims  and  liens,  which  are  before  the  court  for 

92  Davis  V.  Duke  of  Marlborough,  Stone  v.  Taylor,  173  111.,  147,  50  N. 

2  Swans.,  138.  E.,  688,  it  was  held  that  in  the  ab- 

03  Meyer  v.  Seebald,  11  Ab.  Pr.,  sence  of  statutory  authority  the 
N.  S.,  326,  note.  But  see,  contra,  plaintiff  in  a  proceeding  to  foreclose 
Webb  V.  Van  Zandt,  16  Ab.  Pr.,  a  mechanic's  lien  was  not  entitled  to 
314,  note,  which  was  a  case  in  the  a  receiver  and  that  the  act  of  June 
New  York  Common  Pleas,  holding  26,  1895,  which  provided  for  rcceiv- 
that  an  injunction  and  a  receiver  ers  in  such  proceedings,  had  no  ap- 
might  be  granted  in  such  an  action,  plication  to  an  action  instituted  be- 
but  that  if  plaintiff  had  instituted  fore  the  passage  of  the  act  although 
another  action  to  recover  the  same  the  action  might  be  pending  at  the 
indebtedness,  he  would  be  allowed  a  lime  of  its  passage, 
receiver  only  upon  condition  of  his  ^4  Kcenan  v.  Shannon,  9  Bank. 
tliscontinuinG;  such  other  action.     In  Reg.,  441. 


74S  RECEIVEKS.  [chap.  XIV. 

adjustment,  such  a  case  being-  regarded  as  an  eminently  propcr 
one  for  a  receiver  to  take  charge  of  the  property,  until  the 
validity  of  the  liens  may  be  determined,  in  order  that  the  in- 
terests of  all  creditors  may  be  properly  secured.^s  And  in 
England,  the  assignee  of  an  insolvent  debtor,  who  is  prevent- 
ed from  recovering  an  estate  owned  and  in  possession  of  the 
debtor  by  reason  of  former  proceedings  in  bankruptcy  against 
him,  may  maintain  a  bill  in  chancery  to  recover  the  property, 
upon  which  he  may  procure  a  receiver  of  the  rents  pendente 
lite.^^ 

§  588.  Granted  in  action  to  apply  trust  property  in 
payment  of  debts  equal  in  priority.  When  the  purpose  of 
the  litigation  is  to  apply  certain  trust  property  in  payment  of 
an  indebtedness  secured  by  deed  of  trust  upon  the  property, 
and  there  are  conflicting  claims  to  be  satisfied,  which  are  of 
equal  justice  and  merit  in  themselves,  so  that  the  question 
presented  is  as  to  who  is  entitled  to  prior  satisfaction  in  the 
event  of  the  property  proving  insufficient  for  all,  a  proper  case 
is  presented  to  warrant  a  receiver  for  the  management  of  the 
property.  ^''^ 

§  589.  Nature  of  defendant's  interest  in  real  property; 
benefice  of  clergyman.  With  regard  to  the  nature  or  ex- 
tent of  a  defendant's  interest  in  realty  necessary  to  warrant  a 
court  of  equity  in  appointing  a  receiver  thereof,  at  the  suit 
of  an  incumbrancer,  it  is  held  in  England,  that  where  defend- 
ant's right  or  estate  is  such  that  his  creditors  may  have  execu- 
tion against  it  by  writs  of  elegit,  a  sufficient  interest  is  shown  to 
justify  the  appointment  of  a  receiver.^^  And  under  the  former 
practice  in  England,  receivers  were  allowed  over  the  benefice 
of  a  clergyman  of  the  established  church,  when  he  had  made  the 
debt  on  which  the  proceedings  were  instituted  a  charge  upon 
his  benefice.^^ 

^5  }kIcLean  v.   Lafayette   Bank,  3  98  Davis  v.  Duke  of  Marlborough, 

McLean,  503.  1  Swans.,  74. 

OGHollis  V.  Bryant,  12  Sim.,  492.  99  White  v.   Bishop  of  Peterbor- 

9"  Hamberlain  u  Marble,  24  Miss.,  cugh,     3     Swans.,     109;     Silver    v. 

586.  Bishop  of  Norwich,  id.,  112,  note. 


CHAP.    XIV.]  REAL    PROPERTY.  749 

§  590.  When  refused  over  ungathered  crop;  when  al- 
lowed. As  regards  the  right  to  a  receiver  of  crops  grown 
upon  leased  premises,  it  is  held  that  a  mere  contract  between 
the  owner  of  land  and  a  tenant,  providing  for  the  working 
of  the  land  by  the  tenant  for  a  specified  time,  and  compensation 
to  be  paid  the  owner  out  of  the  crops  raised  thereon,  does  not 
give  the  owner  such  equities  as  to  entitle  him  to  an  injunction 
against  the  removal  of  the  crops  by  the  tenant,  or  a  receiver 
to  manage  the  land  and  take  possession  of  the  ungathered 
crop.i  But  when  by  the  terms  of  the  lease  the  parties  are,  in 
effect,  tenants  in  common  of  the  crop,  and  the  lessee  denies  the 
right  of  the  lessor  to  any  portion  thereof  and  threatens  to  re- 
move and  dispose  of  it  for  his  own  use,  such  facts,  coupled  with 
the  insolvency  of  the  lessee,  will  justify  a  receiver  at  the  suit 
of  the  lessor. 2  And  when  the  litigation  concerns  the  title  to 
land,  which  is  claimed  by  both  parties,  both  also  claiming  to- 
be  in  possession,  and  when  they  are  interfering  with  each  other 
in  harvesting  the  crops  grown  by  each  respectively  and  threat- 
ening each  other  with  assaults  and  with  forcible  resistance, 
an  appropriate  case  is  presented  for  a  receiver  until  the  rights 
of  the  parties  can  be  finally  determined.^ 

§  591.  Refused  in  cases  of  marriage  settlements;  when 
allowed  after  divorce.  When,  upon  her  marriage,  certain 
moneys  are  settled  upon  a  wife  for  her  separate  use  and  benefit, 
being  vested  in  trustees  for  that  purpose,  to  be  by  them  invested 
in  securities,  and  the  husband  afterward  induces  the  trustees, 
in  violation  of  their  trust,  to  invest  the  money  in  realty,  upon 
which  he  expends  money  in  improvements  and  repairs,  the 
husband  will  not  be  allowed  a  receiver  of  the  rents  and  profits 
on  a  bill  filed  by  him  against  the  wife  and  the  trustees,  to  re- 
imburse him  for  his  outlay."*  And  when  plaintiff's  rights  were 
under  a  marriage  settlement,  whereby  he  claimed  his  wife's 
fortune  to  be  a  charge  upon  the  fee  of  defendant's  estate,  and 

1  Williams  v.  Green,  37  Ga.,  37.  3  Hlawacek  v.  Bohman,  51   Wis., 

2  Baughman  v.  Reed,  75  Gal.,  319,      92,  8  N.  W.,  102. 

17  Pac,  222.  4  wiles  v.  Cooper,  9  Beav.,  294. 


750  RECEIVERS.  [chap.  XIV. 

defendant  had  neglected  to  pay  the  interest  due,  it  was  held 
not  to  be  such  a  case  as  to  justify  a  receiver;  since,  if  plaintiff 
should  establish  at  the  hearing  that  his  claim  was  a  charge  upon 
the  fee,  he  would  be  entitled  to  sell  the  inheritance,  and  the  fund 
not  being  shown  to  be  insufficient,  the  court  refused  to  interfere 
i)i  limine.^  But  when  husband  and  wife  entered  into  an  agree- 
ment that  they  should  mutually  enjoy  and  share  certain  real 
estate,  and  the  wife  afterward  procured  a  divorce  from  the 
husband,  upon  a  bill  by  her  alleging  that  the  husband  was  in 
the  sole  occupancy  of  the  property  and  enjoying  all  the  rents, 
and  that  he  was  insolvent  and  unable  to  respond  in  damages, 
a  receiver  was  granted,  and  was  directed  to  pay  half  the  rents 
to  the  husband  and  to  retain  the  other  half  to  await  the  final 
decree.^ 

§  592.  Difficulty  in  collection  of  rent  no  ground  for  re- 
ceiver. It  has  already  been  shown  that  a  defendant's  pos- 
session of  real  property,  under  claim  of  title,  will  not  be  dis- 
turbed by  a  receiver  when  adequate  relief  may  be  had  in  the 
usual  forms  of  procedure  at  law.  And  the  mere  fact  of  diffi- 
culties existing  in  the  way  of  enforcing  the  ordinary  legal  rem- 
edies to  compel  payment  of  rent  due  upon  premises  demised, 
is  not,  of  itself,  sufficient  to  give  a  court  of  equity  jurisdiction 
to  appoint  a  receiver,  when  those  remedies  are  still  open  to  the 
party  aggrieved.'^ 

§  593.  Plaintiff's  acquiescence,  and  participation  in 
fraud,  a  bar  to  relief.  It  is  in  all  cases  essential  that  a 
plaintiff,  seeking  the  aid  of  a  receiver  over  real  property, 
should  use  due  diligence  in  the  assertion  of  his  rights,  since 
long  acquiescence  in  defendant's  possession  may  suffice  to  bar 
him  from  the  relief  to  which  he  might  otherwise  be  entitled. 
And  when  a  shareholder  in  a  corporation  seeks  a  receiver  over 

5  Drought  V.  Percival,  2  Mol.,  502.       ceeding  for  alimony,  see  Holmes  v. 

6  Baggs  V.  Baggs,  55  Ga.,  590.    As       Holmes,  29  N.  J.  Eq.,  9. 

to   the   circumstances    under   which  7  Cremen   v.    Hawkes,   8   Ir.    Eq., 

a    receiver    may    be    allowed    over      153,  affirmed  on  appeal,  id.,  503. 
property  of  the  husband  in  a  pro- 


CHAP.    XIV.]  REAL    PROPERTY.  751 

real  property  held  by  a  defendant,  alleging  it  to  be  the  property 
of  the  corporation,  but  plaintiff  has  acquiesced  in  defendant's 
possession  and  use  of  the  property  for  a  number  of  years  with- 
out question  or  remonstrance,  and  shows  no  danger  on  the 
ground  of  defendant's  responsibility,  he  will  not  be  allowed  a 
receiver.  And  when,  in  such  a  case,  it  appears  that  the  proper- 
ty over  which  a  receiver  is  sought  was  accumulated  through 
fraud  on  the  part  of  the  corporate  authorities,  of  which  plain- 
tiff, as  a  shareholder,  was  fully  cognizant,  and  in  which  he  had 
acquiesced  without  complaint  for  several  years,  his  applica- 
tion is  properly  refused.^ 

§  594.  Granted  when  property  has  escheated  to  state. 
A  receiver  may  be  appointed  of  the  rents  and  profits  of  real 
estate  which  is  found  to  have  escheated  to  the  state,  upon  a 
proceeding  instituted  by  the  state  for  that  purpose,  when  it  is 
shown  that  the  relief  is  necessary  for  the  purpose  of  collecting 
the  rents  forthwith,  which  would  otherwise  be  lost.^ 

§  595.  Refused  on  defendant  paying  rents  and  profits 
into  court.  It  would  seem  to  be  proper,  on  an  application 
for  a  receiver  over  real  property,  when  the  defendant,  against 
whose  possession  the  receiver  is  sought,  consents  to  pay  the 
rents  and  profits  into  court,  to  refuse  the  application  for  a  re- 
ceiver. ^^ 

§  596.  One  not  party  to  the  cause  can  not  object;  re- 
mainder-man and  tenants  can  not  restrain  receiver  from 
turning  them  out  of  possession.  One  who  is  not  a  party  to 
the  action,  although  claiming  certain  lands  which  are  subject 
to  the  receivership,  can  not  be  heard  to  show  cause  against 
making  a  conditional  order  for  the  receiver  absolute,  his 
proper  method  of  redress  being  by  application  to  the  court  to 
remove  the  receiver  as  to  such  lands  as  he  claims.^  And  a 
motion  by  a  remainder-man  and  by  tenants  of  premises,  which 
had  been  placed  in  the  hands  of  a  receiver,  to  restrain  him  from 

SHager  v.  Stevens,  2  Halst.  CIi.,  ^^Prcbble  v.  Boglnirst,  1  Swans., 

374.  309. 

9  People  V.  Norton,  1  Paige,  17.  ^1  Creed  v.  Mootq,  4  Ir.  Eq..  684. 


752  RECEIVERS.  [chap.  XIV. 

turning-  them  out  of  possession,  was  refused  on  the  ground 
that  their  interest  Avas  insufticient  to  sustain  the  application. ^^ 

§  597.  Practice  in  placing  receiver  in  possession;  who 
responsible  for  loss  by  owner  remaining  in  possession. 
When  a  receiver  is  appointed  over  real  property  in  the  posses- 
sion of  the  owner,  the  proper  course  is  to  make  application  to 
the  court  for  an  order  directing  the  owner  to  surrender  pos- 
session to  the  receiver,  since  the  latter  can  not  distrain  upon 
the  owner  in  possession,  who  is  not  a  tenant  of  the  receiver. 
If,  therefore,  a  loss  occurs  by  reason  of  the  receiver  allowing 
the  owner  to  remain  in  possession,  it  will  be  regarded  as  the 
fault  of  the  parties  in  interest  in  the  cause  in  not  applying  for 
an  order  upon  the  owner  to  deliver  up  possession.^^ 

§  598.  When  granted  before  answer.  A  receiver  of  the 
rents  of  real  property  may  be  appointed  upon  bill  and  affidavits 
in  support  thereof,  before  answer,  in  a  case  of  emergency  re- 
quiring the  immediate  interference  of  the  court  for  the  protec- 
tion of  plaintiff's  equities.^'*  But  the  appointment  will  not  be 
made  when  the  person  in  possession  is  not  a  party  to  the  cause 
and  not  before  the  court. ^^ 

§  599.  Effect  of  appointing  receiver  over  corporation 
upon  title  to  its  real  estate.  As  regards  the  effect  of  the 
appointment  of  a  receiver  over  a  corporation  upon  the  title  to 
its  real  estate,  it  would  seem  that  when  the  appointment  is 
merely  pendente  lite,  and  no  assignment  is  executed  by  the 
corporate  body  to  the  receiver,  the  title  is  not  divested,  the 
proceedings  being  regarded  as  inchoate,  and  the  right  of  the 
receiver  as  only  a  possessory  right  for  the  purposes  of  the 
suit.^^  Where,  however,  a  receiver  is  appointed  upon  the  dis- 
solution of  a  corporation,  it  is  held  that  the  title  to  its  realty 
vests  in  the  receiver,  for  the  benefit  of  creditors  and  share- 
holders.l''' 


12  Wynne  v.  Lord  Newborough,  1  15  Mays  v.  Wherry,  3  Tenn.  Ch., 
Ves.  Jr.,  164.  34. 

13  Griffith  V.  Griffith,  2  Ves.,  400.  16  Montgomery     v.     Merrill,     18 
i^Woodyatt   v.   Gresley,   8   Sim.,  Mich.,  338. 

180.  17  Owen  v.  Smith,  31  Barb.,  641. 


CHAP.    XIV.]  REAL    PROPERTY.  753 

§  600.  Order  should  state  precisely  over  what  property 
receiver  is  appointed ;  appointment  may  be  over  part  only. 

It  is  important  that  the  order  appointing  a  receiver  over  real 
property  should  state  distinctly  and  clearly  the  particular  prop- 
erty over  which  he  is  appointed.  And  when  it  is  so  indefinite 
in  this  respect  that  it  does  not  appear  what  property  is  subject 
to  the  receiver's  control,  the  court  will  not  enjoin  the  real 
owner  from  interfering  with  the  property  or  collecting  its 
rents.  18  But  cases  are  sometimes  met  with  in  the  books,  where 
a  receiver  has  been  appointed  over  a  portion  of  the  real  estate 
in  controversy,  and  not  over  the  whole.^^ 

§  601.  When  plaintiff  entitled  to  funds  in  receiver's  pos- 
session. When  a  receiver  is  appointed  to  take  charge  of 
the  proceeds  arising  from  real  estate,  pending  litigation  con- 
cerning the  right  thereto,  and  judgment  is  finally  rendered  for 
plaintiff,  he  is  entitled  to  an  order  of  court  directing  the  re- 
ceiver to  deliver  the  funds  into  his  possession.  And  upon  an 
application  for  such  order,  the  court  will  not  presume  that  the 
receiver  transcended  his  authority,  and  will  not  grant  a  refer- 
ence to  a  jury  or  referee,  to  determine  how  much  of  the  fund 
rightfully  belongs  to  plaintiff,  or  to  ascertain  who  is  entitled 
to  the  money  in  the  receiver's  hands. ^^ 

§  602.  Real  estate  subject  to  judgment  and  execution 
on  termination  of  receiver's  functions.  Since  the  right  of 
a  receiver  can  not  outlast  the  action  in  which  he  was  appointed, 
nor  be  used  for  any  purpose  not  justified  thereby,  it  is  held  that, 
upon  the  termination  of  the  receiver's  functions,  when  no  as- 
signment was  made  of  his  real  estate  by  the  defendant  to  the 
receiver,  the  real  estate  is  subject  to  the  lien  of  a  judgment  and 
execution  against  the  defendant  to  the  same  extent  as  if  there 
had  been  no  receivership.^i 

18  Crow  V.  Wood,  13  Beav.,  271.  21  Montgomery     v.     Merrill,     18 
And  see,  ante,  §  87.                                 Mich.,  338. 

19  Calvert  v.   Adams,  Dick.,  478. 

20  Whitney  v.  Buckman,  26  Cal., 
447. 

Receivers — 48. 


754  RECEIVERS.  [chap.  XIV. 

§  602(7.  When  receiver  allowed  against  plaintiff  suing 
in  forma  pauperis.  The  power  of  a  court  of  equity  to  take 
possession,  through  a  receiver,  of  property  which  is  hable  to 
waste  and  irremediable  loss,  if  suffered  to  remain  in  the  pos- 
session of  a  defendant  pending  a  litigation  as  to  its  title,  may 
also  be  exercised  against  a  plaintiff  who  has  taken  possession 
from  defendant  and  whose  possession  threatens  similar  injury 
to  the  property.  And  when  plaintiff,  suing  in  forma  pauperis 
for  the  recovery  of  land,  during  the  pendency  of  the  action 
takes  possession  of  a  portion  of  the  premises  and  resists  their 
reoccupation  by  defendants  claiming  tide  thereto,  a  receiver 
may  be  had  upon  the  application  of  defendants  to  take  pos- 
session of  the  usurped  premises  and  to  secure  their  rents  until 
the  determination  of  the  cause. 22 

22  Horton  v.  White,  84  N.  C.  297. 


CHAP.    XIV.]  REAL    PROPERTY.  755 

II.  Receivers  as  Between   Tenants  in   Common. 

§  603.     Courts   averse   to  interfering  as  between  tenants  in  common; 
ill-will  and  hostility. 

604.  Exclusion    of    co-tenants    by    insolvent    tenant    in    possession, 

ground  for  relief. 

605.  When  receiver  allowed  over  part  of  joint  property;  injunction 

allowed;  receiver  in  default  of  security  by  defendant. 

606.  Receiver   granted   over   colliery   because   of  difficulty   between 

joint  tenants  as  to  its  management;  gold  mine. 

607.  When  granted  in  suits  for  partition. 

608.  Notice  to   under-tenants   not  to  pay  rents  to   co-tenants   entitled 

thereto,  no  ground  for  receiver. 

§  603.  Courts  averse  to  interfering  as  between  tenants 
in  common;  ill-will  and  hostility.  As  between  tenants  in 
common  or  joint  owners  of  real  property,  courts  of  equity 
manifest  the  same  aversion  to  the  appointment  of  receivers  as 
in  other  cases  where  the  jurisdiction  is  invoked  against  a  de- 
fendant in  possession,  under  claim  of  title,  in  a  controversy  con- 
cerning the  right  to  the  disputed  property.  And  it  may  be  stat- 
ed as  a  general  rule,  that  a  receiver  will  not  be  appointed,  as 
between  tenants  in  common  of  realty,  unless  a  case  is  presented 
amounting  to  an  exclusion  by  the  defendant  of  his  co-tenants 
from  the  enjoyment  or  possession  of  the  property.23  And  when 
the  application  for  a  receiver  was  founded  on  an  affidavit  of 
improper  management  by  the  defendant,  and  of  a  reservation 
of  the  profits  not  amounting  to  an  exclusion  of  his  co-tenants, 
which  was  met  by  counter-affidavits  of  a  balance  due  to  de- 
fendant on  an  unsettled  account,  and  an  agreement  for  a  refer- 
ence to  arbitration,  the  charges  of  improper  management  be- 
ing also  denied,  it  was  held  that  no  case  was  presented  for  a 
receiver.24  So  a  feeling  of  ill-will  and  hostility  between  ten- 
ants in  common  will  not  justify  the  appointment  of  a  receiver 
where  it  does  not  result  in  depriving  one  or  the  other  of  the 
proper  use  and  enjoyment  of  the  property.^s 

23  Milbank    v.    Revett,    2    Meriv.,  24  Milbank    v.    Revett,    2    Meriv., 

405 ;  Vaughan  v.  Vincent,  88  N.  C,  405. 

116;  Cassetty  ?7.  Capps,  3  Tenn.  Ch.,  25  Lamaster    v.    Elliott,    53    Neb., 

524.      And    see    Heinze    v.    Klein-  424,  73  N.  W.,  925. 
Schmidt,  25  Mont.,  89,  63  Pac,  927. 


756  RECEIVERS.  [chap.  XIV. 

§  604.  Exclusion  of  co-tenants  by  insolvent  tenant  in 
possession,  ground  for  relief.  Where,  however,  one  ten- 
ant in  common  is  in  possession  of  the  property  and  in  receipt 
of  the  entire  rents  and  profits,  exchiding  his  co-tenants  from  all 
participation  therein,  a  stronger  case  is  presented  for  relief  in 
equity,  especially  when  the  defendant  in  possession  is  insolvent 
and  unable  to  respond  in  damages ;  and  in  such  cases,  the 
right  to  a  receiver  in  behalf  of  the  tenant  excluded  is  regarded 
as  well  established. 26  Thus,  where  a  tenant  in  common  of 
valuable  mill  property,  who,  in  addition  to  his  interest  as  a  co- 
tenant,  also  claims  a  vendor's  Hen  for  a  portion  of  the  property 
sold  by  him  to  defendants,  shows  by  his  bill  that  the  defend- 
ants, his  co-tenants,  are  in  possession  and  receiving  the  profits, 
which  they  refuse  to  share  with  the  plaintiff,  and  that  they  are 
managing  the  property  in  so  careless  a  manner  that  the  mills 
are  losing  much  of  their  custom,  and  that  they  are  wholly  in- 
solvent, except  as  to  their  interest  in  the  property  in  question, 
a  clear  case  is  presented  for  the  aid  of  a  receiver.  In  such  a 
case,  the  relief  is  based  largely  upon  the  inadequacy  of  the 
remedy  at  law  for  the  protection  of  plaintiff  in  his  right  to  the 
profits,  while  the  property  remains  in  defendant's  possession. ^^ 

26  Williams    v.    Jenkins,    11    Ga.,  in   an   undivided   one-eighteenth   of 

595.     And   see   Street  v.   Anderton,  certain  oil   lands   was   entitled  to  a 

4  Bro.  C.  C,  414;  Sandford  v.  Bal-  receiver      pending      a      proceeding 

lard.  30  Beav.,  109.     But  see  Tyson  brought     to     determine     plaintiff's 

V.    Fairclough,   2    Sim.   &   St.,    142,  rights  to  the  property, 

where  a   doubt  is   expressed  as  to  27  Williams    v.    Jenkins,    11    Ga., 

whether  even  an  actual  exclusion  of  595.        Mr.      Justice      Warner      for 

one   tenant   in   common   by  another  the     court      says,     p.      598:        "Do 

constitutes    ground    for    a    receiver,  the    allegations    in    this    bill    show 

since  if  the  exclusion  amounts  to  an  that    the    discretion    of    the    chan- 

ouster  at  law,  the  party  aggrieved  cellor     in     the     appointment     of    a 

may   assert   his    legal   title   at   law;  receiver     was     properly    exercised? 

and   if  not   such   an   exclusion,   the  The     complainant     is     the     owner 

court   would   compel   the   tenant   in  of      one-third      part      of      valuable 

common  in  receipt  of  the  rents  to  property   consisting   of  a   saw   and 

account  to  his  co-tenant.     In  Hig-  grist  mill,  as  a  tenant  in  common 

gins   Oil   &   Fuel   Co.   v.    Snow,   51  with    the    defendants,    who    are    in 

C.  C.  A.,  267,  113  Fed.,  433,  it  was  possession  of  the  same,  which  is  of 

held  that  the  owner  of  a  life  estate  the    annual    value    of    one    or    two 


CHAP.    XIV.] 


REAL    PROPERTY. 


757 


§  605.  When  receiver  allowed  over  part  of  joint  prop- 
erty ;  injunction  allowed ;  receiver  in  default  of  security  by 
defendant.  As  regards  the  extent  of  the  receivership,  in 
the  class  of  cases  under  consideration,  it  is  held  that  a  plain- 
tiff, claiming  a  moiety  of  an  estate  as  a  tenant  in  common  with 
defendant,  may  have  a  receiver  of  the  rents  and  profits  of  such 


thousand  dollars.  The  complain- 
ant alleges  the  bad  management  of 
the  mills  by  the  defendants;  their 
intention  to  defraud  him,  as  mani- 
fested by  their  various  acts,  which 
the  complainant  specifically  alleges, 
and  that  they  are  insolvent,  except 
as  to  their  interest  in  the  mill  prop- 
erty ;  that  there  is  now  due  the 
complainant  for  the  original  pur- 
chase-money of  said  mills,  from  the 
defendants,  the  sum  of  $3,716. 
Assuming  the  original  price  paid 
for  the  property  to  be  its  true  value, 
(to  wit)  $5,500,  the  two-thirds 
thereof,  which  the  defendants  now 
own,  is  worth  about  the  sum  of 
$3,666,  which  is  less  than  the 
amount  of  the  original  purchase- 
money  now  due  the  complainant, 
so  that  when  the  original  purchase- 
money  shall  be  paid  to  the  com- 
plainant (for  which  he  asserts  his 
vendor's  lien),  the  defendant  will 
have  nothing  to  pay  him  for  his 
share  of  the  annual  rents  and 
profits  thereof.  The  defendants 
are  in  the  possession  and  enjoy- 
ment of  the  property,  and  refuse  to 
allow  the  complainant  to  partici- 
pate in  the  same,  in  any  manner 
whatever.  The  complainant  shows 
that  he  has  offered  to  take  posses- 
sion of  the  mills,  and  give  bond 
and  security  to  the  defendants,  to 
account  to  them  for  their  share  of 
the  profits;  or  to  let  them  continue 
in    possession    on    their    doing    the 


same,  to  account  to  him  for  his 
share  of  the  profits,  which  they 
have  refused.  The  plaintiff  in  error, 
however,  insists  that  a  court  of 
equity  will  not  interfere,  and  ap- 
point a  receiver,  at  the  instance  of 
one  tenant  in  common  against  an- 
other, who  is  in  possession,  because 
the  party  complaining  may  relieve 
himself  at  law,  by  a  writ  of  parti- 
tion. Concede  that  the  complain- 
ant in  this  case  might  have  a  writ 
of  partition  at  law,  for  his  share  of 
the  property,  what  adequate  rem- 
edy has  he  at  law,  in  the  mean- 
time, for  the  profits  of  the  mills, 
while  in  the  possession  of  the  de- 
fendants, who  are  insolvent?  We 
entertain  no  doubt  that  a  court  of 
equity  has  jurisdiction  to  appoint 
a  receiver,  at  the  instance  of  one 
tenant  in  common  against  his  co- 
tenants,  who  are  in  possession  of 
undivided  valuable  property,  re- 
ceiving the  whole  of  the  rents  and 
profits  and  excluding  their  com- 
panion from  the  receipt  of  any  por- 
tion thereof,  when  such  tenants  are 
insolvent.  2  Story's  Equity,  §  833; 
Street  v.  Anderton,  4  Brown's 
Chan.  Rep.,  415;  Milbank  v.  Revett, 
2  Merivale.  405.  The  discretion  of 
the  chancellor  in  appointing  a  re- 
ceiver, in  this  case,  was,  in  our 
judgment,  properly  exercised  ;  there- 
fore, let  the  judgment  of  the  court 
below  be  affirmed." 


758  RECEIVERS.  [CIIAP.  XIV. 

moiety,  when  defendant  is  in  possession  of  the  whole;  and 
he  may  also  have  an  injunction  to  restrain  defendant  from 
receiving  the  rents  of  such  moiety,  as  well  as  an  order  upon  the 
tenants  of  that  part  of  the  estate  to  attorn  to  the  receiver.28 
So  it  has  been  ordered  that  a  tenant  in  common  in  possession 
should  give  security  to  his  co-tenant  for  the  portion  of  rents 
due  him,  or  in  default  thereof  that  a  receiver  be  appointed. 29 
And  in  the  case  of  equitable  tenants  in  common  of  realty,  the 
legal  title  to  which  is  in  a  trustee  for  the  benefit  of  the  co-ten- 
ants, the  fact  that  the  trustee  has  put  one  of  the  co-tenants  in 
possession  will  justify  a  receiver  in  behalf  of  the  other  tenants 
over  their  own  shares,  but  not  over  the  entire  property,  since 
the  tenant  in  possession  is  entitled  to  the  possession  of  his  own 
share  of  the  property.^O  But  when  the  conduct  of  the  defend- 
ant in  possession  is  such  as  to  amount  to  an  exclusion  of  his  co- 
tenants,  they  are  entitled  upon  the  hearing  to  a  receiver  of  the 
whole  property.^l 

§  606.  Receiver  granted  over  colliery  because  of  diffi- 
culty between  joint  tenants  as  to  its  management;  gold 
mine.  While,  as  has  already  been  shown,  equity  is  gener- 
ally averse  to  extending  the  aid  of  a  receiver,  as  between  joint 
owners  or  tenants  in  common,  yet  in  cases  of  mining  property 
or  collieries,  there  would  seem,  from  the  nature  of  the  property, 
to  be  stronger  reasons  why  the  relief  should  be  allowed 
when  there  is  a  disagreement  as  to  the  management  of  the 
property,  than  in  cases  of  ordinary  real  estate.  And  where 
there  are  a  large  number  of  persons  interested  and  owning 
shares  in  mining  property,  as  in  a  colliery,  upon  a  difficulty 
between  them  as  to  the  management  of  the  property,  a  receiver 
may  be  allowed,  although  the  owners  are  tenants  in  common, 

28  Hargrave  v.  Hargrave,  9  Beav.,  29  Street  v.  Anderton,  4  Bro.   C. 

549.      See   Hoppe   v.    Fountain,    104  C,  414. 

Cal.,  94,  37  Pac,  894,  as  to  the  ap-  30  Sandford  v.  Ballard,  30  Beav., 

pointment   of   a    receiver   over    real  109. 

property    in   an    action    brought    to  31  Sandford  v.  Ballard,  33  Beav., 

foreclose  a  mortgage  given  by  a  co-  401. 
tenant  of  his  undivided  interest. 


CHAP.    XIV.] 


REAL    PROPERTY. 


759 


the  relief  being  granted  to  prevent  the  destruction  of  the  sub- 
ject-matter.32  So  in  an  action  brought  by  plaintiffs  claiming 
to  be  the  sole  owners  of  a  gold  mine,  averring  that  defendants 
have  unlawfully  entered  upon  a  mine  and  are  taking  away  the 
gold,  defendants  claiming  an  interest  as  co-tenants,  while  the 
court  may  refuse  to  enjoin  the  working  of  the  mine  upon 
grounds  of  public  policy  and  because  of  the  peculiar  nature  of 
the  property,  a  receiver  may  be  allowed  pendente  lite,  the  de- 
fendants being  of  doubtful  responsibility.^^ 

§  607.  When  granted  in  suits  for  partition.  The  aid  of  a 
receiver  is  sometimes  granted  in  actions  for  the  partition  of 
real  estate  between  tenants  in  common,  when  it  is  apparent  to 
the  court  that  the  relief  is  necessary  to  protect  all  parties  in 
interest.24    And  in  such  an  action,  when  defendants  not  only 


32  Jefferys  v.  Smith,  1  Jac.  &  W., 
298;  Ames  v.  Ames,  148  IH.,  321,  36 
N.  E.,  110;  Heinze  v.  Butte  &  B. 
C.  M.  Co.,  61  C.  C.  A.,  63,  126  Fed., 
1.  And  see  Higgins  Oil  &  Fuel  Co. 
V.  Snow,  51  C.  C.  A.,  267,  113  Fed., 
433.  In  Jefferys  v.  Smith,  1  Jac.  & 
W.,  298,  supra,  Lord  Eldon,  refer- 
ring to  a  note  of  a  case  before  Lord 
Hardwicke,  in  which  he  held  that 
a  colliery  was  in  the  nature  of 
a  trade,  persons  owning  different 
interests  in  which  were  to  be  re- 
garded as  in  the  nature  of  partners, 
and  that  the  difficulty  of  manage- 
ment gave  a  court  of  equity  juris- 
diction as  to  mesne  profits  which  it 
would  not  assume  with  regard  to 
other  lands,  observes:  "On  this 
ground,  and  on  account  of  the  pe- 
culiarity of  this  species  of  produce, 
the  court  gives  an  iniunctinn 
against  trespassers,  and  allows  a 
party  to  maintain  a  suit  for  the 
profits,  which,  in  other  cases,  it 
would  not  do.  Here  there  arc 
twenty  shares;  and  if  each  owner 
may   employ   a   manager   and   a   set 


of  workmen,  you  destroy  the  sub- 
ject altogether;  it  renders  it  impos- 
sible to  carry  it  on.  It  appears  to 
me,  therefore,  upon  general  princi- 
ples, without  reference  to  the  par- 
ticular circumstances  of  any  case, 
that  where  persons  are  concerned 
in  such  an  interest  in  lands  as  a 
mining  concern  is,  this  court  will 
appoint  a  receiver,  although  there 
are  tenants  in  common  of  it.  Take 
the  order  for  a  receiver,  and  let 
every  owner  be  at  liberty  to  pro- 
pose himself  as  manager  before  the 
master." 

33  Parker  v.  Parker.  82  N.  C, 
165.  But  see  Stith  v.  Jones,  101  N. 
C,  360.  8  S.  K,  151;  Thomas  v. 
Nantahala  M.  &  T.  Co.,  7  C.  C.  A.. 
330,  58  Fed.,  485.  As  to  the  pro- 
priety of  the  court's  directing  a 
receiver  of  a  coal  mine  appointed 
pendente  lite,  to  work  the  mine  ac- 
tively, see  Bigbee  v.  Summerour, 
101  Ga..  201.  28  S.  E.,  642. 

34  Pignolet  v.  Bushc,  28  How.  Pr., 
9;  Duncan  v.  Campau,  15  Mich., 
415;  Weise  v.  Welsh.  30  N.  J.  F.q., 


760  RECEIVERS.  [chap.  XIV. 

deny  plaintiff's  title,  but  have  endeavored  to  entangle  the  whole 
title,  and  are  not  disposed  to  account  for  the  rents  and  profits, 
equity  may  interfere  by  a  receiver.^^  And  when,  in  an  action 
for  partition,  it  is  shown  that  a  portion  of  the  property  can  not 
be  rented,  in  consequence  of  the  refusal  of  one  of  the  tenants 
in  common  to  unite  with  the  others,  and  that  the  rents  of  the  re- 
maining portions  can  not  be  collected  because  of  the  interfer- 
ence of  such  co-tenant,  a  receiver  may  be  appointed  to  pre- 
serve the  property  from  loss  pendente  lite.^^  But  a  receiver 
will  not  be  appointed  merely  because  of  the  occupancy  of  the 
premises  by  the  defendant,  a  tenant  in  common,  since  the  right 
of  possession  is  one  of  the  incidents  of  such  tenure.^"^ 

§  608.  Notice  to  under-tenants  not  to  pay  rents  to  co- 
tenants  entitled  thereto,  no  ground  for  receiver.  When 
one  of  several  co-tenants  has  entered  into  an  agreement  with 
the  others,  whereby  they  are  authorized  to  receive  all  the  rents 
of  the  premises  until  they  have  repaid  an  amount  due  them, 
the  fact  that  such  co-tenant  afterward  notifies  the  tenants  of 
the  premises  to  pay  their  rents  to  him,  and  not  to  his  co-ten- 
ants, affords  no  ground  for  interfering  by  the  appointment  of 
a  receiver,  such  a  notice  not  being  regarded  as  equivalent  to  an 
exclusion. 38 

431;    Goodale   v.    Fifteenth   District  -"'S  Duncan  v.   Campau,   15   Mich., 

Court,    56    Cal.,    26;    Mesnager    v.  415. 

DeLeonis,    140    Cal.,    403,    73    Pac,  36  pignolet    v.    Bushe,    28    How. 

1052;  Ames  v.  Ames,  148  111.,  321,  Pr.,  9. 

36   N.   E.,   110;   Heinze  v.   Butte  &  37  Varnum  v.  Leek,  65  Iowa,  751. 

B.  C.  M.  Co.,  61  C.  C.  A.,  63,  126  23  N.  W.,  151. 

Fed.,    1.     And   see   Higgins   Oil   &  38  Tyson  v.  Fairclough,  2  Sim.  & 

Fuel  Co.  V.  Snow,  51  C.  C.  A.,  267,  St.,  142. 

113  Fed.,  433. 


CHAP.    XIV.]  REAL    PROPERTY.  761 


III.  Receivers   as   Between   Vendors   and   Purchasers. 

§  609.     When  vendor  entitled  to  receiver  in  action  for  specific  perform- 
ance. 

610.  When  vendee  so  entitled. 

611.  Vendor  allowed  receiver  in  suit  to  recover  possession  on  show- 

ing defendant's  insolvency  and  commission  of  waste. 

612.  Purchasers    allowed    receiver   as    against   settlement   made   by 

husband  upon  wife  after  marriage. 

613.  When  purchaser  at  sheriff's  sale  granted  a  receiver. 

614.  When  purchaser  of  gold  mine  allowed  a  receiver. 

615.  When  granted  over  colliery  or  mine;  what  required  of  the  re- 

ceiver; when  discharged;  operation  of  mine  by  receiver. 

616.  Bill  not  entertained  which  will  affect  interest  of  purchasers  not 

made   parties. 

617.  When  receiver  required  to  return  purchase-money  and  counsel 

fees. 

§  609.  When  vendor  entitled  to  receiver  in  action  for 
specific  performance.  The  aid  of  equity  by  a  receiver  is 
sometimes  necessary  as  between  vendors  and  purchasers  of  real 
property,  either  in  connection  with  proceedings  to  compel  a 
specific  performance  of  the  contract  of  sale,  or  for  the  protec- 
tion of  the  rights  of  a  purchaser  after  sale.  And  the  vendor 
of  real  estate,  upon  a  bill  against  the  vendee  for  a  specific  per- 
formance of  the  contract  of  purchase,  may  have  a  receiver  in 
aid  of  his  action  when  it  is  shown  that  the  defendant  is  in- 
solvent, and  that  all  his  property,  real  and  personal,  includmg 
the  estate  which  is  the  subject  of  the  contract,  is  about  to  be 
conveyed  to  trustees  for  the  benefit  of  his  creditors.  The  re- 
lief, under  such  circumstances,  is  warranted  upon  the  ground 
that,  if  the  contract  can  be  enforced,  the  vendor  has  a  lien  upon 
the  property  for  the  unpaid  purchase-money;  while,  if  it  can 
not  be  enforced,  the  purchaser  has  a  lien  to  the  extent  of  the 
amount  already  paid  by  him  on  account  of  his  purchase;  and 
upon  the  further  ground  that  the  purchaser's  insolvency  and 
attempt  to  convey  the  estate  would  embarrass  the  title. ^^     So 

39  Hall    V.    Jenkinson,    2    Ves.    &       this  case,  the  purchaser  had   never 
Bea.,  125.    It  is  to  be  noticed  that  in      been    let    into    exclusive   possession 


762  RECEIVERS.  [CIIAP.   XIV. 

when  a  person  has  contracted  for  the  purchase  of  real  estate, 
but  is  dissatisfied  with  the  title,  and  refuses  on  that  ground 
to  conclude  the  purchase,  in  an  action  against  him  to  enforce  a 
specific  performance  of  the  contract,  a  receiver  may  be  ap- 
pointed for  the  management  of  the  property,  pending  a  refer- 
ence to  determine  the  validity  of  the  title.^o  When  a  receiver 
is  appointed  in  aid  of  a  bill  against  the  purchaser  for  specific 
performance  of  his  agreement,  if  defendant  is  compelled  by 
the  court  to  carry  out  the  agreement  and  to  complete  his  pur- 
chase, the  receiver  will  be  considered  as  his  receiver,  and  the 
receiver's  possession  as  his  possession. ^i  But  since,  in  such  an 
action,  the  receivership  is  merely  ancillary  to  the  principal  re- 
lief sought,  if  the  principal  remedy  is  prematurely  invoked, 
there  being  no  default  which  would  entitle  the  vendor  to  a  sale, 
the  order  appointing  a  receiver  should  be  revoked. ^^  And  in 
Tennessee,  the  courts  refuse  the  aid  of  a  receiver,  in  an  action 
to  enforce  a  vendor's  lien,  upon  the  ground  that  it  is  no  part 
of  the  contract  of  sale,  either  expressed  or  implied,  that  the 
vendor  shall  appropriate  anything  but  the  land  itself  by  a  sale 
to  satisfy  the  unpaid  purchase-money,  and  because  by  the  con- 
tract the  purchaser  is  entitled  to  possession  until  the  land  is  sold 
in  satisfaction  of  the  debt.^s  But  in  the  same  state,  after  a 
decree  in  favor  of  the  vendor  seeking  to  subject  the  land  to  the 
payment  of  the  purchase-money,  from  which  decree  defendant 
has  appealed,  the  failure  of  defendant  to  pay  taxes  has  been 
held  to  be  sufficient  ground  for  a  receiver  pending  the  appeal. ^^ 
§  610.  When  vendee  so  entitled.  The  relief,  in  the  class 
of  cases  under  consideration,  is  not  confined  to  actions  for 
specific  performance,  brought  by  a  vendor  against  the  vendee, 
but  the  jurisdiction  is  also  exercised  in  behalf  of  the  vendee 

of  the  premises,  the  possession  hav-  ^2  Jones  v.  Boyd,  80  N.  C,  258. 

ing  been  partly  in  the  vendor  and  43  Morford  v.  Hamner,  3  Baxter, 

partly  in  the  purchaser.  391. 

40  Boehm  v.  Wood,  2  Jac.  &  W.,  44  Darusmont   v.    Patton,   4   Lea, 
236.  597. 

41  Boehm  v.  Wood,  Turn.  &  R., 
332. 


CHAP.    XIV.]  REAL    PROPERTY.  763 

instituting  such  an  action.  And  upon  a  bill  by  the  vendee  to 
compel  specific  performance  of  the  contract  of  sale,  a  receiver 
may  be  appointed  to  secure  the  property  pendente  lite,  v^dien 
the  vendor  has  fraudulently  repossessed  himself  of  the  prop- 
erty.'*^ And  the  relief  has  been  granted  in  such  case  although 
there  was  no  showing  of  the  insolvency  of  the  defendant.^^ 

§  611.  Vendor  allowed  receiver  in  suit  to  recover  pos- 
session on  showing  defendant's  insolvency  and  commission 
of  waste.  When  a  vendor  of  real  estate,  who  has  never 
parted  with  the  legal  title,  having  merely  given  the  purchaser 
a  title  bond,  sues  to  recover  possession  because  of  nonpayment 
of  purchase-money,  and  seeks  to  have  the  property  sold  and 
its  proceeds  applied  in  payment  of  the  purchase  price,  it  is 
proper  to  appoint  a  receiver  to  take  charge  of  the  property, 
upon  allegations  of  defendant's  insolvency,  and  that  he  is  com- 
mitting waste  by  cutting  off  the  timber,  w^hich  constitutes  the 
chief  value  of  the  property.^"^  But  the  appointment  of  a  re- 
ceiver, in  such  a  case,  does  not  in  law  have  the  effect  of  chan- 
ging the  possession,  but  only  suspends  the  right  of  actual  en- 
joyment pending  the  litigation. ^^  And  when  the  vendor  of 
real  estate,  having  given  a  bond  or  contract  to  convey,  upon  de- 
fault of  the  purchaser,  files  a  bill  for  the  specific  performance  of 
the  contract  and  for  a  sale  of  the  land,  if  the  premises  are  an 

45  Dawson  v.  Yates.  1  Beav.,  301.  cutting     down     and     removing    of 

46  Mead   v.    Burk,    156  Ind.,   577,  valuable   timber    from    the    land   in 
60  N.  E.,  338.  controversy,    and    especially    where 

47  McCaslin  v.  State,  44  Ind.,  151.  defendant  only  claimed  the  title 
The  court,  Buskirk,  J.,  say,  p.  174:  and  possession  of  such  land  under 
"Nor  do  we  think  the  court  ex-  a  title  bond,  the  purchase-money 
ceeded  its  power  in  appointing  a  being  unpaid,  and  it  being  alleged 
receiver.  The  third  clause  of  sec-  and  proved  that  the  defendant  was 
tion  199,  2  G.  &  H.  (statutes),  152,  insolvent,  would  be  such  material 
authorizes  the  appointment  of  a  re-  injury  as  would  justify  the  court  in 
ceiver  'in  all  cases  when  it  is  shown  appointing  a  receiver  to  take  charge 
that  the  property,  fund,  or  rents  of  and  preserve  such  land  during 
and  profits  in  controversy  is  in  the  litigation."  But  see  Guernsey 
danger  of  being  lost,  removed,  or  v.  Powers,  9  Hun,  78. 
materially  injured.'  There  seems  48  McCaslin  z/.  State,  44  Ind.,  151. 
to   be   no   room   to   doubt   that   the 


764  RECEIVERS.  [CIIAP.  XIV. 

inrulequate  security  for  the  unpaid  pnrchase-moncy  and  the 
vendee  is  insohent,  the  vendor  is  entitled  to  a  receiver  of  the 
rents  and  profits  pendente  lite,  upon  the  same  ground  that  a 
mortgagee  is  entitled,  under  like  circumstances,  to  a  receiver 
in  aid  of  a  foreclosure.'*^  So  when  the  vendee  is  in  possession 
under  a  bond  to  convey  title,  and  receives  the  rents  and  profits 
for  several  years,  permitting  the  premises  to  deteriorate  in 
value  through  want  of  repairs  and  improper  cultivation,  so 
that  they  are  insufficient  to  pay  the  amount  due,  and  the  vendee 
becomes  insolvent  and  is  adjudicated  a  bankrupt,  a  receiver 
of  the  rents  and  profits  will  be  appointed  until  the  final  hearing, 
no  part  of  the  purchase-money,  principal  or  interest,  having 
been  paid.^^  But  the  mere  insolvency  of  the  vendee,  if  known 
to  the  vendor  at  the  time  of  sale,  will  not  warrant  a  receiver 
upon  a  bill  to  rescind  the  contract  of  sale  and  for  an  accounting 
of  rents,  no  fraud  being  charged  in  the  bill,  and  the  allegations 
of  waste  being  fully  denied. ^^  Nor,  in  such  case,  will  a  receiver 
be  allowed  when  it  is  not  shown  that  defendants  were  less 
solvent  and  able  to  pay  when  the  debt  for  purchase-money 
matured  than  when  it  was  created,  and  when  it  does  not  ap- 
pear that  the  depreciation  in  value,  which  is  relied  upon  as  a 
ground  for  relief,  was  caused  by  the  waste  or  mismanagement 
of  the  purchasers.^2  And  when  it  is  not  shown  that  the  vendee 
is  insolvent,  and  the  amount  of  the  indebtedness  is  disputed 
and  undetermined,  a  receiver  should  not  be  appointed. ^^  But 
in  Kentucky,  the  general  doctrine  under  consideration  does  not 
prevail,  and  it  is  there  held  that  when  the  vendor  conveys  real 
estate  and  delivers  possession  to  his  vendee,  reserving  a  lien 
for  the  purchase-money,  the  lien  attaches  to  the  land  and  not 
to  the  rents  and  profits.  The  vendee,  therefore,  having  the 
legal  title  and  the  right  to  the  use  and  occupancy  of  the  proper- 

49  Phillips    V.    Eiland,    52    Miss.,  51  Jordan  v.  Beal,  51  Ga,  602. 
721 ;  Smith  v.  Kelley,  31  Hun,  387.          52  Tnmlin    v.    Vanhorn,    77    Ga., 

50  Tufts    V.    Little,    56    Ga.,    139.      315,  3  S.  E.,  264. 

See,  also,   Gunby  v.  Thompson,  56  53  Hughes   v.   Hatchett,    55   Ala., 

Ga.,  316;  Chappell  v.  Boyd,  56  Ga.,      631. 
578 ;  Worrill  v.  Coker,  56  Ga.,  666. 


CHAP.  XIV.]  REAL  PROPERTY.  765 

ty,  a  receiver  will  not  be  appointed  in  an  action  to  enforce  tlie 
lien,  in  the  absence  of  waste  or  improper  cultivation,  although 
it  is  shown  that  the  vendee  is  insolvent  and  that  the  land  is 
not  worth  more  than  the  amount  of  the  indebtedness.^^ 

§  612.  Purchasers  allowed  receiver  as  against  settle- 
ment made  by  husband  upon  wife  after  marriage.  Pur- 
chasers of  real  estate,  as  against  an  adverse  party  in  posses- 
sion claiming  a  paramount  title,  have  been  allowed  the  pro- 
tection of  a  receiver  upon  a  bill  to  perfect  their  title  against 
such  adverse  claimant ;  although  the  relief  is  proper  only  when 
it  is  apparent  that  the  purchaser  seeking  the  aid  of  the  court 
has  a  good  equitable  title,  against  which  defendant's  title  can 
not  prevail,  and  that  the  purchaser  can  compel  the  perform- 
ance of  his  contract  of  purchase.  Thus,  purchasers  for  value 
from  a  husband  have  been  allowed  a  receiver,  as  against  a 
voluntary  settlement  made  by  the  husband  upon  his  wife  after 
marriage,  upon  the  ground  that  such  settlement  gave  no  title 
as  against  the  purchasers,  who  were,  therefore,  entitled  to  a 
specific  performance  of  their  contract.  And  the  receiver  may 
be  appointed,  under  such  circumstances,  before  answer.^^ 

§  613.  When  purchaser  at  sheriff's  sale  granted  a  re- 
ceiver. A  purchaser  of  lands  at  a  judicial  sale,  who  ob- 
tains a  sheriff's  deed  therefor,  upon  the  expiration  of  the  stat- 
utory period  of  redemption,  is  entitled  to  possession  of  the 
lands,  and  of  the  crops  growing  thereon  as  an  incident  to  the 
realty.  He  may,  therefore,  in  an  action  to  obtain  such  posses- 
sion, have  a  receiver  to  take  charge  of  the  growing  crops  with 
a  view  to  properly  harvesting  and  preparing  them  for  market, 
and  holding  the  proceeds  subject  to  the  final  order  of  the  court, 
defendants  being  alleged  to  be  in  a  condition  of  insolvency.^^ 

54  Collins  V.  Richart,  14  Bush,  621.  quired  the  title  to  the  land,  and  the 

55  Metcalfe  v.  Pulvertoft,  1  Ves.  defendants  are  properly  restrained 
&  Bea.,  180.  from    selling    or    incumbering    the 

56  Corcoran  v.  Doll,  35  Cal.,  476.  land,  till  the  rights  of  the  parties 
Sawyer,  C.  J.,  for  the  court,  says,  can  be  determined.  So,  also,  we 
p.  479:  "If  the  facts  stated  in  the  think  the  record  shows  a  proper 
complaint    are    true,    plaintiffs    ac-  case    for    restraining   an    appropria- 


766  RECEIVERS.  [chap.  XIV. 

And  it  is  an  appropriate  exercise  of  the  jurisdiction  to  appoint 
a  receiver  in  aid  of  the  possession  of  a  purchaser  at  a  sheriff's 
sale,  under  judgment,  upon  a  bill  alleging  that  the  defendant 
debtor  has  fraudulently  conveyed  his  real  estate  with  a  view 
to  delay  and  defeat  his  creditors.  Such  a  state  of  facts,  it  is 
held,  would  clearly  warrant  a  receiver  in  aid  of  the  judgment 
creditor  himself,  and  the  right  of  a  purchaser  at  a  sale  under 
the  judgment  to  the  same  relief  is  deemed  equally  clear-^*^ 

§  614.  When  purchaser  of  gold  mine  allowed  a  receiver. 
While  the  courts  are  usually  averse  to  taking  possession  of 
lands  by  a  receiver  pending  litigation  between  conflicting  claim- 
ants, it  is  held,  in  California,  that  the  working  of  gold  mines 
and  the  extraction  of  gold  therefrom  are  something  more 
than  the  ordinary  use  of  real  estate  by  one  in  possession,  re- 
quiring more  than  the  usual  remedies  for  the  protection  of  a 
purchaser.  Such  a  use  of  the  realty  constitutes  a  waste  or  de- 
struction of  the  very  property  itself,  or  all  that  is  of  essential 
value.  It  is,  therefore,  held  that  a  purchaser  at  a  mortgage 
sale  of  an  interest  in  a  mining  claim  may  have  a  receiver, 
when  the  mortgagor  is  still  in  possession,  working  the  claim 
and  refusing  to  pay  the  purchaser  his  interest  in  the  dividends, 
it  being  alleged  that  the  mortgagor  is  insolvent,  and  that  the 
claim  will  be  worked  out  and  exhausted  before  the  statutory 
period  for  redemption  expires.^^ 

tion  of  the  crops  and  for  a  receiver.  pretended  tenant  in  possession,  as 
It  is  not  a  question  of  rents  and  well  as  the  other  defendants,  was 
profits  merely,  during  the  time  for  a  party.  We  think  there  is  clearly 
redemption.  That  time  had  already  a  cause  of  action  stated,  both  for 
expired,  and  the  plaintiffs  had  ob-  an  injunction  and  a  receiver.  If 
tained  the  sheriff's  deed  and  were  the  tenant  in  possession  is  entitled 
entitled  to  the  possession  of  the  to  anything  for  his  services  in  cul- 
land.  The  growing  crops  belonged  tivating  the  land  during  the  time 
to  the  plaintiffs  as  a  part  of  the  for  redemption,  he  is  a  party  to  the 
land.  The  principal  parties  are  al-  suit,  and  his  equities  can  be  ad- 
leged  to  be  insolvent,  and  all  the  justed  when  the  affairs  of  the  re- 
transactions  on  the  part  of  the  de-  ceivership  are  settled  up." 
fendants,  on  the  theory  of  ihe  com-  57  Mays  v.  Rose,  Freem.  (Miss.), 
plaint,  constitute  a  scheme  to  de-  703. 
fraud    the   plaintiffs,    to    which    the  58  Hill  v.  Taylor,  22  Cal.,  191.    It 


CHAP,  XIV.]  REAL  PROPERTY.  767 

§  615.  When  granted  over  colliery  or  mine;  what  re- 
quired of  the  receiver ;  when  discharged ;  operation  of  mine 
by  receiver.  The  aid  of  a  receiver  is  sometimes  granted  in 
cases  of  mines  or  collieries  pending  a  litigation  which  is  to  de- 
termine the  title  and  rights  of  the  parties,  when,  from  the  pe- 
culiar nature  of  the  property,  it  is  necessary  that  it  should  be 
kept  in  operation  and  preserved  pendente  lite.  Thus,  where 
purchasers  of  a  colliery  file  a  bill  to  set  aside  their  purchase 
and  to  enjoin  their  notes  given  for  purchase-money,  on  the 
ground  of  fraudulent  representations  made  by  defendants  to 
induce  them  to  purchase,  if,  on  the  case  presented,  there  is 
much  doubt  as  to  the  ownership  of  the  colliery,  and  it  is  of 
importance  that  it  should  be  worked  to  prevent  flooding  and 
other  injury,  and  also  to  prevent  a  forfeiture  to  the  landlord,  a 
fit  case  is  presented  for  the  appointment  of  a  receiver  pendente 
lite.  And  the  relief,  in  such  a  case,  is  founded  upon  the  ne- 
cessity of  preserving  the  property  pending  the  controversy,  in 
order  that,  when  it  is  finally  determined  to  whom  it  belongs, 
full  and  complete  justice  may  be  done.  And  plaintiffs  may 
be  required  to  supply  the  means  of  carrying  on  the  colliery,  re- 
serving the  ultimate  question  of  expense  for  future  determina- 
tion. The  receiver  thus  appointed  will  be  required  to  keep  the 
colliery  going,  and  out  of  its  receipts  to  pay  all  outgoings; 
and  if  the  receipts  are  insufficient,  plaintiffs  may  be  required 
to  supply  him  with  the  necessary  funds  for  that  purpose.^^ 

is  to  be  observed  that  the  Practice  and  profits  are  in  danger  of  being 

Act   of  California,   §    143,   provides  lost    or   materially   injured    or    im- 

that  a  "receiver  may  be  appointed  paired." 

by  the  court  in  which  the  action  is  59  Gibbs  v.  David,  L.  R.,  20  Eq., 

pending,    or    by    a    judge    thereof,  373.     The    doctrine    of   the   text   is 

first    before    judgment,    provision-  very   clearly   stated   in   the   opinion 

ally,    on    the    application    of   either  of  Vice-Chancellor   Malins    as    fol- 

party,  when  he  establishes  a  prima  lows,  p.   375:     "As   far  as   I   know 

facie   right   to   the   property,    or   to  of  the  case  at  present,  although  the 

an    interest    in    the   property    which  precise       circumstances       certainly 

is    the    subject    of   the    action,    and  have    not    occurred    before,    I    can 

which  is  in  possession  of  an  adverse  not   help   thinking   that,   upon   prin- 

party,  and  the  property  or  its  rents  ciple,    I    shall    not    much    err    if    I 


768 


RECEIVERS. 


[chap,  XIV. 


But  when  the  effect  of  appointing  a  receiver  in  a  controversy 
as  to  the  right  to  mining-  property  is  to  suspend  the  operation 
of  the  mines,  the  receiver  having  no  funds  with  which  to  meet 
the  necessary  outlays,  the  appointment  will  be  regarded  as 
improvident,  and  the  receiver  will  be  discharged,  when  it  is 
not  alleged  that  defendants  in  possession  are  insolvent,  or  that 
they  are  unable  to  account  for  the  mesne  profits,  or  that  the 


accede  to  the  application  of  the 
plaintiffs.  The  question  brought 
before  the  court  is  a  very  remark- 
able one.  The  two  plaintiffs,  Mr. 
Gibbs  and  Mr.  Joachim,  are,  it  is 
stated,  merchants  in  the  city  of 
London,  and  their  case  is  this : 
that,  by  representations  made  to 
them  by  the  defendant  Webb,  they 
have  been  induced  to  purchase  a 
colliery  in  South  Wales.  They  al- 
lege that  the  representations  made 
by  Webb  were  entirely  false,  and 
that  if  they  had  known  the  false- 
hood of  such  representations  they 
would  not  have  purchased  the  col- 
liery. The  persons  from  whom  the 
colliery  was  bought  are  Mr.  Cot- 
ton's clients,  Charles  William 
David  and  John  Sloper,  and,  of 
course,  if  it  turns  out  that,  what- 
ever representations  were  made  by 
Webb,  they  were  made  without 
the  knowledge  of  these  two  defend- 
ants, they  will  not  be  answerable, 
and  the  suit  will  fail.  But  the  bill 
alleges  that,  in  point  of  fact,  Webb 
was  the  bribed  agent  of  these  de- 
fendants to  make  these  false  repre- 
sentations; and  if  this  turns  out  to 
be  the  truth,  and  is  established  at 
the  hearing,  the  contract  will  be 
set  aside,  the  suit  will  succeed,  the 
plaintiffs  will  be  entitled  to  be  re- 
lieved from  all  further  payments, 
and  will  take  out  of  court  all  the 
moneys   paid   in   and   all    that    may 


be  hereafter  brought  in.  In  other 
words,  the  contract  will  be  undone. 
But  the  property  is  a  colliery,  and 
a  going  colliery,  and  both  sides  ad- 
mit that  it  must  be  kept  going  or 
the  lease  will  be  forfeited;  and 
moreover,  if  it  is  not  kept  going,  it 
will  be  drowned  out,  and,  therefore, 
it  is  absolutely  necessary  it  should 
be  worked.  In  this  state  of  things, 
I  think  it  is  clearly  uncertain  to 
whom  the  colliery  belongs.  If  the 
plaintiffs  are  right  in  their  allega- 
tions on  the  bill,  the  colliery  does 
not  belong  to  them,  but  to  David 
and  Sloper.  If,  on  the  other  hand, 
the  allegations  are  erroneous,  then 
the  colliery  belongs  to  the  plain- 
tiffs, and  David  and  Sloper  have 
nothing  to  do  with  it.  It  is  accord- 
ing to  the  practice  of  the  court  to 
keep  property  in  security  until  the 
right  is  decided,  and  therefore,  it 
being  totally  uncertain  •to  which  of 
these  two  parties  this  colliery  be- 
longs, it  does  seem  to  me,  in  ac- 
cordance with  practice  and  princi- 
ple, that  the  property  shall,  as  far 
as  possible,  be  kept  in  security. 
Then,  it  is  asked,  why  should  this 
be  done?  The  plaintiffs  are  in  pos- 
session ;  they  say  that  they  were 
fraudulently  induced  to  take  pos- 
session, and,  being  in  possession, 
they  are  incompetent  to  deal  with 
the  property  in  its  present  position, 
and  if  they  should   succeed  in  this 


CHAP.  XIV.] 


REAL  PROPERTY. 


769 


property  is  being  injured  under  their  management. ^'^  And  a 
receiver  of  a  coal  mine  should  ordinarily  not  be  authorized  to 
operate  the  mine  and  carry  on  a  general  mining  business,  and 
where  he  has  so  operated  the  mine  and  has  incurred  large  in- 
debtedness in  so  doing,  it  is  error  to  charge  up  such  obligations 
as  preferred  claims  prior  to  mortgage  liens  upon  the  property.^! 
§  616.  Bill  not  entertained  which  will  affect  interest  of 
purchasers  not  made  parties.  Equity  will  not  entertain  a 
bill  for  a  receiver  of  the  rents  and  profits  of  real  property 
which  will  affect  the  interests  of  purchasers  of  the  property 


suit  they  will  have  a  demand 
against  the  defendants  for  all  mon- 
eys properly  expended  in  working 
the  colliery.  It  is  of  very  great 
importance  that  the  colliery  should 
be  so  worked  as  to  leave  as  little 
doubt  as  possible  whether  it  was 
properly  or  improperly  worked.  If 
the  court  appoints  an  officer  com- 
petent to  manage  a  colliery,  and 
he  says,  'I  have  carried  on  the  col- 
liery and  made  a  gain,'  then  the 
gain  will  belong  to  the  party  to 
whom  the  mine  belongs.  If,  on 
the  other  hand,  he  says,  'I  have 
been  obliged  to  carry  on  the  col- 
liery at  a  loss,'  that  loss  will  have 
to  be  borne  by  the  plaintiffs,  if  they 
fail  in  their  suit,  and  by  the  defend- 
ants if  the  plaintiffs  succeed.  Now 
I  will  assume,  in  favor  of  the  de- 
fendants, that  all  these  charges  are 
unfounded  and  that  the  suit  will 
fail,  and  I  will  continue  to  act  upon 
that  assumption  until  the  contrary 
is  approved.  If,  therefore,  the  suit 
does  fail,  and  a  receiver  is  ap- 
pointed, and  he  is  supplied  with 
the  means  of  carrying  on  the  col- 
liery by  the  plaintiffs,  what  dam- 
age will  be  done  to  the  defendants? 
It  is  impossible  that  they  can  be 
damaged  to  the  extent  of  a  farthing. 
Receivers — 49. 


If,  on  the  other  hand,  the  suit 
should  succeed,  then  a  very  mate- 
rial benefit  may  arise  to  the  plain- 
tiffs in  the  manner  I  have  pointed 
out,  on  its  being  ascertained  in  this 
way  what  is  the  proper  expenditure 
in  carrying  on  the  colliery.  There- 
fore I  shall  do  what  this  court  is 
constantly  in  the  habit  of  doing 
when  property  is  in  dispute,  and  as 
was  done  in  Boehm  v.  Wood,  2 
Jac.  &  W.,  236.  ...  It  seems  to 
me,  in  this  case,  that  the  court 
should  appoint  a  protector  or  man- 
ager of  the  estate,  in  order  that, 
when  it  is  decided  to  whom  it  be- 
longs, justice  may  be  done.  There- 
fore, upon  principle,  and,  I  think, 
upon  authority,  I  shall  accede  to 
the  application  that  a  receiver  be 
appointed.  The  plaintiffs  must 
supply  the  means  of  carrying  on 
the  colliery,  and,  as  in  Bochm  v. 
Wood,  2  Jac.  &  W.,  236,  the  ques- 
tion at  whose  expense  the  receiver 
is  to  be  appointed  and  the  colliery 
is  to  be  carried  on  will  be  reserved. 
If  the  suit  succeeds,  it  will  be  at 
the  expense  of  the  defendants." 

00  Carter  v.  Hoke,  64  N.  C.  348. 

SlDalliba  v.  Winschell,  11  Idaho, 
364,  82  Pac,  107,  114  Am.  St.  Rep., 
267. 


770  RECEIVERS.  [chap.  XIV. 

who  are  not  made  parties  to  the  action,  since  all  parties  direct- 
ly interested  in  the  subject-matter  must  be  brought  before  the 
court.  And  when  this  is  not  done,  a  demurrer  to  the  bill  for 
want  of  proper  parties  will  be  sustained. ^^ 

§  617.  When  receiver  required  to  return  purchase-mon- 
ey and  counsel  fees.  Where  a  receiver  sold  real  estate  at 
auction  under  an  order  of  court,  and  the  purchasers  afterward 
refused  to  complete  the  purchase  on  the  ground  of  an  alleged 
defect  of  title,  but  the  court  ordered  them  to  complete  the  pur- 
chase, and  the  receiver  afterward  consented  that  the  order 
should  be  held  void  and  that  the  purchase  might  be  annulled, 
the  receiver  was  required  by  the  court  to  return  the  purchase- 
money,  together  with  counsel  fees  to  the  purchasers  for  ex- 
amining the  title  and  in  resisting  the  proceeding  to  have  the 
purchase  perfected.^^ 

62Lumsden  v.  Fraser,  1  Myl.  &  63  Drake  v.  Goodrich,  6  Blatchf., 

Cr.,  589,  affirming  S.  C,  7  Sim.,  555.      531. 


CHAP.  XIV.]  REAL  PROPERTY.  771 


IV.  Functions  of  the  Receiver. 

§  618.     Control  over  rents  and  profits;  tenants  required  to  attorn  to 
receiver;  English  practice. 

619.  Arrears   of  rent;   future   rents;   Irish  practice. 

620.  Motion  to  compel  tenants  to  attorn;  costs. 

621.  At  what  time  liability  of  tenant  to  receiver  attaches;  when  pay- 

ment to  third  person  treated  as  payment  to  receiver. 

622.  Receiver's  right  to  distrain,  decisions  unsettled;  order  of  court 

to  distrain. 

623.  Receiver  not  allowed  to  distrain  when  plaintiff  still  proceeds 

with  his  action. 

624.  Notice   to   tenant    of   appointment   necessary  before   receiver   can 

sue. 

625.  Attachment  against  tenant  for  failure  to  pay  rent  to  receiver. 

626.  Attachment  must  be  discharged  before  receiver  can  distrain, 

and  vice  versa. 

627.  Disputed  title  not  determined  by  attachment;  attachment  not 

granted  pending  abatement  of  suit  by  death  of  plaintiff. 

628.  Order  authorizing  receiver  to  collect  rents  through  defendant, 

effect  of;  not  appealable. 

629.  Receiver  should  move  to  invest  rents;  rights  of  claimants. 

630.  Right  to  rents  in  case  of  receiver  over  corporation. 

631.  Receiver  continued  after  sale  until  conveyances  are  executed. 

632.  Receiver  of  leasehold  premises  bound  to  pay  head-rent. 

633.  Right  to  make  repairs. 

634.  Duty  of  receiver  in  case  of  waste;  injunction  against  waste. 

635.  Sale  of  property  free  from  all  liens. 

636.  What  purchaser  at  receiver's  sale  bound  to  see;  his  title  not 

affected  by  irregularities  if  court  had  jurisdiction. 

637.  Receiver  may  enjoin  tenant  from  using  premises  for  purpose 

prohibited  by  lease. 

638.  Leave  to  lease  property;  lease  will  not  bind  infant  remainder- 

man. 
638a.  Rent  due  third  parties;  dilapidations. 

§  618.  Control  over  rents  and  profits;  tenants  required 
to  attorn  to  receiver ;  English  practice.  The  most  impor- 
tant function  of  a  receiver  over  real  estate  is  the  control  of  the 
rents  and  profits  accruing  from  the  property  pending  the  re- 
ceivership, the  right  to  such  rents  being  generally  vested  in  the 
receiver  by  his  order  of  appointment.  And  in  appointing  a  re- 
ceiver over  real  property  of  a  defendant,  the  correlative  rights 
of  landlord  and  tenant  subsisting  between  the  defendant  and 


172  RECEIVERS.  [chap.  XIV. 

his  tenants  are  not  changed.  The  court,  through  its  receiver, 
takes  upon  itself  the  possession  previously  existing  in  defend- 
ant, and  while  the  court  has  additional  and  larger  powers  for 
enforcing  the  landlord's  rights,  the  rights  themselves  remain 
unaltered.^'*  In  New  York,  it  is  held  that  the  court  may  au- 
thorize its  receiver  to  lease  the  premises  for  the  customary  term 
for  which  such  premises  are  ordinarily  leased,  even  though  the 
term  should  extend  beyond  the  termination  of  the  litigation, 
and  that  such  authority  may  be  granted  to  the  receiver  upon 
an  ex  parte  application.  The  court  may,  however,  modify  or 
vacate  such  order  and  annul  the  lease,  in  which  event  lessees 
who  have  taken  the  lease  in  good  faith,  relying  upon  the  or- 
der of  the  court,  are  entitled  to  indemnity  out  of  the  funds 
arising  from  a  sale  of  the  premises  in  a  partition  suit  in  which 
the  receiver  was  appointed. ^^  It  was  the  practice  of  the  Eng- 
lish Court  of  Chancery,  on  appointing  a  receiver  of  the  rents 
and  profits  of  realty,  to  direct  that  the  tenants  attorn  to  the  re- 
ceiver, and  if  they  refused  so  to  do  the  proper  course  was  to 
move  that  they  be  required  to  attorn,  thus  enabling  them  to 
be  heard  before  the  court  as  to  whether  they  were  actually 
tenants  of  the  premises  in  controversy.  And  if  no  cause  was 
shown  by  the  tenants  against  such  motion,  the  court  would 
grant  an  order  requiring  them  to  deliver  up  possession  to  the 
receiver.66  When  a  tenant  of  a  portion  of  the  property  under 
a  former  lease  attorns  to  the  receiver,  and  for  a  time  pays  him 
the  rent,  upon  his  subsequent  refusal  to  pay  rent  to  the  re- 
ceiver the  court  will  grant  an  order  compelling  him  so  to  do.^"^ 
§  619.  Arrears  of  rent;  future  rents;  Irish  practice. 
Under  the  practice  of  the  Irish  Court  of  Chancery,  the  receiver 
is  entitled  to  all  arrears  of  rent  unpaid  at  the  time  of  the  order 

64  Commissioners   v.   Harrington,  575.     As  to  the  right  to  set  off  im- 
11  L.  R.,  Ir.,  127.  provements,  taxes  and  repairs  paid 

65  Weeks  v.   Weeks,    106   N.    Y.,  for  by  one  in  possession  of  premises 
626,  13  N.  E.,  96.  over  which  a  receiver  is  appointed, 

66  Reid  V.  Middleton,  Turn.  &  R.,  against    rents   due   to   the   receiver, 
455.  see  Jefferson  v.  Edrington,  53  Ark., 

67  Hobson  V.  Sherwood,  19  Beav.,  545,  14  S.  W.,  99,  903. 


CHAP.  XIV.]  REAL  PROPERTY.  17^ 

of  reference  for  his  appointment.^S  And  although  the  ten- 
ants are  only  responsible  from  the  service  of  the  order  requir- 
ing them  to  pay  to  the  receiver,  yet  the  person  entitled  to  re- 
ceive the  rent  and  arrears  is  bound  from  the  date  of  the  order 
of  reference  to  appoint,  when  he  has  had  notice  of  such  order.^^ 
And  when  a  receiver  is  appointed  over  the  property  of  a  judg- 
ment debtor,  upon  the  application  of  his  creditors,  the  debtor 
is  not  entitled  to  interfere  with  the  receipt  of  rents  after  the 
order  of  appointment  is  made  absolute.'^^  So  where,  as  under 
the  Irish  practice,  the  functions  of  a  receiver  of  rents  and  profits 
of  real  property  have  reference,  not  only  to  the  future  rents, 
but  to  rents  already  due  and  in  arrears,  a  trustee,  previously 
charged  with  the  management  of  the  estate,  will  not  be  held 
responsible  for  arrearages  of  rent  at  the  date  of  appointment, 
since  all  control  over  and  power  of  collecting  them  are  taken 
away  from  the  trustee  by  the  appointment  of  the  receiver.'^^ 
When  a  receiver  is  appointed  in  aid  of  a  foreclosure  suit,  to 
take  possession  of,  manage  and  rent  the  mortgaged  premises, 
a  tenant  under  the  mortgagor,  with  constructive  notice  of  the 
pendency  of  the  action,  may  be  required  to  attorn  and  pay  his 
rent  to  the  receiver,  even  though  he  may  have  paid  rent  to  the 
mortgagor  for  the  same  period. '''^ 

§  620.  Motion  to  compel  tenants  to  attorn;  costs.  When 
a  motion  was  made  that  tenants  of  a  portion  of  the  real  estate 
in  controversy  be  required  to  attorn  to  the  receiver,  and  to  pay 
him  their  arrears  of  rent,  which  was  opposed  by  the  tenants 

68  McDonnell  v.  White,  11  H.  L.  is  discharged  as  to  a  part  before  the 

Rep.,  570;  Hollier  v.  Hedges,  2  Ir.  termination  of  the  entire  receiver- 

Ch.,  N.  S.,  370.    As  to  the  power  of  ship,  see  Beechey  v.   Smyth,   11   L. 

a  court  of  equity  to  abate  rent  re-  R.,  Ir.,  88. 

served  on  a  lease  made  before  the  69  Hollier  v.   Hedges,  2  Ir.    Ch., 

receivership  over  the  lessor's  estate,  N.  S.,  370. 

see  Harrison  v.  Fitzgerald,  Ir.  Rep.,  70  M'Loughlin    v.    Longan,   4   Ir. 

10  Eq.,  394.     As  to  the  apportion-  Eq.,  325. 

ment  of  rent  between  that  part  of  ^1  McDonnell  v.  White,  11  H.  L. 

the    premises    over    which    the    re-  Rep..  570. 

ceiver  is  continued  and  that  part  as  "^2  Gaynor    v.    Blewett,    82    Wis., 

to  which  he  is  discharged,  when  he  313,  52  N.  W.,  313. 


774  RECEIVERS.  [chap.  XIV. 

upon  the  ground  that  an  action  had  been  brought  against  them 
to  recover  the  rent,  which  was  still  pending,  and  that  if  such 
action  should  be  sustained  they  would,  by  attorning,  subject 
themselves  to  payment  of  the  arrears  twice  over,  the  motion 
was  ordered  to  stand  over  until  the  action  was  tried.  And  the 
action  being  tried  and  plaintiffs  being  nonsuited,  the  motion 
to  compel  the  tenants  to  attorn  was  allowed.  But,  under  the 
English  practice,  costs  were  not  allowed  against  tenants  on 
granting  such  a  motion. "^^ 

§  621.  At  what  time  liability  of  tenant  to  receiver  at- 
taches ;  when  payment  to  third  person  treated  as  payment 
to  receiver.  The  service  of  an  order  of  court  upon  ten- 
ants, requiring  them  to  pay  their  rents  to  the  receiver  appoint- 
ed in  the  cause,  attaches  all  rents  then  in  their  hands,  and  all 
thereafter  to  become  due.  And  until  such  order  is  revoked, 
or  set  aside  by  an  order  discharging  the  receiver,  the  tenant 
can  not  rightfully  pay  rent  to  any  person  other  than  the  re- 
ceiver, and  the  death  of  the  receiver  will  not  justify  the  ten- 
ant in  paying  any  other  person  before  the  appointment  of  an- 
other receiver. '^^  But  when  tenants  have  paid  rent  properly 
due  the  receiver  to  a  third  person,  he  having  no  authority  or 
right  to  receive  it,  it  will  be  treated  as  paid  to  such  person 
for  the  receiver,  and  the  party  entitled  thereto,  under  the  first 
appointment  of  the  receiver,  will  be  allowed  the  money,  al- 
though the  receiver  has  been  subsequently  extended  in  behalf 
of  another  creditor.'^^ 

§  622.  Receiver's  right  to  distrain,  decisions  unsettled; 
order  of  court  to  distrain.  As  regards  the  receiver's  right 
to  distrain  for  unpaid  rent,  it  is  difficult  to  deduce  any  settled 
rule  from  the  decided  cases,  and  the  decisions  are  far  from 
harmonious  upon  this  subject.  Thus,  it  has  been  held,  when 
the  tenant  has  already  attorned  to  the  receiver,  that  he  may 

T^  Hobhouse     v.     Hollcombe,     2  75  O'Callaghan  v.   O'Callaghan,  3 

De  G.  &  Sm.,  208.  Ir.  Ch.,  N.  S.,  376. 

74  Russell  V.  Baker,  1  Hog.,  180. 


CHAP.  XIV.]  REAL  PROPERTY.  775 

distrain  without  obtaining  leave  of  court  for  that  purpose.*^^ 
So  it  is  held  that  a  tenant  who  has  leased  from  a  receiver  may 
not  question  the  right  of  his  lessor  to  bring  an  action  for  the 
rent,  and  that  such  action  may  be  maintained  without  special 
authority  of  the  court  therefor. '^'^  And  it  has  been  held,  gen- 
erally, that  a  receiver  may  distrain  whenever  he  deems  it  nec- 
essary, without  applying  for  leave  of  court,  since  this  would  in 
many  cases  afford  the  tenant  an  opportunity  to  remove  his 
goods  from  the  premises  before  the  order  could  be  obtained.'^^ 
Again,  it  is  said  that  the  receiver  may  distrain  at  his  own  dis- 
cretion for  rent  in  arrear  within  the  year,  but  if  in  arrear  more 
than  a  year,  he  should  obtain  an  order  of  court  before  distrain- 
mg.'^^  If,  however,  there  is  doubt  as  to  who  has  the  legal 
right  to  the  rent  in  question,  the  receiver  should  obtain  an  or- 
der of  court  before  proceeding,  since  he  must  distrain  in  the 
name  of  the  person  having  the  legal  right.^^  When  permis- 
sion is  given  the  receiver  to  distrain,  it  is  regarded  as  indefinite 
in  its  operation,  and  not  confined  to  any  particular  act  or  time.^^ 
And  it  is  not  necessary  that  the  receiver  should  first  procure 
the  discharge  of  an  order  to  distrain  against  tenants,  before 
moving  the  court  for  leave  to  proceed  in  ejectment  against  the 
tenants  for  non-payment  of  rent.^^ 

§  623.  Receiver  not  allowed  to  distrain  when  plaintiff 
still  proceeds  with  his  action.  When  plaintiff,  after  pro- 
curing the  appointment  of  a  receiver  in  equity,  still  proceeds 
by  action  at  law  concerning  the  same  subject-matter,  and  the 
receiver  takes  no  steps  to  restrain  him  from  so  doing,  the  latter 
will  not  be  granted  leave  to  distrain  for  rent  due  from  the 
premises  subject  to  his  receivership.  But  upon  plaintiff  under- 
taking to  proceed  no  further  with  his  action  at  law,  the  re- 

76  Raincock  v.  Simpson,  cited  in  79  Brandon  v.  Brandon,  S  Madd., 
note  to  Shelly  v.  Pelham,  Dick.,  120.  473,  1st  American  edition,  287. 

77  Pouder  v.  Catterson,  127  Ind.,  80  Pitt  v.  Snowden,  3  Atk.,  750. 
434   26  N    E    66  ^^  Anonymous,  1  Hog.,  335. 

78  Pitt  V.  Snowden,  3  Atk.,  750.  «2  Sturgeon  v.  Douglas,   1   Hog., 

400. 


776  RECEIVERS.  [chap.  XIV. 

ceiver's  application  for  leave  to  distrain  may  properly  be  grant- 
ed.83 

§  624.  Notice  to  tenant  of  appointment  necessary  be- 
fore receiver  can  sue.  As  a  general  rule,  to  entitle  a  re- 
ceiver to  sue  for  and  recover  rents  accruing  from  property  of 
a  debtor  over  whose  estate  he  is  appointed,  he  must  give  notice 
of  his  appointment  to  the  tenant,  and  without  such  notice  he 
can  not  maintain  an  action  for  the  rent.  The  object  of  the  no- 
tice is  of  a  twofold  nature :  first,  to  protect  the  estate  from  pay- 
ment to  the  wrong  person,  and  second,  to  prevent  the  tenant 
from  dealing  with  the  former  owner  in  ignorance  of  the  re- 
ceiver's appointment.^'* 

§  625.  Attachment  against  tenant  for  failure  to  pay  rent 
to  receiver.  The  proper  method  of  enforcing  obedience  to 
an  order  of  court  directing  a  tenant  to  pay  rent  to  the  receiver  is 
by  attachment.  And  upon  the  refusal  or  neglect  of  a  tenant  to 
comply  with  such  order,  an  attachment  may  issue  to  compel 
obedience  to  the  mandate  of  the  court.^^  But  before  an  at- 
tachment will  issue  against  a  tenant  for  non-payment  of  rent 
to  the  receiver,  it  should  appear  that  he  has  been  served  with 
an  order  requiring  him  to  make  such  payment.^^  If,  however, 
the  tenant  has  once  paid  his  rent  to  the  receiver,  a  personal  de- 
mand by  the  receiver  of  the  rent  due  is  not  necessary  to  lay 
the  foundation  for  an  attachment  against  the  tenant  for  non- 
payment, and  a  demand  by  letter  or  by  a  third  person  is  suffi- 
cient.^'^ And  when,  after  appearance  in  the  action  or  matter 
in  which  the  receiver  was  appointed,  a  party  to  the  cause  in- 
terferes with  the  rents  due  the  receiver,  an  order  for  an  attach- 
ment against  the  person  thus  interfering  may  be  made  absolute 
in  the  first  instance.^^ 


83  Mills  V.  Fry,  19  Ves.,  277;  S.  86  Pope  v.  Pope,  2  Hog.,  335. 

C,  Coop.,  107.  87  Brown  v.  O'Connor,  2  Hog.,  77. 

84  Hunt  V.  Wolfe,  2  Daly,  298.  88  Thomas  v.  Thomas,  Flan.  &  K., 

85  Armstrong  v.  Southwell,  1  If.  621. 
Eq.,  32. 


CHAP.  XIV.]  REAL  PROPERTY.  TT7 

§  626.  Attachment  must  be  discharged  before  receiver 
can  distrain,  and  vice  versa.  When  the  receiver  has  ob- 
tained an  order  for  an  attachment  against  a  tenant  for  non- 
payment of  rent,  this  order  must  be  discharged  before  the  re- 
ceiver can  be  allowed  to  proceed  by  distress  for  the  collection 
of  the  rent.^9  So  when  the  receiver  has  first  proceeded  by 
distraint,  the  order  to  distrain  must  be  discharged  before  he 
will  be  allowed  to  attach. ^<^ 

§  627.  Disputed  title  not  determined  by  attachment; 
attachment  not  granted  pending  abatement  of  suit  by 
death  of  plaintiff.  The  court  will  not  by  a  proceeding  for 
attachment  against  a  tenant,  for  not  paying  rent  to  the  re- 
ceiver, determine  the  rights  of  a  third  person,  not  a  party  to 
the  cause,  to  whom  the  tenant  has  paid  his  rent.^^  And  when 
a  person  has  been  in  possession  of  premises,  paying  rent  there- 
for to  a  receiver  for  several  years,  and  afterward  disputes  his 
liability  to  pay  the  receiver,  on  the  ground  of  holding  under 
another  title,  the  receiver  should  not  proceed  by  attachment 
against  the  tenant,  since  a  question  of  disputed  title  can  not  be 
tried  by  an  attachment  for  contempt,  but  must  be  tried  in  an 
action  at  law  for  that  purpose.^2  ^^d  when  a  receiver  has  re- 
ceived rent  from  an  assignee  of  the  tenant,  he  can  not  attach 
the  tenant  himself  for  non-payment,  his  only  remedy  against 
him  being  by  proceedings  at  law.^^  Nor  will  the  court  issue 
an  attachment  against  a  party  to  the  cause,  for  non-payment 
of  rent  to  the  receiver,  pending  the  total  abatement  of  the  suit 
by  the  death  of  the  sole  plaintiff.^* 

§  628.  Order  authorizing  receiver  to  collect  rents 
through  defendant,  effect  of;  not  appealable.  When,  in  an 
action  to  determine  the  right  to  real  property,  a  receiver  of  the 
rents  and  profits  has  been  appointed,  and  he  is  authorized  by 

89  Nugent  v.  Nugent,  1  Hog.,  169.  92  Pread  v.  Lewis.  2  Mol.,  369. 

90  Eyre  v.  Eyre,  1  Hog.,  252.  93  Cane  v.  Bloomfield,  1  Hog.,  345. 

91  Nason     v.     Blennerhassett,     1  94  Brennan  v.   Kenny,  2  Ir.  Ch., 
Hog.,  402.  N.  S.,  579. 


//i 


RECEIVERS.  [chap,  XIV, 


the  court  to  permit  the  defendant  to  collect  the  rents  until  fur- 
ther order,  upon  giving  bond  with  satisfactory  surety  for  pay- 
ment to  the  receiver  of  all  rents  collected  by  him,  such  order 
will  be  construed  as  merely  regulating  the  receiver's  conduct, 
without  affecting  the  rights  of  the  parties.  The  fund  is  re- 
srarded  as  being  still  under  control  of  the  court  as  much  as  be- 
fore,  the  receiver  collecting  the  rents  by  proxy  instead  of  in 
person,  and  defendant  being  simply  the  receiver's  agent,  for 
the  benefit  of  the  fund  under  control  of  the  court.  An  appeal, 
therefore,  will  not  lie  from  such  an  order,  since  it  does  not  af- 
fect the  rights  of  the  parties.^^ 

§  629.  Receiver  should  move  to  invest  rents;  rights  of 
claimants.  A  receiver  over  real  property  should  not  re- 
tain the  money  arising  from  rents,  but  should  move  to  have  it 
laid  out  and  invested  for  the  benefit  of  the  parties  entitled  there- 
to. ^^  But  when  a  receiver  is  appointed  of  the  rents  and  profits 
of  real  estate  pendente  lite,  the  court  will  not  usually  order  him 
to  pay  over  or  account  for  the  rents  to  a  person  claiming  them, 
when  the  land  itself  is  not  charged  with  payment  of  the  de- 
mand. Claimants  must,  therefore,  to  entitle  themselves  to 
the  rents  and  profits  at  the  receiver's  hands,  show  that  they  had 
a  right  to  proceed  against  the  land  itself  for  satisfaction  of 
their  demands.^"^  And  persons  claiming  liens  upon  rents  col- 
lected by  a  receiver  are  entitled  to  intervene  in  the  cause,  in 
order  that  their  rights  may  be  determined. ^^ 

§  630.  Right  to  rents  in  case  of  receiver  over  corpora- 
tion. In  New  Jersey,  it  is  held  that  the  statute  author- 
izing the  appointment  of  receivers  over  insolvent  corpora- 
tions, and  the  appointment  under  the  statute,  operate  as  a 
conveyance  of  all  the  corporate  property  to  the  receiver,  for 
the  benefit  of  creditors,  and  to  be  distributed  in  accordance 

95  Garr  v.  Hill,  1  Halst.  Ch.,  639.      by  agreement  of  the  parties,  Ford 

96  Foster  v.  Foster,  2  Bro.  C.  C,      v.  Rackham,  17  Beav.,  485. 

616.     See,  as  to   liability  of  a   re-  97  City  of  Baltimore  v.   Chase,  2 

ceiver  of  rents  and  profits  of  realty      G.  &  J.,  376. 

to  account,  who  has  been  appointed  98  McNair  v.  Pope,  104  N.  C.,  350, 

10  S.  E..  252. 


CHAP.  XIV.]  REAL  PROPERTY.  779 

with  the  statute.  It  is  held,  therefore,  that  rents  accruing 
from  the  corporate  property  subsequent  to  its  sale  by  the  re- 
ceivers belong  to  the  purchaser  at  such  sale,  while  rents  ac- 
cruing after  the  appointment  and  before  the  sale  belong  to 
the  receivers,  for  the  benefit  of  creditors  of  the  corporation.^^ 

§  631.  Receiver  continued  after  sale  until  conveyances 
are  executed.  When  a  receiver  of  the  rents  accruing;  from 
real  property  has  been  appointed,  and  a  decree  is  subsequently 
made  for  a  sale  of  the  premises,  the  receiver  will  be  continued 
until  the  conveyances  are  executed,  in  order  to  collect  arrears 
of  rent,  and  the  tenants  will  be  compelled  to  pay  arrears  to 
the  receiver.^ 

§  632.  Receiver  of  leasehold  premises  bound  to  pay 
head-rent.  The  primary  duty  of  a  receiver  of  leasehold 
premises  is  to  pay  the  head-rent,  or  principal  rent  due  to  the 
landlord  of  the  premises,  and  this  he  is  bound  to  do  without 
any  special  order  of  court  to  that  effect,  and  without  com- 
pelling the  landlord  to  resort  to  any  proceedings  for  the  pur- 
pose of  enforcing  payment.2  And  when  the  title  to  leasehold 
premises  becomes  vested  in  a  receiver,  who  continues  in  pos- 
session of  and  sub-lets  the  same,  the  lessor  may  recover  the 
rent  in  an  action  against  the  receiver.^  So  where  a  receiver 
has  taken  possession  of  real  property  under  an  order  of  court 
fixing  the  amount  to  be  paid  by  him  as  rent,  and  he  has  con- 
tinued in  possession  for  a  considerable  time  paying  the  rental 
specified  until  the  lessor  has  become  insolvent,  and  has  re- 
tained possession  after  such  insolvency  and  while  proceedings 
were  pending  to  determine  to  whom  the  rental  should  be  pay- 
able, he  will  be  required  to  pay  as  rental  for  such  period  the 
rent  specified  in  the  order  of  court,  and  he  can  not  insist  that 
the  party  entitled  thereto  shall  be  limited  to  what  he  may  be 

99  Corrigan  v.  Trenton  Delaware  1  Q"in  v.  Holland,  Ca.  temp.  H., 

Falls  Co.,  3  Halst.  Ch.,  489.     See,  295. 

also.    Fish   v.    Potts,   4   Halst.    Ch.,  2  Balfe  v.  Blake,  1  Ir.  Ch..  N.  S., 

277,    affirmed    on  appeal,    id.,    909,  365 ;  Walsh  v.  Walsh,  1  Ir.  Eq.,  209. 

upon  the  question  of  rents  in  such  3  Wells  v.  Higgins,  132  N.  Y.,  459, 

case.  30  N.  E.,  861. 


780  RECEIVERS.  [chap.  XIV. 

able  to  show  is  a  reasonable  rental  value  of  the  premises  in 
question.'* 

§  633.  Right  to  make  repairs.  Upon  the  question  of  the 
receiver's  right  to  make  repairs,  after  recovery  of  the  premises 
in  ejectment,  it  has  been  held  unnecessary  for  him  to  first  ap- 
ply for  leave  of  court  to  expend  a  part  of  the  fund  in  his  hands 
for  repairs,  prior  to  letting  the  premises;  but  that  he  is  war- 
ranted in  the  first  instance  in  laying  out  what  he  may  deem 
necessary  for  repairs,  and  his  disbursements,  if  reasonable  and 
proper,  will  be  allowed  in  passing  his  accounts. ^  But  in  an 
early  English  case,  upon  a  bill  by  an  administrator  against  a 
tenant  for  life,  praying  a  decree  that  the  tenant  for  life  in  pos- 
session should  repair  the  premises,  or  that  a  receiver  be  ap- 
pointed with  directions  to  repair,  the  master  of  the  rolls  re- 
fused the  relief  on  the  ground  that  there  was  no  precedent  for 
such  an  exercise  of  jurisdiction.^  And  in  New  York  it  is  held 
that  a  receiver  in  a  foreclosure  suit  has  no  power,  without  the 
authority  of  the  court,  to  make  repairs,  and  that  the  allowance 
of  claims  for  repairs  made  by  a  third  person  seeking  repay- 
ment at  the  hands  of  the  receiver  is  entirely  within  the  discre- 
tion of  the  court,  and  that  no  appeal  lies  from  its  order  re- 
fusing such  an  allowance.*^ 

§  634.  Duty  of  receiver  in  case  of  waste;  injunction 
against  waste.  Under  the  Irish  chancery  practice,  the 
appropriate  course  for  a  receiver  to  adopt,  when  waste  is  com- 
mitted on  lands  subject  to  his  control,  is  to  apply  to  the  court 
for  a  reference  to  a  master,  to  inquire  and  report  what  pro- 
ceedings shall  be  taken  by  the  receiver  touching  the  waste. 
Or,  if  the  case  is  so  pressing  as  to  admit  of  no  delay,  he  may 
file  a  bill  for  an  injunction  to  stay  waste,  and,  at  the  same  time 
with  moving  for  the  injunction,  he  may  move  for  a  reference 
to  a  master  to  inquire  and  report  whether  it  is  necessary  that 

4BlackalI    v.    Morrison,    170    111.,  6  Wood  t/.  Gaynon,  Amb.,  395. 

152.  48  N.  E.,  705.  7  W^yckoflf  v.  Scofield,  103  N.  Y., 

5  Macartney  v.  Walsh,  Hayes,  29,  630,  9  N.  E.,  498. 
note  b. 


CHAP.  XIV.]  REAL  PROPERTY.  781 

he  should  have  adopted  that  proceeding,  and  whether  it  shall 
be  continued.^  And  the  court  may,  upon  the  receiver's  mo- 
tion, grant  a  conditional  order  restraining  tenants  from  com- 
mitting waste,  without  requiring  a  bill  to  be  filed  for  that  pur- 
pose, leaving  the  case  to  be  decided  upon  showing  cause  against 
the  order. ^ 

§  635.  Sale  of  property  free  from  all  liens.  When  a  re- 
ceiver is  in  possession  of  real  estate  under  and  by  virtue  of 
his  appointment,  and  proceedings  are  instituted  in  another  court 
by  parties  claiming  a  lien  upon  the  property,  the  court  appoint- 
ing the  receiver  will  entertain  a  bill  filed  by  him  for  leave  to 
sell  the  real  estate  free  from  all  liens  claimed  by  other  parties, 
and  to  have  so  much  of  the  proceeds  of  the  sale  set  apart  as 
shall  be  sufficient  to  pay  the  alleged  liens,  if  they  are  finally  sus- 
tained.lO  But  when  a  receiver  is  appointed  over  real  estate  in 
an  action  for  the  rescission  of  a  contract,  it  is  improper  to 
authorize  him  to  sell  any  part  of  the  property  in  controversy 
for  the  benefit  of  plaintiff,  before  a  final  hearing  upon  the  mer- 
its.ll  A  purchaser,  however,  from  a  receiver,  who  has  given 
his  note  for  the  purchase  money,  having  received  and  retained 
possession  under  the  receiver's  deed,  may  not,  in  the  absence  of 
fraud  or  mistake,  deny  the  validity  of  the  receiver's  appoint- 
ment, in  an  action  brought  against  him  to  enforce  a  vendor's 
lien  for  the  unpaid  purchase  money.^^    And  when  liens  upon 

8  Mangle  v.  Lord  Fingall,  1  Hog.,  while  his  right  to  possession  and  to 
142  receive   the   rents   remains    unqnes- 

9  Cronin  v.  McCarthy,  Flan.  &  tioned,  he  has  no  concern  with  the 
^    49  legal  title  and  can  not  maintain  a 

10  De  Visser  v.  Blackstone.  6  suit  to  set  aside  a  conveyance  al- 
Blatchf.,  235.  ^eged     to    have    been    fraudulently 

11  Eslerlund  v.  Dye,  56  Ga.,  284.  made  by  the  husband  after  the  re- 
Under  a  New  York  statute  au-  ceiver  was  appointed,  or  to  set 
thori/ing  a  receiver  in  an  action  by  aside  an  alleged  fraudulent  assign- 
a  wife  for  divorce,  it  is  held  that  ment  by  the  husband  of  a  mort- 
the  receiver  acquires  no  title  to  gage  received  upon  such  convey- 
property  of  the  defendant,  but  is  ance.  or  to  restrain  the  foreclosure 
only  entitled  to  possession  as  of  such  mortgage.  Foster  v.  Town- 
against  the  defendant  and  all  per-  shend.  68  N.  Y.,  203. 

sons    claiming    under    him.      And  12  Stelzcr  t;.  La  Rose,  79  Tnd.,  435. 


7S2  RECEIVERS.  [chap.  XIV. 

real  estate  are  sought  to  be  enforced  in  equity,  and  as  a  means 
of  making  the  security  available  the  land  is  placed  in  the  hands 
of  a  receiver,  the  rents  and  profits  received  by  him  are  the  pri- 
mary fund  which  must  first  be  applied  to  the  extinguishment 
of  the  liens  in  the  order  of  their  priority.!^ 

§  636.  What  purchaser  at  receiver's  sale  bound  to  see; 
his  title  not  affected  by  irregularities  if  court  had  jurisdic- 
tion. As  regards  the  rights  acquired  by  a  purchaser  of 
real  property  at  a  receiver's  sale  under  order  of  court,  it  is 
sufficient  for  the  purchaser  to  see  that  there  was  a  suit  in  which 
the  court  appointed  a  receiver  of  the  property ;  that  he  was  au- 
thorized by  the  court  to  sell,  and  that  he  sold  in  pursuance  of 
such  authority ;  that  the  sale  was  confirmed  by  the  court,  and 
that  the  deed  accurately  recites  the  property  sold.  The  title 
then  passes  to  the  purchaser,  and  he  is  not  bound  to  inquire 
whether  any  errors  occurred  in  the  action  of  the  court,  or 
whether  there  were  any  irregularities  in  the  action  of  the  re- 
ceiver.^^  The  court  having  properly  acquired  jurisdiction  of 
the  subject-matter,  and  having  ordered  its  receiver  to  sell  the 

13  Milhous  V.  Dunham,  78  A!a.,  48.  would  in  that  case  pass  to  the  pur- 

14  Koontz  V.  Northern  Bank,  16  chaser.  He  is  not  bound  to  inquire 
Wal.,  196.  "A  purchaser  under  a  whether  any  errors  intervened  in 
deed  from  a  receiver,"  say  the  the  action  of  the  court,  or  irregu- 
court,  Mr.  Justice  Field  delivering  larities  were  committed  by  the  re- 
the  opinion,  "is  not  bound  to  ex-  ceiver  in  the  sale,  any  more  than  a 
amine  all  the  proceedings  in  the  purchaser  under  execution  upon  a 
case  in  which  the  receiver  is  ap-  judgment  is  bound  to  look  into  the 
pointed.  It  is  sufficient  for  him  to  errors  and  irregularities  of  a  court 
see  that  there  is  a  suit  in  equity,  or  on  the  trial  of  the  case,  or  of  the 
was  one,  in  which  the  court  ap-  officer  in  enforcing  its  process.  If 
pointed  a  receiver  of  property;  that  the  receiver  in  the  one  case,  or  the 
such  receiver  was  authorized  by  sheriff  in  the  other,  omit  to  perform 
the  court  to  sell  the  property;  that  his  Avhole  duty,  by  which  the  par- 
a  sale  was  made  under  such  au-  ties  are  injured,  or  commit  any 
thority;  that  the  sale  was  con-  fraud  upon  the  court,  and  the 
firmed  by  the  court,  and  that  the  rights  of  third  parties  have  so  far 
deed  accurately  recites  the  property  intervened  as  to  prevent  the  court 
or  interest  thus  sold.  If  the  title  from  setting  the  proceedings  aside, 
of  the  property  was  vested  in  the  the  injured  parties  must  seek  their 
receiver  by   order  of  the  court,   it  remedy     personally     against     those 


CHAP.  XIV.]  REAL  PROPERTY.  783 

real  estate,  no  mere  errors  or  irregularities  in  the  exercise  of 
the  jurisdiction  thus  acquired  can  affect  the  title  of  a  pur- 
chaser from  the  receiver,  in  a  collateral  proceeding.  Thus, 
when  a  bill  is  filed  in  behalf  of  creditors  against  an  adminis- 
trator to  establish  a  lien  upon  the  estate  of  the  deceased,  and 
on  this  bill  a  decree  is  had  adjusting  and  fixing  the  rights  of 
the  creditors,  removing  the  administrator  and  appointing  a  re- 
ceiver to  wind  up  the  estate,  the  court  has  full  jurisdiction  to 
order  its  receiver  to  sell  the  realty,  and  his  deed  in  pursuance 
of  such  order  will  convey  a  good  title.  The  court,  in  such 
case,  having  properly  acquired  jurisdiction  for  the  purpose  of 
settling  the  administration  of  the  estate,  retains  its  jurisdic- 
tion until  the  matter  is  fully  and  properly  adjusted  and  the 
property  sold.^^  It  is  held  in  Texas  that  a  receiver,  selling 
by  order  of  the  court,  may  convey  the  title  of  the  defendant 
to  the  purchaser,  although  no  conveyance  had  been  executed 
by  the  defendant  to  the  receiver,  and  that  the  title  thus  derived 
under  the  sale  and  conveyance  by  the  receiver  will  prevail  over 
that  derived  from  a  sale  under  a  judgment  against  the  defend- 
ant.l6 

§  637.  Receiver  may  enjoin  tenant  from  using  premises 
for  purpose  prohibited  by  lease.  In  case  of  the  appoint- 
ment of  a  receiver  over  premises  which  are  held  by  a  tenant 
under  a  lease,  with  covenants  against  the  use  of  the  demised 
premises  for  a  particular  purpose,  as  for  a  shop,  on  pain  of  for- 
feiting the  lease  for  a  breach  of  the  covenants,  the  receiver  is 
entitled  to  the  aid  of  an  injunction  to  restrain  the  tenant  from 
using  the  premises  for  the  forbidden  purpose.^*^ 

§  638.  Leave  to  lease  property;  lease  will  not  bind  in- 
fant remainder-man.    It  is  a  common  practice  for  receivers 

officers,   or  on  their  official  bonds.  15  Walker  v.  Morris,  14  Ga.,  323. 

The  interest  of  parties  in  the  con-  16  Russell  v.  Texas  &   Pacific  R. 

troversy  will  generally  induce  such  Co.,  68  Tex.,  646. 

attention  to  the  proceedings  as   to  17  Mason  v.   Mason,  Flan.  &  K., 

prevent    great    irregularities     from  429. 

occurring,    without    being    brought 

to  the  notice  of  the  court." 


784  RECEIVERS.  [chap.  XIV. 

in  charge  of  real  property,  to  apply  to  the  court  for  leave  to 
lease  the  premises  under  their  control.  And  when  an  order  is 
sought  authorizing  the  receiver  to  let  the  property,  it  must  be 
clearly  shown  who  is  in  the  actual  possession,  since  otherwise  a 
party  in  possession  might  be  ejected  without  notice.^^  But  a 
receiver  will  not  be  permitted  to  make  a  lease  of  real  estate 
which  will  bind  an  infant  remainder-man. ^^ 

§  638a.  Rent  due  third  parties;  dilapidations.  When 
receivers  enter  into  possession  of  and  receive  the  rents  of  real 
estate  belonging  to  third  persons  not  parties  to  the  cause,  but 
which  had  been  held  by  defendants  under  lease,  they  may  be 
required  by  petition  in  the  cause  in  which  they  were  appoint- 
ed to  pay  to  the  owners  the  rent  due  thereon.  They  may  also 
be  required,  upon  like  petition,  to  reimburse  such  owners  for 
dilapidations  to  the  property,  the  lease  requiring  the  lessee  to 
keep  the  premises  in  the  condition  in  which  they  were  de- 
mised.2^ 

18  Sealy  v.  Munns,  1  Ir.  Eq.,  332.  affirming  S.  C,  15  Sim.,  450.     But 

19  Gibbins  v.  Howell,  3  Madd.,  1st  see    Brocklebank    v.    East    London 
American  edition,  242.  Railway,  12  Ch.  D.,  839. 

20  Neate  v.  Pink,  3  Mac.  &  G.,  476, 


CHAPTER  XV. 

OF  RECEIVERS  IN  CASES  OF  MORTGAGES. 

I.  Principles  Governing  the  Relief  o  ^^q 

II.  Inadequacy  of  Security  and  l^^soLvz^cvoTMoRiGAooK' ':.['''      666 

III.  Receivers  as  Between  Different  Mortgagees  ]      g^ 

I.  Principles  Governing  the  Relief. 

§  639.     The    jurisdiction    well    established,    but    cautiously    exercised; 
strong  grounds  must  be  shown. 

640.  English  rule  denying  receiver  to  mortgagee  having  legal  title 
<Ai      a/"     "^       *°  possession;  recognized  in  this  country 

641.  Mortgagee  having  legal  estate  may  have  receiver  if  unable  to 

take  possession;  mortgage  executed  by  one  as  surety;  refusal 
of  trustee. 
641a.  When  receiver  refused. 

642.  Rents  and  profits  pendente  life;  receiver  refused  when  security 

adequate;  refused  when  mortgage  not  yet  due;  refused  when 
property  already  in  custodia  legis;  refused  when  improvements 
destroyed  by  fire. 

643.  When    mortgagee    entitled   to   receiver   of   rents    and   profits; 

mortgagee's  right  to  rents  as  against  assignee  in  bank- 
ruptcy; express  pledge  of  rents;  when  insolvency  of  mort- 
gagor  immaterial;  insurance  and  taxes;  past-due  rents. 

644.  Equitable  lien  of  mortgagee  upon  unpaid  rents. 

645.  Loss  by  embezzlement  or  waste  on  part  of  receiver. 

646.  Receiver  of  crops  pendente  lite;  right  to  severed  crops. 

647.  Mortgages  of  chattels. 

648.  Receivers  allowed  over  mortgaged  premises  in  foreign  country. 

649.  Relief  granted  to  secure  interest  alone;  payments  of  interest  by 

receiver  to  mortgagee,  effect  of. 

650.  Receiver  the  representative  of  all  parties  in  interest;  the  rule 

applied  to  corporation  in  bankruptcy. 

651.  Duties  of  mortgagee  appointed  receiver;  order  to  lease  prem- 

ises, when  revoked. 

652.  Mortgagee  authorized  by  mortgagor  to  appoint  receiver;  status 

of   receiver   thus   appointed;   statute   of   Victoria   authorizing 
receivers  when  mortgage  is  in  arrears. 
652a.  Supreme  Court  of  Judicature  Act;  rights  of  debenture  holders. 
Receivers— 50.  785 


786  RECEIVERS.  [chap.  XV. 

653.  Receiver  not  allowed  in  contravention  of  statute;  statute  pro- 

hibiting sale  of  soldier's  property. 

654.  When  appointed  in  behalf  of  mortgagor;   possession  of  mortga- 

gee rarely  interfered  with;  relief  refused  on  creditor's  bill 
against  debtor  and  mortgagee;  when  receiver  appointed 
against  mortgagee  in  possession. 

655.  When  receiver  allowed  after  decree. 

656.  Receiver  appointed   in   suit  to  execute   trusts  of  mortgagor's 

will,  how  discharged;  mortgagor  not  entitled  to  accruing 
rents  after  discharge. 

657.  Mortgagor's  right  to  discharge  of  receiver  on  payment  of  in- 

debtedness, or  on  sale  for  full  amount;  when  owner  of  equity 
of  redemption  entitled  to  rents  collected  by  receiver. 

658.  Equitable  mortgages;  deposit  of  deeds  as  mortgage;  municipal 

loans  secured  on  rates  and  assessments. 

659.  Liquidator   of  corporation   appointed   receiver   in  behalf  of   equi- 

table mortgagee. 

660.  Application   should   show   who  is  in  possession;   amount   due 

should  be  shown. 

661.  Receivers  in  foreclosure  of  railway  mortgages. 

662.  Receiver  appointed  in  aid  of  judgment  creditor,  extended  in 

behalf  of  mortgagee. 

663.  Need  not  be  extended  over  whole  estate;  limited  to  mortgaged 

premises. 

664.  Defense  of  usury. 

665.  Mortgage   of  leasehold  interest;   when  appointment  made  ex 

parte. 
665o.  Receiver  allowed  against  administrator  of  mortgagor;  receiver 
pending  appeal. 

§  639.  The  jurisdiction  well  established,  but  cautiously 
exercised;  strong  grounds  must  be  shown.  The  jurisdic- 
tion of  equity  by  the  appointment  of  receivers  over  mortgaged 
premises,  for  the  protection  of  mortgagees,  or  in  aid  of  actions 
for  the  foreclosure  of  mortgages,  is  well  established,  and  has 
long  been  exercised  by  courts  of  equity,  both  in  England  and 
in  America.  It  is,  however,  exercised  with  extreme  caution, 
and  the  relief  will  not  be  allowed  when  other  adequate  remedy 
exists,  and  when  no  imperative  reasons  are  shown  for  this 
extraordinary  species  of  relief.^     Stated  in  general  terms,  the 

1  Morrison  v.  Buckner,  Hemp.,  under  the  statutes  of  Indiana,  and 
442.  As  to  the  right  to  a  receiver  as  to  the  extent  of  the  receivership 
in  an  action  to  foreclose  a  mortgage      and  the  practice  and  procedure,  see 


CHAP.  XV.]  MORTGAGES.  787 

rule  is,  that  in  actions  for  the  foreclosure  of  mortgages,  equity- 
will  not  interfere  by  the  appointment  of  a  receiver  unless  it  is 
clearly  shown  that  the  security  is  inadequate,  or  that  there 
is  imminent  danger  of  the  waste,  destruction,  or  removal  of 
the  property.  And  there  must,  in  all  cases,  be  a  strong,  spe- 
cial ground  for  the  relief  shown.2  In  other  words,  the  courts 
do  not  interfere  by  a  receiver  as  a  matter  of  course  in  aid  of 
foreclosure  proceedings,  when  it  is  not  alleged  that  there  will 
be  any  deficiency,  and  when  plaintiff  is  at  liberty  to  obtain  a  de- 
cree of  sale.^  When  the  mortgagor  is  the  holder  of  the  legal 
title  and  entitled  to  the  possession  of  the  mortgaged  premises, 
his  possession  under  the  legal  estate  will  not  be  disturbed  by 
the  appointment  of  a  receiver,  except  in  a  clear  case  of  fraud, 
or  of  great  danger  to  the  rights  of  the  mortgagee  if  the  es- 
tate is  not  taken  under  the  protection  of  the  court.  And  the 
court  will  not  interfere  in  behalf  of  the  mortgagee,  unless  it 
clearly  appears  to  be  its  duty  to  take  charge  of  the  estate  to 
protect  a  "clear,  strong  claim  against  it."  If,  therefore,  doubt 
exists  as  to  the  amount  actually  due  under  the  mortgage,  and 
the  plaintiff's  allegations  of  the  inadequacy  of  the  security  are 
denied  by  the  answer,  the  court  will  not  interfere  with  the 
mortgagor's  possession.* 

Hursh  V.  Hursh,  99  Ind.,  500.     As  Whitehead  v.  Hale,  118  N.  C,  601, 

to  the  right  of  a  mortgagee  to  a  re-  24  S.  E.,  360.     In  Collins  v.  Gross, 

ceiver  of  the  rents  and  income  of  51  Wash.,  516,  99  Pac,  573,  it  was 

the  mortgaged  premises  under  the  held  proper  to  appoint  a  receiver  for 

Kentucky    code,    see    Douglass    v.  the  rents  and  profits  of  the  mort- 

Cline,    12    Bush,    608;    WooIIey    v.  gaged   premises    where   it   appeared 

Holt,  14  Bush,  788.     As  to  the  ap-  that  the   defendant  had  abandoned 

pointment    of    a    receiver    pending  the  property  and  had  departed  for 

proceedings  to  foreclose  a  mortgage  parts  unknown. 

upon   premises   which   are   occupied  2  Morrison    v.    Buckner,    Hemp., 

as  the  family  residence  of  the  mort-  442;    Callanan    v.    Shaw,    19    Iowa, 

gagor  and  which  embrace  his  home-  183. 

stead    exemptions,    see    Sanford    v.  3  Hackett  v.  Snow,  10  Ir.  Eq.,  220. 

Anderson,  69  Neb.,  249,  95  N.  W.,  4  Callanan  v.  Shaw,  19  Iowa,  183. 

632.     As  to  the   appointment   of  a  And  in  this  case,  grave  doubts  are 

receiver  in  aid  of  a  foreclosure  of  intimated    as    to    whether,    in    any 

a  mortgage  upon  a  newspaper,  see  case,  a  receiver  should  be  allowed 


788  RECEIVERS.  [chap.  XV. 

§  640.  English  rule  denying  receiver  to  mortgagee  hav- 
ing legal  title  and  right  to  possession;  recognized  in  this 
country.  Under  the  practice  of  the  English  Court  of  Chan- 
cery, a  distinction  was  always  observed,  in  the  appointment 
of  receivers,  between  legal  and  equitable  mortgages,  the  for- 
mer vesting  the  legal  estate  at  once  in  the  mortgagee,  with  the 
right  of  immediate  entry,  and  the  latter  conveying  no  legal 
title,  but  a  mere  equity.  And  while,  as  will  hereafter  be  shown, 
the  jurisdiction  has  been  frequently  exercised  in  behalf  of 
equitable  mortgagees,^  as,  for  example,  in  behalf  of  subsequent 
mortgagees  when  there  were  several  incumbrancers,  all  sub- 
sequent to  the  first  being  regarded,  under  the  English  system, 
as  equitable  mortgagees,  yet  the  rule  is  well  settled  that  a  legal 
mortgagee,  i.  e.,  one  having  the  legal  estate  with  an  immediate 
right  of  entry,  is  not  entitled  to  the  aid  of  equity  by  the  ap- 
pointment of  a  receiver.^  The  reason  for  the  rule,  as  stated 
by  Lord  Eldon,  by  whom  it  was  first  firmly  established,  is 
found  in  the  fact  that  the  legal  mortgagee,  being  entitled  to 
immediate  possession,  stands  in  no  need  of  the  aid  of  equity, 
since  he  may  at  once  protect  his  interests  by  himself  taking 
possession.'^  Nor  does  the  fact  that  the  tenants  of  the  mort- 
gaged premises  are  numerous,  and  that  there  is  difficulty  in 
collecting  the  rents,  vary  the  application  of  the  rule,  and  the 
mortgagee,  in  such  case,  will  still  be  left  to  his  remedy  by  tak- 
ing possession.^  The  English  doctrine  has  been  recognized, 
although  not  generally  followed,  in  this  country,  and  it  has 
been  held,  on  a  bill  to  foreclose  a  legal  mortgage  and  for  an 
injunction  and  a  receiver  to  prevent  the  defendant  from  re- 
ceiving the  rents,  that  equity  will  not  interfere  as  against  the 

to   take  possession  of  the   mortga-  "^  See  observations  of  Lord  Eldon 

gor's   homestead,   pending   proceed-  in  Berney  v.   Sewell,  1  Jac.  &  W., 

ings  for  the  foreclosure  of  a  mort-  647.    See,  also,  observations  of  Lord 

gage  thereon.  Romilly,  Master  of  the  Rolls,  to  the 

5  See  Meaden  v.   Sealey,  6  Hare,  same  effect,  in  Ackland  v.  Gravener, 
620.  31  Beav.,  482. 

6  Berney  v.   Sewell,  1   Tac.  &  W.,  8  Sturch  v.  Young,  5  Beav.,  557. 
647;  Ackland  v.  Gravener.  31  Beav., 

482;  Sturch  v.  Young.  5  Beav.,  SS7. 


CHAP.  XV.]  MORTGAGES.  789 

mortgagor  in  possession,  such  interference  being  regarded  as 
inconsistent  with  the  estabHshed  practice  of  courts  of  equity.^ 
§  641.  Mortgagee  having  legal  estate  may  have  receiv- 
er if  unable  to  take  possession;  mortgage  executed  by  one 
as  surety;  refusal  of  trustee.  While,  as  we  have  thus  seen, 
a  mortgagee  in  England,  having  the  legal  estate,  is  not  entitled 
to  the  intervention  of  equity  by  the  appointment  of  a  receiver 
in  aid  of  his  foreclosure  suit,  since  he  is  usually  in  a  position 
to  take  possession  himself,  without  the  aid  of  the  court,  yet  if 
he  is  unable  to  take  possession,  the  reason  for  the  rule  fails, 
and  he  may,  in  such  case,  be  entitled  to  the  relief.  Thus,  in 
the  case  of  a  mortgage  executed  by  one  as  surety  to  the  original 
indebtedness,  in  addition  to  the  mortgage  given  by  the  principal 
debtor  himself,  and  providing  that  the  mortgagee  shall  not  have 
recourse  to  the  surety's  estate  until  the  estate  primarily  charged 
shall  prove  an  insufficient  security,  in  an  action  for  a  foreclosure 
by  the  mortgagee,  a  receiver  may  be  appointed  over  the  surety's 
estate.io    So  when  the  mortgagee  is  forcibly  prevented  by  the 

9  Oliver  V.  Decatur,  4  Cranch  C.  conveniences  which  arise  from  ex- 
C-,  458.  ercising  that   power.     But,   though 

10  Ackland  v.  Gravener,  31  Beav.,  the  court  refuses  to  grant  the  re- 
482.  Lord  Romilly,  Master  of  the  ceiver  in  cases  where  there  is  no 
Rolls,  observes,  p.  484:  "I  must  question  and  the  mortgagee  can 
grant  the  receiver  in  this  case,  take  possession  at  once,  there  being 
which  is  a  peculiar  one.  The  rule  no  defense  whatever  to  his  actfon 
undoubtedly  is,  that  where  a  mort-  of  ejectment,  still,  if  the  mortgagee 
gagee  files  a  bill  to  foreclose,  if  he  can  not  take  possession,  as  if,  for 
has  a  legal  estate  and  can  take  pos-  instance,  there  is  a  prior  mortgagee 
possession  at  once  by  ejectment,  this  who  refuses  to  take  possession,  then, 
court  will  not  grant  him  a  receiver,  at  the  instance  of  the  second  mort- 
and  for  this  plain  reason :  that  he  gagee,  the  court  does  grant  a  re- 
may,  if  he  think  fit,  take  possession  ceiver.  In  this  instance,  the  case  is 
without  the  help  of  the  court.  It  peculiar,  for,  though  I  think  the 
is  true  that,  by  taking  possession  as  legal  estate  is  in  the  plaintiff  by  the 
mortgagee,  he  is  subject  to  have  terms  of  the  deed,  yet  it  contains  a 
the  account  taken  against  him  with  proviso  that  the  plaintiff  shall  not 
a  greater  degree  of  severity  than  have  recourse  to  the  surety's  estate, 
any  other  case,  but  he  is  not  to  gain  or  be  at  liberty  to  sell  it,  until  the 
the  advantage  of  having  a  receiver  estate  primarily  charged  shall  prove 
when   he  can  take   possession   him-  an  insufficient  security." 

self,  though   subject  to  all  the  in- 


790  RECEIVERS.  [chap.  XV. 

mortgagor  from  taking  possession  after  default  in  the  payment 
of  principal  and  interest,  the  mortgagee  is  entitled  to  a  receiv- 
evM  And  when  a  deed  of  trust,  in  the  nature  of  a  mortgage, 
authorizes  the  trustee  to  take  possession  of  the  mortgaged 
premises  upon  default  in  the  payment  of  principal  and  interest, 
upon  such  default  and  the  refusal  of  the  trustee  to  take  posses- 
sion at  the  request  of  the  bondholders  secured  by  the  mortgage, 
a  court  of  equity  may  appoint  a  receiver  upon  a  bill  by  the 
bondholders.  And  in  such  case,  the  relief  may  be  granted  to 
enforce  the  right  to  immediate  possession  of  the  mortgaged 
premises,  independent  of  any  question  of  loss  or  depreciation 
of  the  property.l2  But  a  covenant  in  the  mortgage  that,  in 
the  event  of  default,  the  mortgagee  may  take  possession,  does 
not  afford  sufficient  ground  for  a  receiver,  after  foreclosure 
sale,  to  hold  the  premises  during  the  period  of  redemption,  as 
against  a  lessee  of  the  mortgagors,  when  it  is  not  shown  that 
the  mortgagors  are  insolvent  and  unable  to  respond  for  a  de- 
ficiency.^^ 

§  641a.  When  receiver  refused.  Under  the  statutes  of 
Michigan,  it  is  held  that  the  mortgagor  is  entitled  absolutely 
to  possession  until  the  mortgagee's  title  under  the  foreclosure 
becomes  absolute.  It  is,  therefore,  held  that  the  mortgagee  is 
not  entitled  to  the  rents  pending  a  foreclosure,  or  to  a  receiver 
to  collect  such  rents.^'*  So  under  a  similar  statute  of  Oregon 
it  is  held  that  a  receiver  should  not  be  appointed  over  the  rents 
and  profits  of  the  mortgaged  estate,  although  there  is  an  express 
provision  in  the  trust  deed  or  mortgage  for  the  appointment  of 
a  receiver  upon  default  by  the  mortgagor. ^^     And  when  the 

11  Truman  v.  Redgrave,  18  Ch.  M.  &  P.  R.  M.  Co.,  40  Mich.,  307; 
D.,  547.  Union  M.  L.  I.  Co.  v.  Union  M.  P. 

12  Warner  v.   Rising   Fawn   Iron       Co.,  37  Fed.,  286. 

Co.,  3  Woods,  514.  15  Conper  v.  Shirley,  21  C.  C.  A., 

13  Swan  V.  Mitchell,  82  Iowa,  307,  288,  75  Fed.,  168,  44  U.  S.  App.,  586. 
47  N.  W.,  1042.  The    statute    in    question    provided 

14  Wagar  v.  Stone,  36  Mich.,  364 ;  that:  "A  mortgage  of  real  prop- 
Hazeltine  v.  Granger,  44  Mich.,  503,  erty  shall  not  be  deemed  a  convey- 
7  N.  W.,  74.     See,  also,  Beecher  v.  ance  so  as  to  enable  the  owner  of 


CHAP.  XV.]  MORTGAGES.  791 

mortgagee  sells  under  a  power  of  sale  contained  in  the  mort- 
gage and  becomes  the  purchaser,  upon  a  bill  by  him  to  remove 
uncertainties  as  to  his  title  and  for  a  confirmation  of  the  sale, 
he  can  not  have  a  receiver  of  the  rents  and  profits,  the  suit  be- 
ing in  the  nature  of  an  action  to  remove  a  cloud  from  the  title, 
and  the  mortgagee  having  a  remedy  at  law  to  recover  posses- 
sion.i6  So  when  the  mortgage  provides  in  express  terms  that 
the  mortgagor  shall  retain  possession  until  foreclosure,  it  is 
error  to  appoint  a  receiver  in  behalf  of  the  mortgagee  in  a  suit 
to  foreclose,  as  the  consideration  for  a  continuance  of  the  cause 
requested  by  defendant,  when  it  is  not  shown  that  the  relief  is 
necessary  for  the  preservation  of  the  property.!'^  And  where 
a  trust  deed  provides  that  the  trustee  therein  may,  upon  default, 
enter  upon  and  take  possession  of  the  premises,  the  remedy  thus 
provided  is  regarded  as  ample  and  a  receiver  will  not  be  ap- 
pointed.^^  But  it  is  held,  in  Minnesota,  that  a  statute  declaring 
that  a  mortgage  of  real  property  shall  not  be  deemed  a  convey- 
ance, so  as  to  enable  the  mortgagee  to  recover  possession  with- 
out foreclosure,  has  the  effect  only  of  changing  the  common- 
law  rights  and  remedies  of  the  mortgagee,  without  affecting  his 
equitable  remedies.  The  right,  therefore,  of  a  mortgagee  to  a 
receiver  for  the  preservation  of  his  security,  upon  proper  cause 
shown,  is  in  no  manner  impaired  by  such  a  statute.!^  And  the 
same  doctrine  has  been  announced  by  the  supreme  court  of 
Nebraska  under  a  statute  providing  that,  in  the  absence  of 
stipulations  to  the  contrary,  the  legal  title  and  right  to  the  pos- 
session of  real  estate  shall  remain  in  the  mortgagor.^o 

the  mortgage  to  recover  possession  18  Eastern    Trust    &    B.    Co.    v. 

of  the  real  property,  without  a  fore-  American  Ice   Co.,   14  App.  D.   C, 

closure  and  sale  according  to  law."  304. 

1  Hill's  Ann.  Laws  of  Oregon,  (2nd  19  Lowell  v.  Doe,  44  Minn.,  144, 

ed.),  p.  383,  §  326;   General  Laws  46  N.  W.,  297. 

of  Oregon,  1845-64,  p.  228,  §  323.  20  Philadelphia    M.    &   T.    Co.   v. 

16  McLean  v.  Presley's  Adminis-  Coos,  47  Neb.,  804,  66  N.  W.,  843. 
trator,  56  Ala.,  211. 

1'''  Chadbourn    v.    Henderson,    2 
Baxter,  460. 


792  RECEIVERS.  [chap,  XV. 

§  642.  Rents  and  profits  pendente  lite ;  receiver  refused 
when  security  adequate;  refused  when  mortgage  not  yet 
due;  refused  when  property  already  in  custodia  legis; 
refused  when  improvements  destroyed  by  fire.  As  regards 
the  rents  and  profits  of  mortgaged  premises,  pending  an 
action  for  a  foreclosure,  the  general  rule,  in  the  absence  of 
any  especial  equities,  is,  that  the  mortgagee,  as  against  the 
mortgagor  in  possession  and  those  deriving  title  under  him  sub- 
sequent to  the  mortgage,  is  not  entitled  to  a  receiver  of  the 
rents  and  profits  pendente  lite,  and  a  court  of  equity  will  usual- 
ly leave  the  mortgagee  to  his  action  at  law  to  recover  posses- 
sion, and  for  the  rents  and  profits.2i  If,  therefore,  the  mort- 
gaged premises  are  an  adequate  security  for  the  payment  of  the 
indebtedness,  there  is  no  ground  for  the  appointment  of  a  re- 
ceiver of  the  rents  and  profits.  And  in  determining  as  to  the 
adequacy  of  the  security  for  the  purposes  of  an  application  of  a 
receiver  of  the  rents,  the  best  criterion  as  to  the  value  of  the 
security  would  seem  to  be  the  rental  itself.22  A^d  if  the 
property  is  sufficient  security,  the  fact  that  at  some  future  time 
it  may  become  insufficient  is  no  ground  for  the  appointment  of  a 
receiver  even  though  the  mortgagor  is  insolvent.23  It  is  to  be 
observed,  also,  that  a  receiver  will  not  be  appointed  of  the  rents 
and  profits  when  the  mortgage  indebtedness  is  not  yet  due, 
and  when  the  mortgagee  has  neglected  to  take  a  pledge  of  the 
rents  and  profits  of  the  whole  premises  to  keep  down  the  ac- 
cruing interest.24  So  where  the  security  is  adequate  and  there 
is  an  ample  remedy  under  the  statute,  a  receiver  will  not  be 
appointed.25  So  the  mortgagee  is  not  entitled  to  rents  which 
have  been  collected  by  a  receiver  in  another  suit,  notwithstand- 

21  Williams      v.      Robinson,      16  23  Holbert   v.    Chilvers,   58   Neb., 
Conn.,  517.    And  see  Fifth  National      665,  79  N.  W.,  623. 

Bank  v.  Pierce,  117  Mich.,  376,  75  24  Bank  of   Ogdensburgh   v.    Ar- 

N.  W.,  1058;  Dubois  v.  Bowles,  30  nold,  5  Paige,  38. 

Colo..  44,  69  Pac,  1067.  2.5  Nathans   v.    Steinmeyer,   57   S. 

22  ShotweU  V.  Smith,  3  Edw.  Ch.,  C,  386,  35  S.  E.,  733. 
588. 


CHAP.  XV.]  MORTGAGES.  793 

ing  he  may  have  given  notice  to  the  tenants  of  the  receiver 
to  attorn  to  him.26  And  when  the  mortgagee  files  a  general 
creditor's  bill,  for  the  benefit  of  himself  and  other  creditors, 
but  does  not  set  up  his  mortgage  or  seek  its  foreclosure,  and  a 
receiver  is  appointed,  but  the  bill  is  afterward  dismissed,  the 
mortgagee  is  not  entitled  to  the  rents  collected  by  such  re- 
ceiver, even  though  he  afterward  files  his  bill  for  a  foreclo- 
sure.2'^  And  when  the  mortgaged  property  is  ample  security 
for  the  indebtedness,  a  receiver  of  the  rents  and  profits  will  be 
denied,  although  the  mortgage  expressly  provides  that  the 
mortgagee  shall  be  entitled  to  the  rents  and  profits  after  de- 
fault.28  And  where  there  has  been  a  foreclosure  sale  for  a 
sum  not  sufficient  to  satisfy  the  amount  due  under  the  mort- 
gage but  there  is  no  proof  that  the  mortgagor  is  insolvent  or 
the  property  is  inadequate  security,  a  balance  in  the  hands  of 
the  receiver  on  account  of  rents  and  profits  is  properly  paid 
to  the  mortgagor  and  not  applied  on  the  deficiency.29  And 
where  a  railway  mortgage  provided  that  until  default  the 
mortgagor  should  remain  in  possession,  exercise  its  franchises 
and  collect  and  use  the  revenues  of  the  property,  and  the  bill 
for  a  receiver  constituted  the  first  demand  for  the  possession 
of  the  road  on  account  of  the  default,  it  was  held  that  the  re- 
ceiver was  not  entitled  to  the  rents  and  profits  which  were 
earned  prior  to  the  filing  of  the  bill,  although  they  were  not 
paid  until  after  the  appointment  of  the  receiver.^^  Nor  is  the 
mortgagee  entitled  to  a  receiver  of  the  rents  and  profits  where 
the  property  is  already  in  custodia  legis,  being  in  the  possession 
of  the  administrator  of  the  deceased  mortgagor  who  is  collect- 
ing the  rents  and  profits.^^  And  a  receiver  will  not  be  appointed 
where  the  improvements  upon  the  mortgaged  premises  have 

26  Coddington  v.  Bispham,  36  N.  Carey,  52  C.  C  A.,  174,  114  Fed., 
J.  Eq.,  574.  288. 

27  Scott  V.  Ware,  65  Ala.,  174.  ^  Hook  v.  Bosworth,  12  C.  C.  A., 

28  Aetna  Life  Ins.  Co.  v.  Broeker,  208,  64  Fed.,  443,  24  U.  S.  App.,  341. 
166  Ind.,  576,  77  N.  E.,  1092.  31  St.    Louis    National    Bank    v. 

29  Southern    B.    &    L.    Assn.    v.  Field,  156  Mo.,  306,  56  S.  VV.,  1095. 


794  RECEIVERS.  [chap.  XV. 

been  destroyed  by  fire  and  there  are  consequently  no  rents  and 
profits  arising  from  the  property.^^ 

§  643.  When  mortgagee  entitled  to  receiver  of  rents 
and  profits ;  mortgagee's  right  to  rents  as  against  assignee 
in  bankruptcy;  express  pledge  of  rents;  when  insolvency 
of  mortgagor  immaterial;  insurance  and  taxes;  past-due 
rents.  But  when  the  mortgage  is  actually  due,  and  the 
proceeds  of  the  mortgaged  premises  are  not  likely  to  prove 
sufficient  for  the  payment  of  the  debt  and  costs,  and  the  mort- 
gagor or  other  person  who  is  personally  liable  for  the  deficiency 
is  insolvent,  the  mortgagee  may  apply  for  a  receiver  to  secure 
the  rents  and  profits  which  have  not  yet  been  collected.  And 
in  this  way  he  may  obtain  a  specific  lien  upon  the  rents  to  pay 
such  deficiency.^^  When,  therefore,  a  mortgagee,  upon  pro- 
ceedings for  a  foreclosure,  obtains  a  receiver  of  the  rents  and 
profits,  if  the  amount  obtained  upon  a  sale  of  the  premises 
proves  insufficient  to  pay  the  mortgage  indebtedness,  he  is  en- 
titled to  so  much  of  the  rents  in  the  receiver's  hands  as  will 
make  up  the  deficiency.  And  this  is  so,  even  though  the  mort- 
gagor's rights  in  the  premises  have  passed  to  his  assignee  in 
bankruptcy,  and  have  been  sold  by  him ;  since  the  mortgagee, 
who  procures  a  receiver  to  be  appointed  for  the  protection  of 
his  lien,  is  entitled  to  the  rents  in  preference  to  the  assignee  or 
purchaser  at  his  sale.^**  And  where  a  mortgage  gives  an  ex- 
press lien  upon  the  rents  and  profits  and  a  foreclosure  sale  has 
resulted  in  a  deficiency,  the  mortgagee  is  entitled  to  a  receiver 

32  Eastern  Trust  &  B.  Co.  v.  See,  also,  Post  v.  Dorr,  4  Edw.  Ch., 
American  Ice  Co.,  14  App.  D.  C,  412;  Lofsky  v.  Maujer,  3  Sandf. 
304.  Ch.,  69;  Ecklund  v.  Willis,  42  Neb., 

33  Astorz/.  Turner,  11  Paige,  436;  737,  60  N.  W.,  1026;  Philadelphia 
Kountze  v.  Omaha  Hotel  Co.,  107  M.  &  T.  Co.  v.  Oyler,  61  Neb.,  702, 
U.  S.,  378,  395,  2  Sup.  Ct.  Rep.,  911,  85  N.  W.,  899;  Boyce  v.  Continental 
926;  Grant  v.  Phoenix  Life  Ins.  Co.,  Wire  Co.,  60  C.  C.  A.,  508,  125  Fed., 
121  U.  S.,  105,  7  Sup.  Ct.  Rep.,  841 ;  740. 

Shepherd  v.  Pepper,  133  U.  S.,  626,  34  Post  v.  Dorr,  4  Edw.  Ch.,  412. 

652,  10  Sup.  Ct.  Rep.,  438,  447 ;  Oak-      And    see    Pepper    v.    Shepherd,    4 
ford  V.  Robinson,  48  111.  App.,  270.       Mackey,  269. 


CHAP.  XV.]  MORTGAGES.  795 

of  the  rents  and  profits  during  the  period  of  redemption.35 
And  in  such  case  it  is  no  objection  that  the  decree  of  sale  failed 
to  provide  for  such  a  receiver,  since,  until  a  sale  was  had,  it 
was  impossible  to  ascertain  whether  or  not  there  would 
be  a  deficiency  requiring  the  appointment  of  a  receiver.36  And 
where  the  mortgage  expressly  pledges  the  rents  and  profits  and 
it  appears  that  the  mortgagor  is  insolvent  and  the  security  in- 
adequate, a  receiver  is  properly  appointed  during  the  period  of 
redemption.3'^  And  where  the  mortgage  or  deed  of  trust  thus 
expressly  pledges  the  rents  and  profits  as  security  for  the  in- 
debtedness, and  it  appears  to  be  necessary  to  enforce  the  lien 
thus  created  for  the  payment  of  the  mortgage  debt,  the  court 
may  appoint  a  receiver  of  the  rents  and  profits  without  regard 
to  the  question  of  the  solvency  or  insolvency  of  the  mortga- 
gor.38  And  it  is  held  that  a  statute  which  provides  that  a  mort- 
gage of  real  property  shall  not  be  deemed  a  conveyance  so  as  to 
enable  the  owner  of  the  mortgage  to  recover  possession  of  the 
property  without  foreclosure  and  sale  does  not  deprive  a  mort- 
gagee of  his  right,  under  the  general  rules  of  equity,  to  a  re- 
ceiver of  the  rents  and  profits  during  the  period  of  redemption 
where  the  mortgagor  is  insolvent  and  the  security  is  inadequate 
and  the  premises  are  being  subjected  to  waste. ^^  And  where 
the  mortgagor  has  agreed  to  keep  the  mortgaged  premises  in- 
sured for  the  benefit  of  the  mortgagee  and  to  pay  all  taxes  and 
assessments  levied  against  the  property,  rents  collected  by  a  re- 

35  First  National  Bank  v.  Illinois  38Bagley  v.  Illinois  T.  &  S.  Bank, 
Steel  Co.,  174  111.,  140,  51  N.  E.,  199  111.,  76,  64  N.  R,  1085;  Ball  v. 
200;  Moncrieff  v.  Hare,  38  Colo.,  Marske,  202  111.,  31,  66  N.  E.,  845; 
221,  87  Pac,  1082,  7  L.  R.  A.  (N.  Oakford  v.  Robinson,  48  111.  App., 
S.),  1001.  270. 

36  First  National  Bank  v.  Illinois  39  Moncrieff  v.  Hare,  38  Colo., 
Steel  Co.,  174  111.,  140,  51  N.  E.,  221,  87  Pac,  1082,  7  L.  R.  A. 
200.  (N.   S.),    1001;    Elmira   Mechanics' 

37  Moncrieff  v.  Hare,  38  Colo.,  Society  v.  Stanchfield,  87  C.  C.  A., 
221,  87  Pac,  1082,  7  L.  R.  A.   CN.  585,  160  Fed.,  811. 

S.),  1001;  Hubbell  v.  Avenue  In- 
vestment Co.,  97  Iowa,  135,  66  N. 
W.,  85. 


796  RECEIVERS.  [chap.  XV. 

ceiver  appointed  in  foreclosure  proceedings  are  properly  applied 
to  the  payment  of  taxes  and  insurance  premiums. ^^  And  when 
the  receiver  collects  rents  after  a  foreclosure  sale  and  pending 
the  statutory  period  of  redemption,  the  fact  that  he  acquires  title 
to  the  premises,  subject  to  the  rights  of  the  purchaser,  will  not 
entitle  him  to  such  rents,  nor  will  he  be  permitted  to  question 
an  order  of  the  court  directing  their  payment  to  such  purchaser, 
the  premises  having  sold  for  less  than  the  mortgage  indebted- 
ness and  the  mortgage  r  being  insolvent.'*^  But  as  regards  past- 
due  rents,  the  receiver  only  acquires  title  to  such  as  remain  un- 
paid at  the  time  of  his  appointment,  and  he  is  not  entitled  to 
rents  which  have  been  collected  by  an  assignee  in  bankruptcy 
of  the  mortgagor  prior  to  the  receivership. ^2  And  a  mortgagee 
who  procures  a  receiver  in  aid  of  his  foreclosure  proceeding, 
thereby  acquires  only  an  equitable  lien  upon  the  unpaid  rents. 
Until  such  appointment,  the  owner  of  the  equity  of  redemption 
is  entitled  to  receive  the  rents  and  can  not  be  compelled  to  ac- 
count for  them,  even  though  the  motion  for  a  receiver  is  pend- 
ing when  such  rents  are  collected. ^^  But  in  an  action  brought 
by  the  receiver  to  recover  rents,  the  inadequacy  of  the  mort- 
gage security  and  the  default  in  payment  of  the  mortgage  in- 
debtedness can  not  be  questioned  by  defendant,  he  having  been 
a  party  to  the  suit  in  which  the  receiver  was  appointed,  and 
such  issues  having  been  determined  in  that  suit  they  will  be 
regarded  as  res  judicata^ 

§  644.  Equitable  lien  of  mortgagee  upon  unpaid  rents. 
The  lien  thus  obtained  by  a  mortgagee  who  uses  the  necessary 
diligence  in  the  assertion  of  his  rights  is  not  confined  to  the 
rents  actually  paid.     And  when,  upon  the  maturing  of  the 

40  American  National  Bank  v.  43  Rider  v.  Bagley,  84  N.  Y.,  461, 
Northwestern  M.  Life  Ins.  Co.,  32  As  to  the  right  of  a  receiver  in 
C.  C.  A.,  275,  89  Fed.,  610,  60  U.  S.  foreclosure  proceedings  to  lease  the 
App..  693.  mortgaged  premises  and  as  to  the 

41  Herrick  v.  Miller,  123  Ind.,  304,  duration  of  such  leases,  see  Shreve 
24  N.  R,  111.  V.  Hankinson,  34  N.  J.  Eq..  413. 

42  Rider  v.  Vrooman,  12  Hun,  44  Goodhue  v.  Daniels,  54  Iowa, 
299.  19,  6  N.  W.,  129. 


CHAP.  XV.]  MORTGAGES.  797 

indebtedness,  the  security  being  inadequate,  the  mortgagee  files 
his  bill  for  a  foreclosure,  and  procures  the  appointment  of  a 
receiver,  he  thereby  obtains  an  equitable  lien  upon  the  unpaid 
rents,  and  will  be  entitled  thereto  to  the  extent  of  any  de- 
ficiency in  the  security.  For  example,  when  the  mortgagor, 
previous  to  the  foreclosure  suit  and  the  appointment  of  a  re- 
ceiver, conveys  the  premises  subject  to  the  mortgage,  and  his 
grantee  rents  a  portion  of  the  premises,  receiving  a  note,  se- 
cured by  chattel  mortgage,  for  the  rent,  the  receiver  in  the  fore- 
closure suit  is  entitled  to  the  sum  secured  by  the  chattel  mort- 
gage, it  being  subject  to  the  equitable  lien  acquired  by  the 
mortgagee.^^ 

§  645.  Loss  by  embezzlement  or  waste  on  part  of  re- 
ceiver. Upon  the  question  of  the  liability  for  loss  of  rents 
and  profits  after  they  have  come  to  the  hands  of  the  receiver, 
it  was  intimated,  although  not  decided,  in  a  case  before  Lord 
Thurlow,  that  if  a  receiver  is  appointed  upon  the  application 
of  a  mortgagee  or  other  incumbrancer,  and  he  afterward  em- 
bezzles or  otherwise  wastes  the  rents  and  profits,  the  loss 
should  fall  upon  the  mortgagor.^^  And  in  New  Jersey,  in  a 
well  considered  case,  it  has  been  held  that  the  plaintiff  in  a 
mortgage  foreclosure  who  nominates  and  procures  the  ap- 
pointment of  his  solicitor  and  agent  to  receive  the  rents  and 
profits  of  the  mortgaged  premises  pending  the  receivership 
must  bear  the  loss  caused  by  the  defalcation  of  the  receiver 
and  the  insufficiency  of  his  sureties.'*'^ 

§  646.  Receiver  of  crops  pendente  lite ;  right  to  severed 
crops.  A  mortgagee  of  a  growing  crop,  or  his  assignee, 
although  he  may  not  be  authorized  to  appropriate  the  property 

45Lofsky    V.    Maujer,    3    Sandf.  46  See  observations  of  Lord  Thur- 

Ch.,  69.    As  to  the  right  of  a  mort-      low  in  Rigge  v.  Bowater,  3  Bro.  C. 
gagee,    through    a    receiver,    to   the      C,  365.     And  see,  ante,  §  270. 
rents    collected    by    the    mortgagor  ^"^  Sorchan  v.  Mayo,  50  N.  J.  Eq., 

pending  the  foreclosure  suit  and  be-      288,  23  Atl.,  479. 
fore  decree,  see  Silverman  v.  North- 
western    Mutual     Life     Insurance 
Company,  5  Bradw.,  124. 


79S  RECEIVERS.  [CIIAP.   XV. 

to  himself,  is  nevertheless  entitled  to  have  it  protected,  and 
may,  therefore,  have  a  receiver  of  the  crop  pcndint^  litigation 
concerning  his  rights  under  the  lien  claimed  by  him.^^  But 
when  a  receiver  is  appointed  in  behalf  of  a  mortgagee  to  man- 
age the  mortgaged  estate  and  receive  the  rents  and  profits, 
he  is  not  entitled,  by  virtue  of  his  appointment,  to  the  proceeds 
of  crops  raised  upon  the  premises  which  have  been  severed  by 
him  and  consigned  to  parties  from  whom  he  had  received  ad- 
vances, the  crops  having  been  removed  and  consigned  by  the 
mortgagor  before  the  receiver  was  appointed. '^^  So  the  mort- 
gagor in  possession  is  entitled  to  crops  grown  upon  the  prem- 
ises, and  if  such  crops  are  sold  upon  execution  against  him 
before  a  receiver  is  appointed  in  the  foreclosure  suit,  the  re- 
ceiver acquires  no  title  thereto  as  against  the  purchaser.^^ 
And  where  parties  agree  to  become  sureties  for  a  defaulting 
debtor,  upon  being  secured  for  their  liability  by  his  conveying 
to  them  certain  real  estate  in  trust,  with  a  covenant  that  the 
crops  and  produce  of  the  property  shall  be  consigned  to  them 
for  a  term  of  years  after  the  reimbursement  of  what  they  may 
advance  as  sureties,  upon  a  bill  filed  against  the  sureties  for  an 
accounting,  a  receiver  will  not  be  appointed  when  it  is  not 
shown  that  defendants  have  made  any  oppressive  use  of  the 
deed. 51  But  when  the  mortgage  covers  the  rents,  issues  and 
profits  of  the  premises,  and  a  receiver  is  appointed  upon  the 
ground  of  insolvency  of  the  mortgagor  and  inadequacy  of  the 
security,  and  the  receiver  grows  and  harvests  a  crop  upon  the 
premises,  the  proceeds  of  the  sale  of  such  crop  may  be  applied 
in  payment  of  a  deficiency  due  to  the  mortgagee,  the  proceeds 
of  the  foreclosure  sale  having  been  insufficient  to  satisfy  the 
indebtedness. 52 

§  647.  Mortgages  of  chattels.     When  a  mortgagee  of 
chattels,  who  is  in  possession,  having  sold  a  part  and  occupy- 

48  Simpson  v.  Robert,  35  Ga.,  180.  51  Bunbury  v.   Winter,   1   Jac.  & 

49  Codrington     v.     Johnstone,     1       W.,  255. 

Beav.,  520.  52  Montgomery     v.     Merrill,     65 

50  Favorite  v.  Deardoflf,  84  Ind.,      Cal.,  432,  4  Pac,  414. 

555. 


CHAP.  XV.]  MORTGAGES.  799 

ing  as  to  the  residue  the  position  of  trustee  for  other  creditors, 
is  about  to  dispose  of  the  residue  to  the  prejudice  of  a  judg- 
ment creditor  of  the  mortgagor,  a  receiver  may  be  appointed 
of  the  proceeds  of  the  remaining  property  for  the  better  pro- 
tection of  the  rights  of  all  parties  in  interest.^^  And  a  re- 
ceiver has  been  allowed  in  behalf  of  a  mortgagee  of  chattels 
v^hich  have  been  seized  under  writs  of  attachment  which  were 
subordinate  to  the  lien  of  the  mortgage,  the  relief  being  neces- 
sary for  the  prevention  of  waste  and  loss  until  the  rights  of  all 
parties  could  be  determined.^^  And  a  receiver  may  be  appointed 
in  an  action  to  foreclose  a  chattel  mortgage  where  it  appears 
that  the  security  is  wholly  inadequate  and  that  the  mortgagor 
is  insolvent  and  there  is  no  defense  to  the  action  upon  the 
merits. 55  And  it  is  held  that  an  attachment  and  sale  of  mort- 
gaged chattels  can  not  avail  against  the  prior  and  paramount 
lien  of  the  mortgage  so  as  to  prevent  the  appointment  of  a  re- 
ceiver in  an  action  brought  to  foreclose  the  mortgage.  ^6  But 
a  receiver  will  not  be  appointed  in  behalf  of  a  mortgagor  of 
chattels,  to  take  charge  of  the  property  in  the  hands  of  the  mort- 
gagee, merely  upon  the  ground  of  the  mortgagor's  apprehen- 
sion that  defendant  may  part  with  the  property  to  a  bona  fide 
purchaser,  when  he  himself  admits  an  indebtedness  to  be  still 
due  to  the  mortgagee.^^  And  in  a  suit  by  a  judgment  creditor 
to  set  aside  a  mortgage  executed  by  his  debtor  upon  a  stock 
of  goods,  upon  the  ground  that  it  was  intended  to  defraud 
creditors,  if  the  fraud  is  denied  by  defendants  a  receiver  will  not 
be  appointed  in  limine,  when  it  is  not  shown  that  the  mortgagee 
is  insolvent  or  unable  to  respond  in  case  the  mortgage  shall 
finally  be  declared  invalid. ^8  So  when  plaintiff  sues  to  estab- 
lish his  interest  in  personal  property  covered  by  a  mortgage 
and  for  a  sale  of  the  property,  it  is  not  error  to  refuse  a  re- 

53  Gouthwaite  v.  Rippon,  8  L.  J.,  56  Cooper     v.     Berney     National 
N.  S.  Ch.,  139.  Bank,  99  Ala.,  119,  11  So.,  760. 

54  Crow    V.    Red    River    County  57  Bayaud   v.    Fellows,   28   Barb., 
Bank,  52  Tex.,  362.  451. 

55  Euphrat  v.  Morrison,  39  Wash.,  58  Rheinstein  v.  Bixby,  92  N.  C, 
311,  81  Pac,  695.  307. 


800  RECEIVERS.  [chap.   XV. 

ceiver  when  defendants  deposit  in  court  a  sufficient  amount  to 
secure  plaintiff  in  whatever  judgment  he  may  obtain  against 
them. 5^  Nor  will  a  receiver  be  appointed  over  personal  prop- 
erty upon  which  complainant  claims  a  lien,  as  against  purchas- 
ers, when  full  relief  may  be  had  at  law  by  an  action  of  replevin 
for  the  recovery  of  the  property.^^  But  when  a  manufacturer 
sells  goods  upon  credit,  the  purchaser  agreeing  to  deliver  to  the 
manufacturer  all  notes  which  he  may  receive  upon  the  sale 
of  the  articles  to  his  customers,  to  be  held  as  collateral  security 
to  the  purchaser's  notes  for  the  purchase  price,  a  refusal  to  de- 
liver such  notes  by  the  purchaser,  coupled  with  his  insolvency, 
will  warrant  a  receiver  for  their  collection.^! 

§  648.  Receivers  allowed  over  mortgaged  premises  in 
foreign  country.  It  is  not  essential  to  the  exercise  of  the 
power  of  equity  by  the  appointment  of  receivers  over  mort- 
gaged property,  that  the  property  itself  should  be  within  the 
jurisdiction  of  the  court,  and  receivers  have  been  appointed, 
in  proper  cases,  although  the  mortgaged  estates  were  in  a  for- 
eign country. ^2     Thus,  a  mortgagee  of  West  Indian  estates 

59  Welch  V.  Henry,  32  Kan.,  425,  61  McKinnon  v.  Pike  County 
4  Pac,  814.  As  to  the  right  of  a  Guano  Co.,  94  Ala.,  521,  10  So.,  344. 
mortgagee  of  chattels  to  a  receiver  As  to  the  effect  of  laches  of  persons 
under  the  statutes  of  Iowa,  and  as  claiming  a  lien  upon  mortgaged 
to  the  circumstances  which  will  chattels,  which  have  passed  into  the 
warrant  the  relief,  see  Maish  v.  hands  of  a  receiver  and  have  been 
Bird,  59  Iowa,  307,  13  N.  W.,  298.  sold  by  him  and  the  proceeds  paid 
In  Merchants  and  Manufacturers  to  the  mortgagee,  see  Sullivan  v. 
National  Bank  v.  Kent  Circuit  Miller,  106  N.  Y.,  635,  13  N.  W., 
Judge,  43  Mich.,  292,  5  N.  W.,  627,  772.  In  Washington,  under  a  stat- 
it  is  held  that  when  a  receiver  is  ute  giving  a  lien  upon  vessels  for 
allowed  over  personal  property  in  a  materials  and  labor  used  in  their 
suit  to  foreclose  a  chattel  mortgage,  construction,  in  a  suit  to  establish 
a  third  person,  not  a  party  to  the  and  foreclose  such  lien  a  receiver 
cause,  having  a  right  of  action  in  may  be  appointed  to  take  charge  of 
replevin  to  recover  the  property,  the  property  pendente  lite.  Wash- 
should  not  be  restricted  by  the  ington  I.  W.  Co.  v.  Jensen,  3  Wash., 
court  to  suing  in  trover,  but  should  584,  28  Pac,  1019. 

be   permitted    to   proceed    with    his  62  Davis  v.  Barrett,  13  L.  J.,  N.  S. 

action  of  replevin.  Ch.,  304;  Langford  v.  Langford,  5 

60  Brown  v.  Ring,  77  Mich.,  159,  L.  J.,  N.  S.  Ch ,  60. 
43  N.  W.,  770,  1152. 


CHAP.  XV.]  MORTGAGES.  801 

was  appointed  in  England  receiver  of  the  property,  and  without 
requiring  the  usual  security  for  the  faithful  performance  of  his 
trust. 63  But  the  court  will  not  interfere,  in  this  class  of  cases, 
when  the  parties  in  interest,  and  who  really  represent  the 
mortgaged  property  in  the  foreign  country,  are  not  before  the 
court  or  within  its  jurisdiction.64 

§  649.  Relief  granted  to  secure  interest  alone ;  payments 
of  interest  by  receiver  to  mortgagee,  effect  of.  It  would 
seem  that  the  aid  of  a  receiver  for  the  protection  of  a  mortgagee 
is  not  limited  to  cases  where  it  is  necessary  for  the  security  of 
the  principal  sum  due,  but  may,  in  certain  cases,  be  allowed  for 
the  purpose  of  securing  the  interest  as  well.  Thus,  a  mortgagee 
has  been  allowed  a  receiver  to  keep  down  the  interest  on  his 
mortgage,  although  not  entitled  to  a  foreclosure,  he  having 
covenanted  with  the  mortgagor  that  the  principal  of  the  in- 
debtedness should  not  be  called  in  until  after  the  mortgagor's 
death. 65  As  regards  payments  of  interest  to  a  mortgagee  by  a 
receiver  appointed  at  his  instance,  such  payments  are  treated 
as  having  been  made  by  the  mortgagor  himself;  since  the  re- 
ceiver, although  an  officer  of  the  court,  is  not  a  stranger  to  the 
mortgagor,  and  may  be  regarded  as  his  agent  to  the  extent  of 
making  such  payments  of  interest  due.66 

§  650.  Receiver  the  representative  of  all  parties  in  in- 
terest; the  rule  applied  to  corporation  in  bankruptcy.  It 
is  also  to  be  noticed,  with  reference  to  the  position  and  func- 
tions of  a  receiver  appointed  in  aid  of  an  action  of  foreclosure, 
that  he  represents,  not  merely  the  mortgagees  in  whose  behalf 
he  may  have  been  appointed,  but  is  equally  the  representative 
of  all  parties  in  interest.  And  when  the  mortgagor,  a  corporate 
body,  has  been  thrown  into  bankruptcy,  pending  the  proceed- 
ings for  a  foreclosure  in  which  the  receiver  was  appointed,  the 

63  Davis  V.  Barrett,  13  L.  J.,  N.  S.      Lat,  521 ;  S.  C,  8  Ir.  Eq.,  482.    And 
Ch.,  304.  see  Newman  v.  Newman,  cited  in  2 

64  Shaw  V.  Shore,  5  L.  J.,  N.  S.      Bro.  C.  C,  92,  note  6. 

Ch.,  79.  66  Chinnery  v.   Evans,   11   H.  L. 

65  Burrowes  v.   Molloy,  2  Jo.  &      Rep.,  115. 

Receivers — 51. 


802  RECEIVERS.  [chap.  XV. 

receiver  is  to  be  deemed  as  much  the  representative  of  the  as- 
signees in  bankruptcy  and  the  creditors  and  shareholders  of 
the  corporation,  as  of  the  mortgagees  themselves.  The  court 
will  not,  therefore,  order  a  sale  of  the  property  which  would  be 
in  hostility  to  and  would  dispose  of  the  rights  of  those  interest- 
ed in  the  equity  of  redemption,  since  such  a  sale  would  be  di- 
rectly hostile  to  the  rights  of  the  receiver  who  holds  possession 
for  them.^"^ 

§  651.  Duties  of  mortgagee  appointed  receiver;  order  to 
lease  premises,  v^^hen  revoked.  When  the  person  select- 
ed for  the  office  of  receiver  also  occupies  other  and  different 
relations  toward  the  mortgaged  property,  his  functions  and 
duties  as  receiver  are  considered  as  paramount  to  all  others. 
For  example,  when  a  mortgagee  of  property,  occupying  the  po- 
sition of  a  trustee  of  the  equity  of  redemption,  is  also  appointed 
receiver  of  the  mortgaged  premises  and  accepts  the  trust,  his 
relations  and  interest  as  mortgagee  will  not  be  permitted  to  in- 
terfere with  his  duties  as  receiver,  nor  with  the  purposes  nor  in- 
terests for  which  he  was  appointed.  In  such  case,  it  is  his  plain 
duty  as  receiver  to  increase  the  surplus  revenues  of  the  property, 
beyond  what  may  be  found  due  to  him  as  mortgagee,  by  ob- 
taining the  largest  possible  rental.  And  upon  his  application 
to  the  court  for  authority  to  lease  the  mortgaged  premises,  it  is 
his  duty  to  lay  before  the  court  all  the  information  within  his 
possession,  or  which  by  reasonable  diligence  he  might  acquire, 
as  to  the  situation  and  value  of  the  property.  And  when  he  has 
been  ordered  by  the  court,  upon  his  own  application,  to  lease 
the  premises  to  a  particular  person,  but  it  is  afterward  appar- 
ent that  the  application  was  not  made  by  him  in  good  faith, 
and  that  he  was  controlled  by  a  motive  and  purpose  incon- 
sistent with  his  duties  as  receiver,  the  order  will  be  reversed. ^^ 

67  Sutherland    v.    Lake    Superior  suit  and  an  assignee  in  bankruptcy 

Ship    Canal    R.    &   I.    Co.,   9    Bank.  of    the    mortgagor,    see    Hayes    v. 

Reg.,  307.     As  to  the  right  to  the  Dickinson,  9  Hun,  277. 

rents  of  mortgaged  premises  as  be-  68  Bolles  v.   Duff,  54  Barb.,  215; 

tween  a    receiver   in   a    foreclosure  S.  C,  27  How.  Pr.,  162. 


CHAP.  XV.]  MORTGAGES.  803 

§  652.  Mortgagee  authorized  by  mortgagor  to  appoint 
receiver ;  status  of  receiver  thus  appointed ;  statute  of  Vic- 
toria authorizing  receivers  when  mortgage  is  in  arrears. 

There  are  some  cases  to  be  met  with  in  the  Enghsh  reports, 
where  the  mortgagor  has  covenanted  with  and  authorized  the 
mortgagee  to  appoint  a  receiver,  in  case  of  default,  of  the  rents 
and  proceeds  of  the  mortgaged  estate,  for  the  better  security 
of  the  mortgage  debt  and  the  interest  thereon,  and  where  the 
mortgagor  has  attorned  to  the  receiver  thus  appointed.^^     In 
such  cases,  it  would  seem  that  the  receiver,  being  appointed 
by  the  mortgagee  under  the  power  contained  in  the  mortgage, 
is  in  possession  of  the  premises  as  agent,  not  of  the  mortgagee, 
but  of  the  mortgagor;  since  the  mortgagee  himself  acts  in  the 
capacity  and  sustains  the  relation  of  agent  of  the  mortgagor 
in  making  the  appointment."^^    And  where  the  mortgagor  at- 
torns to  the  receiver,  the  relation  of  landlord  and  tenant  would 
seem  to  be  established  between  them.'^^    The  practice  of  thus 
providing  in  the  mortgage  itself  for  a  receiver,  in  case  of  de- 
fault by  the  mortgagor,  seems  to  have  been  quite  prevalent  in 
England,  and  doubtless  gave  rise  to  the  important  statute  of 
23d  and  24th  Victoria,  which  provides  that  mortgagees  may 
have  receivers  of  the  mortgaged  premises  in  all  cases  when  the 
payment  of  principal  is  in  arrear  one  year,  or  the  interest  six 
months,  or  after  any  omission  to  pay  any  premium  or  insur- 
ance due  upon  the  property.     The  receiver  thus  appointed  is 
deemed  the  agent  of  the  person  entitled  to  the  property  subject 
to  the  mortgage,  who  is  solely  responsible  for  his  conduct,  and 
the  statute  regulates  the  manner  of  appointment  and  removal, 
as  well  as  the  various  functions  and  duties  of  this  class  of  re- 
ceivers.''^^ 

69  See  Jolly  r.  Arbuthnot,  4  DeG.      634;   Jefferys  v.   Dickson,  L.  R.,  1 
&  J.,  224;   Jefferys  v.   Dickson,  L.      Ch.  App.,  183. 

T.     1^,      /        io,     T  ry  71  Jefferys   v.    Dickson,   L.    R.,    1 

R.,  1  Ch.  App.,  183 ;  Law  v.  Glenn,  ^        ^^^^ 

L.  R.,  2  Ch.  App.,  634.  72  23  &  24  Victoria,  ch.   CXLV. 

70  See  opinion  of  Rolt,  L.  J.,  in       (August    28.     1860),     100    English 
Law  V.  Glenn,  L.  R.,  2  Ch.   App.,      Statutes  at  Large,  782. 


804  RECEIVERS.  [chap.  XV. 

§  652a.  Supreme  Court  of  Judicature  Act;  rights  of  de- 
benture holders.  Under  the  English  Supreme  Court  of 
Judicature  Act  of  1873,  it  is  provided  that  a  receiver  may  be 
appointed  by  an  interlocutory  order  in  all  cases  in  which  it  shall 
appear  to  the  court  to  be  just  or  convenient  that  such  order 
shall  be  made.  Under  this  act  the  mortgagee  may  have  a  re- 
ceiver to  relieve  himself  from  the  necessity  or  burden  of  tak- 
ing possession  of  the  mortgaged  premises.  And  the  relief  may 
be  allowed,  although  the  mortgagee  has  been  in  possession  and 
has  received  from  the  rentals  more  than  sufficient  to  pay  the 
interest  due  and  costs.'^^  So  when  debenture  holders  in  the 
nature  of  mortgagees  have  power  under  the  terms  of  their 
debentures  to  appoint  a  receiver  over  the  property  of  the  debtor, 
and  have  exercised  this  power,  the  court  may  recognize  such  ap- 
pointment and  may  direct  an  official  liquidator,  in  proceedings 
for  winding  up  the  corporation,  to  deliver  possession  to  the 
receiver  thus  appointed  by  the  debenture  holders.'^'* 

§  653.  Receiver  not  allowed  in  contravention  of  stat- 
ute; statute  prohibiting  sale  of  soldier's  property.    A  re- 

73  Mason  v.  Westoby,  32  Ch.  D.,  Lloyd's,    Barnett's    &    Bosanquet's 

206.     But  see  In  re   Prytherch,  42  Bank,  (1891)  1  Ch.,  136,  note;  In  re 

Ch.  D.,  590.    As  to  the  right  of  the  Stubbs,  (1891)  1  Ch.,  475;  Whitley 

mortgagee  to  rents  accruing  in  the  v.  Challis,  (1892)  1  Ch.,  64;  Strong 

hands   of   the    receiver    during   the  v.  Carlyle  Press,  (1893)  1  Ch.,  268; 

period  allowed  for  redemption  un-  British  Linen  Co.  v.   South  Amer- 

der  the  English  practice,  see  Jenner-  ican  &  M.  Co.,   (1894)    1  Ch.,  108, 

Fust  V.   Needham,  31   Ch.  D.,  500;  As  to  the  right  of  debenture  hold- 

S.    C,  on   appeal,   32  Ch.   D.,   582;  ers  or  mortgagees  to  a  teceiver  for 

Hoare  v.  Stephens,  32  Ch.  D.  194.  the  protection  of  the  property  of  the 

74/^  re   Pound,  42   Ch.  D.,  403.  debtor  as  against  judgment  credit- 

And    see   Strong  v.    Carlyle    Press,  ors,  before  the  maturity  of  the  in- 

(1893)   1  Ch.  268.     As  to  the  right  debtedness,  see  Wildy  v.  Mid-Hants 

of  debenture  holders  or  mortgagees,  R.  Co.,  16  W.  R.,  409;  Edwards  v. 

under  the  modern  English  practice,  Standard   Rolling   Stock  Syndicate, 

to    a    receiver    for   the    purpose    of  (1893)   1  Ch.,  574.     As  to  the  right 

managing  and  continuing  the  busi-  of  such  debenture  holders  to  a  re- 

ness    of    the    debtor,    see    Peek    v.  ceiver   upon   the   insolvency  of  the 

Trinsmaran  Iron  Co.,  2  Ch.  D.,  115;  debtor  and  before  default  in  inter- 

Makins   v.    Percy   Ibotson   &   Sons,  est,  see  McMahon  v.  North  Kent  I. 

(1891)     1    Ch.,    133;    Campbell    v.  Co.,  (1891)  2  Ch.,  148. 


CHAP.  XV.]  MORTGAGES.  805 

cciver  will  not  be  appointed  over  mortgaged  premises  in  con- 
travention of  the  spirit  and  purpose  of  a  legislative  enactment 
which  prohibits  the  sale  of  a  certain  class  of  mortgaged  prop- 
erty. Thus,  where  a  statute  of  the  state  provides  that  the 
pro])erty  of  volunteer  soldiers,  in  the  military  service  of  the 
United  States,  shall  be  exempt  from  levy  and  sale  under  or  by 
virtue  of  any  deed  of  trust  or  mortgage,  or  by  virtue  of  any 
execution  or  order  of  sale  issued  on  any  judgment  or  decree, 
plaintiffs  in  a  foreclosure  suit,  who  obtain  judgment  of  fore- 
closure against  the  property  of  such  a  soldier,  are  not  entitled 
to  a  receiver  to  take  charge  of  the  property  and  receive  the 
rents  and  profits,  since  this  would  be,  in  effect,  an  infraction 
of  the  spirit  and  object  of  the  statute. "^^ 

§  654.  When  appointed  in  behalf  of  mortgagor;  posses- 
sion of  mortgagee  rarely  interfered  with ;  relief  refused  on 
creditor's  bill  against  debtor  and  mortgagee ;  when  receiv- 
er appointed  against  mortgagee  in  possession.  A  receiver 
has  been  appointed,  at  the  instance  of  one  of  several  mortga- 
gors, to  keep  down  interest  on  the  incumbrance,  although  the 
mortgagee  opposed  the  application,  when  he  had  not  taken  pos- 
session of  the  premises  under  the  mortgage.''^  But  when  a 
mortgagee  is  in  possession  under  the  mortgage,  the  courts  in- 
terfere with  his  possession  with  great  reluctance,  and  will  not 
extend  their  aid  by  appointing  a  receiver,  unless  in  cases  of 
fraud  or  of  imminent  danger.*^*^  And  when  a  debtor  has  mort- 
gaged property  for  the  security  of  his  creditors,  and  the  mort- 
gagee is  in  possession  and  proceeding  properly  in  the  discharge 
of  his  trust,  selling  the  property  and  applying  the  proceeds  in 
payment  of  the  indebtedness,  a  receiver  will  not  be  appointed 
to  divest  him  of  the  possession,  upon  a  creditor's  bill  filed 
against  the  debtor  and  mortgagee. "^^  And  as  against  a  mort- 
gagee lawfully  in  possession,  in  the  absence  of  any  proof  of 

7r.  Adair  t;.  WriKht,  16  Iowa,  385.  99;    Brnndage    v.    Home    S.    &    L. 

70  Newman  v.   Newman,  cited  in  Assn.,  11  Wash.,  277,  39  Pnc,  666. 

2  Bro.  C.  C,  92,  note  6.  "^^  Furlong    v.    Edwards,    3    Md., 

77  Furlong    v.    Edwards,    3    Aid.,  99. 


806  RECEIVERS.  [chap.  XV. 

waste  or  mismanagement,  the  court  will  not  divest  his  posses- 
sion by  appointing  a  receiver  in  a  suit  for  divorce  and  alimony- 
brought  by  the  wife  against  the  mortgagor.'^^  But  a  receiver 
may  be  appointed  as  against  a  mortgagee  in  possession  where 
it  appears  that  the  mortgagee  is  insolvent  or  that  the  rents  and 
profits  w^ill  be  lost  or  that  he  is  committing  waste  upon  the 
property  resulting  in  serious  injury  to  it.^^ 

§  655.  When  receiver  allowed  after  decree.  While  re- 
ceivers in  aid  of  actions  for  the  foreclosure  of  mortgages  are 
usually  applied  for  and  obtained  before  final  decree  of  fore- 
closure, yet  in  cases  of  emergency  it  is  competent  for  the  court 
to  entertain  an  application  and  to  appoint  a  receiver  after  final 
decree,  when  great  injury  might  result  from  withholding  the 
relief.^l  And  while  the  power  to  grant  the  relief,  after  decree 
and  pending  the  statutory  period  of  redemption  from  foreclo- 
sure sales,  is  one  wdiich  is  to  be  exercised  with  extreme  caution, 
its  existence  is  well  established,  and  circumstances  of  fraud  and 
bad  faith  upon  the  part  of  the  mortgagor,  coupled  with  his  in- 
solvency and  the  inadequacy  of  the  security,  may  justify  the 
court  in  the  exercise  of  the  power.  Indeed,  the  necessity  for 
appropriating  the  rents  to  the  payment  of  the  mortgage  debt 
by  the  aid  of  a  receiver  may  frequently  not  appear  until  after 
a  decree  of  sale,  since  the  amount  of  the  mortgage  debt  is  often 
disputed  and  can  only  be  determined  by  final  decree,  and  the 
amount  for  which  the  premises  will  sell  can  only  be  ascertained 

79Cummings  v.  Edwards,  75  Cal.,  son,  48  111.  App.,  270;   Connelly  v. 

434,  17  Pac,  442.  Dickson,  76  Ind.,  440;  Brinkman  v. 

80  Harding  v.  Garber,  20  Okla.,  Ritzinger,  82  Ind.,  358;  Harris  v. 
11,  93  Pac,  539.  United   States   S.   F.  &  I.   Co.,  146 

81  Thomas  v.  Davics,  11  Beav.,  Ind.,  265,  45  N.  E.,  328;  Russell  v. 
29;  Haas  v.  Chicago  Building  So-  Bruce,  159  Ind.,  553,  64  N.  E.,  602. 
ciety,  89  111.,  498;  First  National  65  N.  E.,  585;  Schreiber  v.  Carey, 
Bank  V.  Illinois  Steel  Co.,  174  III,  48  Wis.,  208,  4  N.  W.,  124;  Bidwell 
140,  51  N.  E.,  200;  Roach  v.  Glos,  v.  Paul,  5  Baxter,  693.  And  see 
18l'  111.,  440,  54  N.  E.,  1022;  Bo-  Smith  v.  Tiffany,  13  Hun,  671;  Sel- 
gardus  \.  Tyloses,  181  111.,  554,  54  lers  v.  Stoffell,  139  Ind.,  468,  39  N. 
N.  E.,  984;  Ball  v.  Marske,  202  111.,  E.,  52. 

31,  66  N.  E.,  845;  Oakford  v.  Robin- 


CHAP.  XV.]  MORTGAGES.  807 

with  certainty  by  the  sale  itself.^^  Sq  ^  receiver  of  the  rents 
of  the  mortgaged  property  has  been  allowed,  after  decree  of 
foreclosure,  as  against  a  tenant  in  possession  for  more  than 
nineteen  years,  but  who  was  not  a  party  to  the  suit,  the  exigency 
of  the  case  requiring  the  interposition  of  the  court  to  prevent 
the  tenant  in  possession  from  setting  up  his  adverse  possession 
for  twenty  years. ^^  And  pending  an  appeal  from  a  judgment 
of  foreclosure,  a  receiver  has  been  appointed  when  it  was  shown 
that  the  premises  were  an  inadequate  security,  that  the  mort- 
gagor had  died  insolvent,  that  the  rents  were  being  misappro- 
priated, and  that  the  premises  had  been  sold  for  unpaid  taxes. ^^ 
So  when  an  appeal  is  prosecuted  in  forma  pauperis  from  a  de- 
cree of  foreclosure,  a  receiver  may  be  allowed,  the  security  be- 
ing inadequate.^^  And  the  relief  is  proper  after  decree  when 
the  mortgagor  has  paid  neither  the  interest  nor  any  part  of  the 
principal,  and  the  property  is  an  inadequate  security,  the  mort- 
gagor being  insolvent  and  having  permitted  the  property  to 
be  sold  for  unpaid  taxes. ^^  And  a  receiver  having  been  ap- 
pointed in  aid  of  foreclosure  proceedings,  the  court  has  power, 
notwithstanding  an  appeal  from  the  foreclosure  decree,  to  make 
such  orders  as  are  necessary  for  the  preservation  of  the  prop- 

82  Haas  V.  Chicago  Building  So-  redeem  from  the  sale,  the  rents  col- 
ciety,  89  111.,  498;  First  National  lected  by  the  receiver  to  be  paid  to 
Bank  v.  Illinois  Steel  Co.,  174  III.,  the  mortgagor  should  he  redeem, 
140,  51  N.  E.,  200.  See,  also,  but  otherwise  to  the  mortgagee, 
Schreiber  v.  Carey,  48  Wis.,  208,  4  the  premises  having  been  sold  for  a 
N.  W.,  124;  Bagley  v.  Illinois  T.  &  sum  insufficient  to  satisfy  the  mort- 
S.  Bank,  199  111.,  76,  64  N.  E.,  1085.  gage     indebtedness.       Connelly     v. 

83  Thomas  v.  Davies,  11  Beav.,  Dickson,  76  Ind.,  440.  See.  also, 
29.  Travelers  Insurance  Co.  v.  Brouse, 

84  Brinkman  v.  Ritzinger,  82  Ind.,  83  Ind.,  62;  Buchanan  v.  Berkshire 
358.  Life    Insurance    Co.,    96    Ind.,    510. 

85  Bidwell  v.  Paul,  5  Baxter,  693.  But  see  Sheeks  v.  Klotz,  84  Ind., 
But  see  Hoge  v.  Hollister,  8  Baxter,  471,  as  to  the  effect  of  subsequent 
533.  And  in  Indiana,  the  relief  legislation  in  Indiana  upon  the 
has  been  granted  after  a  sale  under  point  under  consideration, 
foreclosure,  when  the  premises  were  86  Schreiber  v.  Carey,  48  Wis., 
in  possession  of  a  tenant  who  had  208,  4  N.  W.,  124;  Harris  v.  United 
failed  to  pay  rent  and  the  mortga-  States  S.  F.  &  I.  Co.,  146  Ind.,  265, 
gor    was    insolvent    and    unable    to  45  N.  E.,  328. 


SOS  RECEIVERS.  [chap.  XV. 

erty  pending  the  appeal.^'''  The  courts,  however,  proceed  with 
extreme  caution  in  granting  the  rehef  after  final  judgment  of 
foreclosure,  the  practice  being  regarded  as  an  unusual  one, 
and  only  to  be  entertained  upon  a  strong  showing  of  probable 
injury.  And  when  it  appears  that  the  property  in  question  is 
in  a  good  state  of  preservation,  and  that  it  is  not  being  wasted 
and  is  in  no  need  of  repairs,  a  receiver  will  be  refused  after 
decree,  especially  when  plaintiffs  have  other  and  adequate  se- 
curity for  their  debt  in  an  approved  bond  given  by  defendants 
on  appealing  the  foreclosure  suit.^^  So  when  the  mortgagee 
neglects  for  several  years  after  maturity  of  the  indebtedness  to 
institute  foreclosure  proceedings,  and  after  foreclosure  decree 
he  neglects  for  several  months  to  sell,  and  afterward  applies  for 
a  receiver,  the  emergency  must  be  great  and  the  necessity  im- 
perative to  warrant  the  court  in  interfering.  And  if,  in  such 
case,  the  evidence  as  to  the  inadequacy  of  the  security  is  con- 
flicting, the  court  will  decline  to  interfere.^^  And  upon  a  bill 
by  mortgagor  against  mortgagee  for  redemption  of  the  mort- 
gaged premises,  after  a  decree  directing  the  redemption,  the 
court  will  not,  on  the  application  of  defendant  and  without  no- 
tice to  plaintiff,  direct  the  appointment  of  a  receiver,  such  a 
practice  being  regarded  as  without  precedent  or  authority.^^ 
And  under  the  modern  English  practice,  after  judgment  for 
foreclosure  absolute,  the  court  will  not  appoint  a  receiver  over 
the  mortgaged  premises,  since  the  action  is  then  regarded  as  at 
an  end.^^ 

87  Grant   v.    Phcenix   Life  Insur-  from    the    rents    received    by    him 

ance  Co.,  121  U.  S.,  118,  7  Sup.  Ct.  during    the    pendency    of    the    suit. 

Rep.,  849.     Pending  an  appeal  from  Grant    v.    Phoenix    Life    Insurance 

a  decree  in  a  foreclosure  suit,  a  re-  Co.,  120  U.  S.,  271,  7  Sup.  Ct.  Rep., 

ceiver    having    been    appointed    by  586. 

the  court  below  who  was  in  receipt  88  Adair  v.  Wright,  16  Iowa,  385. 

of  the  rents  of  the  mortgaged  prem-  89  Cone    v.    Combs,    5    McCrary, 

ises,  the  mortgagor  and  appellant  in  651. 

the  appeal,  being  unable  to  pay  the  90  Barlow  v.  Gains,  8  Beav.,  329. 

necessary    costs    and    expenses    of  91  Wills  v.  Luff,  38  Ch.  D.,  197. 

prosecuting  his  appeal,  the  receiver  As  to  the  right  of  the  mortgagee, 

was  ordered  to  make  such  payment  who  has  purchased  the  premises  at  a 


CHAP.  XV.]  MORTGAGES.  809 

§  656.  Receiver  appointed  in  suit  to  execute  trusts  of 
mortgagor's  will,  how  discharged ;  mortgagor  not  entitled 
to  accruing  rents  after  discharge.  When  a  receiver  of 
mortgaged  premises  is  appointed  in  an  action  to  carry  into  exe- 
cution the  trusts  of  the  mortgagor's  will,  a  mortgagee,  who 
was  not  a  party  to  the  suit,  can  not  divest  the  possession  of  the 
receiver,  by  mere  notice  to  the  tenants  of  the  premises  to  pay 
their  rents  to  him,  his  proper  course,  in  such  case,  being  to  ap- 
ply to  the  court  for  the  discharge  of  the  receiver.  And,  on  the 
granting  of  such  discharge,  the  mortgagor  is  not  entitled  to 
rents  which  have  accrued  during  the  possession  of  the  receiver, 
and  which  have  been  paid  into  court  by  him.^2 

§  657.  Mortgagor's  right  to  discharge  of  receiver  on 
payment  of  indebtedness,  or  on  sale  for  full  amount ;  when 
owner  of  equity  of  redemption  entitled  to  rents  collected 
by  receiver.  The  right  of  a  mortgagor,  over  whose  prop- 
erty a  receiver  has  been  appointed  in  an  action  for  a  foreclosure, 
to  pay  the  mortgage  indebtedness  and  to  have  the  receiver  dis- 
charged, is  regarded  as  an  absolute  right,  and  in  no  manner  de- 
pendent upon  the  discretion  of  the  court.  For  example,  when 
upon  a  bill  to  foreclose  a  mortgage  given  by  a  railway  company 
to  secure  its  bonds,  a  receiver  has  been  appointed,  and  has 
taken  possession  of  the  road,  if  the  owner  of  the  equity  of  re- 
demption offers  to  pay  the  mortgage  debt,  or  so  much  as  is 
due,  upon  condition  that  the  property  be  released  and  the  re- 
ceiver discharged,  the  right  to  the  discharge  is  not  a  matter 
resting  in  the  discretion  of  the  court,  but  is  a  clear  legal  right, 
the  denial  of  which  is  judicial  error.93    And  since  the  sole  ob- 

sale    under   a   power   in   the   mort-  92  Thomas  v.  Brigstocke,  4  Russ., 

gage,  to  a  receiver  over  the  rents  64. 

accruing    after    such    purchase,    as  93  Milwaukeee    &    Minnesota    R. 

against  the  mortgagor  and  his  ten-  Co.  v.  Soutter,  2  Wal.,  510.     See  S. 

ants    who   refuse   to   attorn  to   the  C,    Woolworth's    C.    C,    49.      The 

purchaser,  see  American   Mortgage  doctrine    is    stated   by    Mr.    Justice 

Co.  V.  Turner,  95  Ala.,  272,  11  So.,  Miller  in  the  opinion  of  the  court, 

211;  Hendrix  v.  American  F.  L.  M.  in  2   Wal.,   at   p.    521,    as    follows: 

Co.,  95  Ala.,  313,  11  So.,  213.  "The    complainants    are    seeking    a 


810 


RECEIVERS. 


[CIIAP.   XV. 


ject  of  a  receiver  at  the  instance  of  a  mortgagee  is  to  preserve 
the  security  of  the  trust  deed  or  mortgage  and  to  apply  the 
rents  and  profits  to  the  payment  of  the  indebtedness,  it  follows 
that  where  the  mortgaged  property  has  been  sold  at  the  fore- 
closure sale  for  the  full  amount  of  the  debt,  interest  and  costs, 
the  necessity  for  the  receiver  ceases  and  he  should  at  once  be  dis- 
charged and  the  possession  of  the  property  turned  over  to  the 
owner  of  the  equity  of  redemption ;  9^  or  in  case  the  receiver 
is  retained  after  the  sale  and  during  the  period  of  redemption, 
the  rents  and  profits  collected  by  him  during  such  period  are 
for  the  benefit  of  the  owner  of  the  equity  of  redemption,  and  in 


foreclosure  of  a  mortgage  with  a 
view  to  make  their  debt.  The  own- 
er of  the  equity  of  redemption  in 
the  mortgaged  premises  comes  for- 
ward and  offers  to  pay  this  debt, 
or  all  of  it  that  is  due,  provided  his 
property,  which  is  in  the  custody 
of  the  court,  shall  then  be  restored 
to  his  possession.  The  right  of  the 
owner  to  this  order  is,  under  ordi- 
nary circumstances,  very  clear,  and 
a  refusal  by  the  court  to  give  him 
this  right  would  seem  to  call  for 
the  revisory  power  of  this  court, 
when  the  whole  case  is  before  it  on 
the  record  brought  here  by  appeal 
from  a  final  decree.  The  only 
doubt  which  the  court  could  have  on 
the  question  arises  from  the  princi- 
ple that  the  appointment  and  dis- 
charge of  a  receiver  are  ordinarily 
matters  of  discretion  in  the  circuit 
court,  with  which  this  court  will  not 
interfere.  As  a  general  rule,  this 
proposition  is  not  denied.  But  we 
do  not  think  it  applicable  to  the  case 
before  us.  While  the  parties  to 
this  suit  were  fiercely  litigating  the 
amount  of  the  mortgage  debt,  and 
questions  of  fraud  in  the  origin 
of   that    debt,    the    appointment    or 


the  discharge  of  a  receiver  for  the 
mortgaged  property  very  properly 
belonged  to  the  discretion  of  the 
court  in  which  the  litigation  was 
pending.  But  when  those  questions 
had  been  passed  upon  by  the  cir- 
cuit court,  and  by  this  court,  also, 
on  appeal,  and  the  amount  of  the 
debt  definitely  fixed  by  this  court, 
the  right  of  the  defendant  to  pay 
that  sum  and  have  a  restoration  of 
his  property  by  discharge  of  the 
receiver  is  clear,  and  does  not  de- 
pend on  the  discretion  of  the  cir- 
cuit court.  It  is  a  right  which  the 
party  can  claim;  and,  if  he  shows 
himself  entitled  to  it  on  the  facts  in 
the  record,  there  is  no  discretion  in 
the  court  to  withhold  it.  A  refusal 
is  error,  judicial  error,  which  this 
court  is  bound  to  correct  when  the 
matter,  as  in  this  instance,  is  fairly 
before  it.  That  the  order  asked 
for  by  appellants  should  have  been 
granted  seems  to  us  very  clear." 

04  Davis  V.  Dale,  150  111.,  239.  37 
N.  E.,  215;  Roach  v.  Glos.  181  111., 
440,  54  N.  E.,  1022;  Bogardus  v. 
Moses,  181  111.,  554.  54  N.  E..  984; 
Haigh  %'.  Carroll,  209  111.,  576,  71 
N.  E.,  317. 


CHAP.  XV.]  MORTGAGES,  811 

such  case  it  makes  no  difference  that  the  purchaser  at  the  sale 
is  the  plaintiff  in  the  foreclosure  and  not  a  stranger  to  the  trust 
deed. ^5  And  where  a  foreclosure  sale  has  resulted  in  a  defi- 
ciency decree  which  is  afterward  paid  by  the  receiver  out  of 
the  rents  and  profits  of  the  property,  the  holder  of  the  equity 
of  redemption  is  entitled  to  the  balance  of  the  rents  accruing 
during  the  period  of  redemption,  and  the  purchaser  is  not  en- 
titled in  such  case  to  have  such  rents  applied  upon  a  prior  en- 
cumbrance for  which  the  owner  of  the  equity  of  redemption 
is  personally  liable.^^  And  where  the  mortgaged  property  has 
thus  been  sold  for  the  full  amount  of  the  debt,  interest  and  costs, 
the  receiver  should  not  be  retained  for  the  purpose  of  paying 
off  a  tax  which  the  owner  of  the  equity  of  redemption  was  not 
legally  bound  to  pay  until  after  the  expiration  of  the  period  of 
redemption.  9"^  And  where  the  mortgaged  property  in  such  case 
consists  of  a  leasehold  estate,  the  receiver  should  not  be  re- 
tained for  the  purpose  of  paying  rent  due  under  the  lease,  al- 
though such  payment  may  be  necessary  for  the  protection  of 
the  interests  of  the  purchaser  and  of  the  owner  of  the  equity  of 
redemption.98  And  where  the  original  mortgagor  has  sold 
the  equity  of  redemption,  the  purchaser  not  assuming  the  pay- 
ment of  the  mortgage  indebtedness,  and  a  deficiency  decree  has 
been  rendered  against  the  original  mortgagor,  rents  collected 
by  the  receiver  during  the  period  of  redemption  should  be  paid 
to  the  purchaser  of  the  equity  of  redemption  and  not  to  the 
holder  of  the  certificate  of  sale,  notwithstanding  a  provision  in 
the  trust  deed  by  which  the  grantor  waives  all  claim  upon  the 
rents  during  the  foreclosure  proceedings  and  agrees  that  the 
receiver  shall  pay  the  income  to  the  person  entitled  to  a  deed 
under  the  certificate  of  sale.^^    And  in  a  proceeding  to  enforce 

95  Davis  V.  Dale,  150  III,  239,  37  97  Bogardus    v.    Moses,    181    III., 
N.    E.,    215;    Stevens    v.    Hadfield,      554.  54  N.  E.,  984. 

178  111.,  532,  52  N.  E.,  875 ;  Stevens  98  Haigh  v.  Carroll.  209  III.,  576. 

V.  Hadfield,  196  111.,  253,  63  N.  E.,  71  N.  E.,  317. 

633.  90  Standish  v.  Mnsgrove,  223  III., 

96  Stevens    v.    Hadfield,    178    III,  500,  79  N.  E.,  161. 
532,  52  N.  E.,  875. 


812  RECEIVERS.  [CIIAP.  XV. 

Statutory  liens  upon  property,  over  whicli  a  receiver  is  appointed 
f'L-iuh'iitc  life,  after  a  sale  of  all  the  property  and  the  approval 
and  settlement  of  the  receiver's  accounts,  his  functions  are  ter- 
minated and  the  court  has  no  power  at  a  subsequent  term  to 
make  an  allowance  for  expenditures  by  the  receiver  and  to  de- 
cree such  allowance  to  be  a  prior  lien  upon  the  premises.^ 

§  658.  Equitable  mortgages;  deposit  of  deeds  as  mort- 
gage; municipal  loans  secured  on  rates  and  assessments. 
The  jurisdiction  of  equity  to  grant  receivers  over  mortgaged 
premises  is  not  confined  to  cases  where  a  mortgage  has  actually 
been  executed  between  the  parties,  but  extends  to  cases  of  equi- 
table mortgages,  such  as  the  deposit  of  title  deeds  as  security 
for  loans  or  advances.  And  when  two  tenants  in  common  of 
real  estate,  in  equal  moieties,  deposit  their  title  deeds  as  secur- 
ity for  loans  to  one  of  them,  with  an  agreement  to  execute  a 
legal  mortgage  when  required,  upon  a  bill  by  the  equitable 
mortgagee  for  a  foreclosure,  a  receiver  of  the  rents  and  pro- 
ceeds may  be  appointed.  And  the  relief  may  properly  be 
granted  in  such  a  case,  although  only  one  of  the  defendants  is 
before  the  court,  he  being  in  possession  and  in  receipt  of  the 
whole  of  the  rents. ^  But  when  the  authorities  of  a  munici- 
pal corporation  have  been  authorized  by  act  of  parliament  to 
levy  rates  or  assessments  and  to  borrow  money  on  the  security 
thereof,  for  purposes  of  public  improvement,  holders  of  the 
bonds  and  obligations  given  by  the  municipal  officers  for  such 
loans  and  secured  on  such  rates  or  assessments  are  not  entitled 
to  a  receiver,  when  there  has  been  no  default  in  the  payment 
either  of  principal  or  of  interest.^ 

§  659.  Liquidator  of  corporation  appointed  receiver  in 
behalf  of  equitable  mortgagee.  When  a  private  corpora- 
tion is  being  wound  up  under  the  supervision  of  the  court,  and 
a  liquidator  has  been  placed  in  possession  of  its  effects,  an 
equitable  mortgagee,  on  filing  his  bill  for  an  accounting  of  what 

1  Bassick   M.    Co.   v.    Schoolfield,  3  Preston  v.  Corporation  of  Great 
15  Colo.,  376,  24  Pac,  1049.                   Yarmouth,  L.  R.,  7  Ch.  App.,  655. 

2  Holmes  v.  Bell,  2  Beav.,  298. 


CHAP.  XV.]  MORTGAGES.  813 

is  due  him,  is  entitled  to  a  receiver.  And  in  such  case,  the  offi- 
cial liquidator  should  be  appointed,  when  there  is  no  personal 
objection  to  him,  and  it  is  manifest  that  his  appointment  will 
be  a  saving  of  great  expense  in  closing  up  the  affairs  of  the 
corporation.^ 

§  660.  Application  should  show  who  is  in  possession; 
amount  due  should  be  shown.  The  petition  or  application 
for  a  receiver  in  aid  of  an  action  for  a  foreclosure  should  show 
who  is  in  possession  of  the  premises,  since  the  court  is  only 
warranted  in  appointing  a  receiver  of  mortgaged  premises 
when  a  party  to  the  suit  is  in  possession,  either  by  himself  or 
by  his  tenants.  The  court  must,  therefore,  be  apprised  that  the 
person  in  possession  is  a  defendant  in  the  action,  and  that  he 
has  had  due  notice  of  the  application,  unless  he  is  in  default 
for  not  appearing.^  And  an  additional  reason  for  requiring 
the  application  to  show  who  is  in  possession  of  the  premises  is 
that  if  a  party  to  the  foreclosure  suit  is  in  possession  by  his 
tenant,  but  the  tenant  is  not  himself  a  party  to  the  litigation, 
his  possession  will  not  be  disturbed  by  the  appointment,  and 
he  will  only  be  directed  to  attorn  to  the  receiver,  and  to  pay 
the  rent  to  him  instead  of  his  former  landlord.^  And  when  the 
plaintiff,  in  an  action  for  the  foreclosure  of  a  mortgage,  moves 
for  a  receiver  upon  a  decree  pro  confesso,  he  should  show  by 
affidavit  the  amount  due  for  principal,  interest  and  costs,  after 
all  just  credits  are  allowed,  and  that  the  defendant  is  in  pos- 
session.'^ 

§  661.  Receivers  in  foreclosure  of  railway  mortgages. 
The  jurisdiction  of  equity  by  appointing  receivers  over  rail- 
ways, in  actions  to  foreclose  mortgages  of  their  corporate 
property,  is  discussed  at  length  in  another  chapter  of  this  work.^ 

4  Perry  v.  Oriental  Hotels  Co.,  L  6  Sea  Insurance  Co.  v.  Stebbins,  8 

R.,  5  Ch.  App.,  420.     But  see  Boyle       Paige,  565. 

V.   Bettws   Llantwit   Colliery   Co..  2  7  Rogers  v.  Newton,  2  Ir.  Eq.,  40. 

Ch.  D.,  726.  8  See  chap.  XI,  ante,  §§  376  et  seq. 

^  Sea  Insurance  Co.  v.  Stebbins,  8 
Paige,  565.  See,  also,  Rogers  v. 
Newton,  2  Ir.  Eq.,  40. 


814  RECEIVERS.  [chap,  XV. 

It  is  sufficient  here  to  remark,  that  while  the  courts  are  averse 
to  taking  possession  of  a  railway  by  a  receiver  in  behalf  of 
mortgagees,  unless  a  strong  case  is  presented,^  they  proceed, 
in  the  exercise  of  this  branch  of  their  jurisdiction,  upon  the 
usual  principles  governing  them  on  applications  for  receivers 
in  the  foreclosure  of  ordinary  mortgages,  and  the  inadequacy 
of  the  security  and  insolvency  of  the  mortgagor  are  regarded 
as  sufficient  grounds  for  the  relief. ^^ 

§  662.  Receiver  appointed  in  aid  of  judgment  creditor, 
extended  in  behalf  of  mortgagee.  When  a  judgment  cred- 
itor of  the  owner  of  the  equity  of  redemption  in  mortgaged 
premises  has  obtained  a  receiver  in  aid  of  his  judgment  at  law, 
the  mortgagee  may  have  such  receiver  extended  for  his  pro- 
tection under  the  mortgage,  upon  showing  the  insufficiency  of 
the  estate  for  payment  of  the  mortgage  indebtedness.^^ 

§  663.  Need  not  be  extended  over  whole  estate ;  limited 
to  mortgaged  premises.  In  appointing  a  receiver  over 
mortgaged  premises,  it  is  not  imperative  upon  the  court  to  ex- 
tend the  appointment  over  the  entire  estate,  and  the  receiver 
may  be  limited  in  the  first  instance  to  such  portion  of  the  lands 
as  is  primarily  liable  for  the  payment  of  the  mortgage  indebted- 
ness.^2  But  the  order  should  be  limited  strictly  to  the  premises 
embraced  in  the  mortgage  and  should  not  extend  to  other  prop- 
erty of  the  mortgagor.i^  j^^^  when,  in  an  action  to  foreclose 
a  mortgage  upon  mining  property,  a  receiver  is  appointed, 
who  enters  upon  and  extracts  ore  from  mining  property  of 
the  mortgagor  not  covered  by  the  mortgage,  he  will  be  liable 
to  the  general  creditors  of  the  mortgagor  for  the  profits  derived 

9  See  Ruggles  v.  Southern  Minne-  H  Trye  v.  Earl  of  Aldborough,  1 
sota  Railroad,  U.  S.  Circuit  Court,       Ir.  Ch.,  N.  S.,  666. 

District    of    Minnesota,    5    Chicago  12  Trissilian  v.  Caniffe,  4  Ir.  Ch., 

Legal  News,  110.  N.  S.,  399. 

10  Ruggles  V.  Southern  Minnesota  13  Staples  v.  May,  87  Cal.,  178, 
Railroad,  supra;  Keep  v.  Michigan  25  Pac,  346;  Wormser  v.  Mer- 
Lake  Shore  R.  Co.,  U.  S.  Circuit  chants  National  Bank,  49  Ark.,  117, 
Court,    Western    District    of    Mich-  4  S.  W.,  198. 

igan,  6  Chicago  Legal  News,  101. 


CHAP.  XV.]  MORTGAGES.  815 

from  such  operation.!^  So  property  or  funds  of  the  mortgagor, 
not  embraced  in  the  mortgage,  but  which  have  come  into  the 
receiver's  possession,  may  be  subjected  to  the  payment  of  judg- 
ments against  the  mortgagor  in  the  order  of  their  priority, 
and  without  diminution  for  allowances  to  the  receiver  or  costs, 
since  his  possession  is  wrongful  as  to  such  judgment  credit- 
ors.i5 

§  664.  Defense  of  usury.  It  has  been  held,  in  New 
York,  in  the  case  of  a  foreclosure  of  a  mortgage  containing 
a  stipulation  that  the  mortgagees  should  be  entitled,  under  cer- 
tain circumstances,  to  a  receiver,  when  the  defense  alleged  was 
usury,  but  the  usury  was  sworn  to  only  upon  information  and 
belief,  that  the  order  appointing  the  receiver  should  be  af- 
firmed on  appeal. 1^ 

§  665.  Mortgage  of  leasehold  interest;  when  appoint- 
ment made  ex  parte.  The  aid  of  a  receiver  is  sometimes 
granted  in  an  action  to  foreclose  a  mortgage  of  a  leasehold 
interest  in  realty.  And  in  such  a  case,  the  relief  may  be  al- 
lowed before  answer  or  process  against  the  defendant  mort- 
gagor, upon  showing  that  the  landlord  is  threatening  an  evic- 
tion because  of  the  non-payment  of  rent-^"^ 

§  665(7.  Receiver  allowed  against  administrator  of  mort- 
gagor; receiver  pending  appeal.  Under  a  statute  authoriz- 
ing the  appointment  of  a  receiver  in  an  action  of  foreclosure 
when  the  mortgaged  property  is  in  danger  of  being  lost,  re- 
moved, or  materially  injured,  or  when  the  property  is  probably 
insufficient  to  discharge  the  indebtedness,  it  is  proper  to  grant 
the  relief  in  a  foreclosure  suit  brought  against  the  administra- 
tor of  a  deceased  mortgagor.!^     And  under  the  same  statute 

14  Staples  V.  May,  87  Cal.,  178,  17  Barrett  v.  Mitchell,  5  Ir.  Eq., 
25  Pac,  346.  501. 

15  Wormser  t;.  Merchants  Nation-  18  Jacobs  v.  Gibson,  9  Neb.,  380, 
al  Bank,  49  Ark.,  117,  4  S.  W.,  198.  2  N.  W.,  893.    As  to  the  right  to  an 

16  Knickerbocker  Life  Insurance  appeal  and  stay  of  proceedings  from 
Co.  V.  Hill,  5  N.  Y.  S.  C.  (Thomp.  an  order  appointing  a  receiver  over 
&  Cook),  694.  mortgaged      premises      pending     a 


816  RECEIVERS.  [chap.  XV. 

it  is  held  that  a  receiver  may  be  appointed  to  collect  the  rents 
and  profits  after  decree  and  pending  an  appeal.^^ 

foreclosure      in      Wisconsin,      see  i^  Philadelphia    M.    &   T.    Co.   v. 

Northwestern    Mutual    Life    Insur-  Goos,  47  Neb.,  804,  66  N.  W.,  843; 

ance  Co.  v.  Park  Hotel  Co.,  37  Wis.,  Buck  v.  Stuben,  63  Neb.,  273,  88  N. 

125.  W.,  483. 


CHAP.  XV.]  MORTGAGES.  817 


II.  Inadequacy  of  Security  and  Insolvency  of  Mort- 
gagor, 

§  666.       The  general  rule  stated. 

667.  Satisfactory  proof  of  inadequacy  and  insolvency  required;  in- 

adequacy limited  to  particular  mortgage. 

668.  Grounds  for  receiver  in  Irish  Court  of  Chancery. 

669.  General  rule  not  followed  in  New  Jersey. 

670.  Grounds  of  the  relief  in  New  Jersey;  fraud,  bad  faith  and  mis- 

management;   assignment    to    insolvent   person;    transfer   to 
wife  of  mortgagor. 

671.  The  doctrine  in   Mississippi. 
671a.  The  rule  in  Minnesota. 

672.  Unpaid  taxes  and  Insurance  as  ground  for  relief;  contest  as  to 

whether   property   is    covered   by   mortgage;   assignment   by 
mortgagor. 
672a.   Mortgage  of  hotel  propertj\ 

673.  The  doctrine  in   Nevada;   when  relief  extended  to  purchasers 

under  foreclosure  sale. 

674.  The  doctrine  in  California;  mortgagee  not  allowed  receiver  be- 

cause of  inadequacy  and  insolvency;  the  doctrine  in  Iowa. 
674a.  The  doctrine  in  South  Carolina;  receiver  not  allowed. 

675.  When   relief  allowed   although   indebtedness   only   partly   due; 

not  allowed  when  there  is  doubt  as  to  amount  due,  and  bill  is 
denied  by  answer. 

676.  When  allowed  over  leasehold  premises  mortgaged;  mortgage 

of  chattels. 

677.  Possession  by  tenant  of  mortgagor  no  bar  to  relief. 

678.  Bonds  issued  by  canal  company,  when  treated  as  mortgage  and 

receiver  allowed. 
678a.  When  receiver  allowed  in  behalf  of  wife. 
678^.  Exemption   of  rents. 

§  666.  The  general  rule  stated.  The  principal  ground 
on  which  courts  of  equity  are  called  upon  to  lend  their  extra- 
ordinary aid  by  the  appointment  of  receivers  over  mortgaged 
property,  is  the  inadequacy  of  the  security  for  the  payment  of 
the  mortgage  indebtedness.  This  inadequacy,  within  the  mean- 
ing of  the  rules  governing  this  branch  of  the  subject,  consists 
of  two  elements,  viz.,  the  insufficiency  of  the  mortgaged  prem- 
ises per  se  as  a  fund  for  the  payment  of  the  debt,  and  the  in- 
solvency of  the  mortgagor  or  other  person  primarily  lial)le  for 
the  indebtedness,  whose  duty  it  is  to  make  good  any  deficiency 
Rccciver.s — S2 


818 


RECEIVERS. 


[CIIAP.  XV, 


in  the  security.  Stated  in  general  terms,  the  well-established 
rule,  deducible  from  the  clear  weight  of  authority,  is,  that  in 
all  cases  where  the  rents  of  the  property  are  not  specifically 
pledged  as  security  for  the  debt,  to  entitle  a  mortgagee  to  a  re- 
ceiver of  the  mortgaged  premises,  and  of  the  rents  and  profits^ 
he  must  show,  first,  that  the  property  itself  is  an  inadequate  se- 
curity for  the  debt  with  interest  and  costs  of  suit ;  and  second, 
that  the  mortgagor  or  other  person  who  is  personally  liable 
for  the  payment  is  insolvent,  or  beyond  the  jurisdiction  of  the 
court,  or  of  such  doubtful  responsibility  that  an  execution 
against  him  for  the  deficiency  would  prove  unavailing.  And 
this  being  shown,  the  courts  will  generally  interpose  and  ap- 
point a  receiver.20    And  Jt  has  been  held  that  the  aid  of  a  re- 


20  Quincy  v.  Cheeseman,  4  Sandf. 
Ch.,  405;  Brown  v.  Chase,  Walk. 
(Mich.),  43;  Hyman  v.  Kelly,  1 
Nev.,  179;  Ruggles  v.  Southern 
Minnesota  Railroad,  U.  S.  Circuit 
Court,  District  of  Minnesota.  5  Chi- 
cago Legal  News,  110;  Keep  v. 
Michigan  Lake  Shore  R.  Co..  U.  S. 
Circuit  Court,  Western  District  of 
Michigan,  6  Chicago  Legal  News, 
101 ;  Kountze  v.  Omaha  Hotel  Co., 
107  U.  S.,  378,  395,  2  Sup.  Ct.  Rep., 
911,  926;  Grant  v.  Phoenix  Life 
Ins.  Co.,  121  U.  S.,  105,  7  Sup.  Ct. 
Rep.,  841 ;  Shepherd  v.  Pepper,  133 
U.  S.,  626,  652,  10  Sup.  Ct.  Rep., 
438,  447;  American  National  Bank 
V.  Northwestern  M.  Life  Lis.  Co., 
32  C.  C.  A.,  275,  89  Fed.,  610,  60 
U.  S.  App.,  693;  Central  Trust  Co. 
V.  C,  R.  &  C.  R.  Co.,  36  C.  C.  A., 
241,  94  Fed.,  275,  affirming  S.  C, 
89  Fed.,  388;  Southern  B.  &  L. 
Assn.  V.  Carey,  52  C.  C.  A.,  174, 
114  Fed.,  288;  Boyce  v.  Continental 
Wire  Co.,  60  C.  C.  A.,  508,  125  Fed., 
740;  Hill  v.  Robertson,  24  Miss., 
368;  Sea  Insurance  Co.  v.  Stebbins, 
8    Paige,   565;    Schreiber  v.   Carey, 


48  Wis.,  208,  4  N.  W.,  124;  Winkler 
V.  Magdeburg,  100  Wis.,  421,  76  N. 
W.,  332;  Commercial  &  Savings 
Bank  v.  Corbett,  5  Sawyer,  172; 
Buchanan  v.  Berkshire  Life  Insur- 
ance Co.,  96  Ind.,  510;  Harris  v. 
United  States  S.  F.  &  L  Co.,  146 
Ind.,  265,  45  N.  E.,  328;  Sweet  & 
Clark  Co.  v.  Union  National  Bank, 
149  Ind.,  305,  49  N.  E.,  159;  Russell 
V.  Bruce,  159  Ind.,  553,  64  N.  E., 
602,  65  N.  E.,  585;  Kerchner  v. 
Fairley,  80  N.  C,  24;  Oldham  v. 
Bank,  84  N.  C,  304;  Durant  v. 
Crowell,  97  N.  C,  367,  2  S.  E.,  541 ; 
dictum  in  First  National  Bank  v. 
Illinois  Steel  Co.,  174  III.,  140,  51 
N.  E.,  200;  Cross  v.  Will  County 
Natl.  Bank,  177  111.,  33,  52  N.  E., 
322;  Jackson  v.  Hooper,  107  Ala., 
634,  18  So.,  254;  Farmers'  National 
Bank  v.  Backus,  64  Minn.,  43.  66  N. 
W.,  5.  See,  also,  Dunlap  v.  Hedges, 
35  West  Va.,  287,  13  S.  E.,  656; 
Warren  v.  Pitts.  114  Ala.,  65,  21 
So.,  494;  Bristow  v.  Home  B.  Co., 
91  Va.,  18,  20  S.  E.,  946.  And  the 
jurisdiction  to  appoint  receivers,  in 
this  class  of  cases,  upon  the  grounds 


CHAP.  XV.] 


MORTGAGES. 


819 


ceiver  should  be  granted  or  withheld,  according  as  it  may  or 
may  not  be  an  essential  means  to  pay  the  indebtedness  secured 
by  the  mortgage,  and  there  can  be  no  necessity  for  the  rehef,  if 
the  mortgagor  is  solvent  and  able  to  pay  any  deficiency.^! 

§  667.  Satisfactory  proof  of  inadequacy  and  insolvency 
required;  inadequacy  limited  to  particular  mortgage.  It 
is  to  be  observed  that,  in  the  apphcation  of  the  rule  as  above 
stated,  the  courts  require  satisfactory  proof,  both  as  to  the  in- 
adequacy of  the  security  and  insolvency  of  the  mortgagor  or 
other  person  liable  for  the  debt.  And  unless  both  these  condi- 
tions are  shown  to  exist,  no  sufficient  cause  is  presented  to  war- 
rant the  interference  of  equity.22  When,  therefore,  it  does  not 
sufficiently  appear  that  the  mortgaged  premises  are  an  inade- 
quate security  for  the  payment  of  the  indebtedness,  the  relief 
will  be  refused,  even  though  it  is  shown  to  the  satisfaction  of 
the  court  that  the  mortgagor  is  insolvent. ^3  And  by  inade- 
quacy of  security,  within  the  meaning  of  the  rule,  is  to  be  un- 


stated in  the  text,  is  not  impaired 
by  the  code  of  procedure  in  New 
York.  Hollenbeck  v.  Donnell,  94 
N.  Y.,  342,  affirming  S.  C,  29  Hun, 
94.  And  see  Herbert  v.  Greene,  3 
Ir.  Ch.,  N.  S.,  274;  Warner  v.  Gou- 
verneur's  Ex'rs,  1  Barb.,  36;  Astor 
V.  Turner,  2  Barb.,  444.  But  see, 
contra,  Cortleyeu  v.  Hathaway,  3 
Stockt.,  39;  Frisbie  v.  Bateman.  9 
C.  E.  Green,  28,  approving  and  fol- 
lowing Best  V.  Scherniier,  2  Halst. 
Ch.,  154.  And  see,  contra,  Horner 
V.  Dey,  61  N.  J.  Eq.,  554,  49  M\., 
154.  As  to  the  right  to  a  receiver 
in  foreclosure  proceedings  under 
the  statute  of  South  Dakota,  see 
Roberts  v.  Parker,  14  S.  Dak.,  323, 
85  N.  W.,  591. 

21  Myers  v.  Estell,  48  Miss.,  403. 
And  see  this  case  for  an  application 
of  the  principles  governing  relief 
by  receivers  in  cases  of  mortgages, 
to  cases  of  deeds  of  trust. 


22  Sea  Insurance  Co.  v.  Stebbins, 
8  Paige,  565 ;  Morris  v.  Branshaud, 
52  Wis.,  187.  And  see  Meyer  v. 
Thomas,  113  Ala.,  Ill,  30  So.,  89. 

23  Brown  v.  Chase,  Walk. 
(Mich.),  43.  The  doctrine  is  very 
clearly  stated  in  the  opinion  of  the 
court  in  this  case  as  follows :  "A 
receiver  of  the  rents  and  profits  of 
mortgaged  premises  is  sometimes 
appointed  on  the  petition  of  the 
mortgagee,  after  he  has  filed  his 
bill  to  foreclose  the  mortgage.  The 
court  must  be  satisfied,  before  mak- 
ing the  appointment,  that  the  mort- 
gaged premises  are  insufficient  to 
pay  the  mortgage  debt,  and  that 
the  mortgagor  or  other  party  to  the 
suit  who  is  personally  liable  for  its 
payment,  is  insolvent,  or  out  of  the 
jurisdiction  of  the  court,  so  that  an 
execution  against  him  for  the  bal- 
ance that  should  remain  due  after 
the  sale  of  the  mortgaged  premises 


820 


RECEIVERS. 


[CIIAP.  XV. 


derstood  inadcfiuacy  as  to  the  particular  mortgage  which  is 
being  foreclosed,  and  not  as  to  other  and  subsequent  mort- 
gages. If,  therefore,  the  premises  are  shown  to  be  a  suffi- 
cient security  for  the  mortgage  which  is  in  process  of  foreclo- 
sure, although  an  inadequate  security  for  other  and  later  mort- 
gages and  liens,  no  sufficient  ground  for  a  receiver  is  presented, 
even  though  the  mortgagor  is  plainly  insolvent  and  unable  to 
respond  for  a  deficiency.^^  And  the  burden  of  proof  rests  upon 
plaintiff  to  establish  the  inadequacy  of  the  security,  and  if  he 
fails  in  this  the  relief  will  be  denied.25  g^t  when  the  income, 
rents  and  profits  of  the  premises  are  pledged  by  the  mortgage, 
less  stringency  of  proof  is  required  to  warrant  the  court  in 
granting  a  receiver.26  And  where  the  debt  is  past  due  and  the 
taxes  and  insurance  are  unpaid  and  the  mortgagor  refuses  to 
surrender  the  property,  the  court  will  not  strictly  scrutinize,  for 


would  be  unavailing.  Chase,  the 
mortgagor,  who  is  personally  liable 
for  the  payment  of  the  debt,  has 
been  decreed  a  bankrupt  on  his  own 
petition.  So  far,  the  complainants 
have  made  out  their  case;  but  they 
have  failed  to  satisfy  the  court  that 
the  mortgaged  premises  are  insuf- 
ficient to  pay  the  mortgage  debt. 
The  security  was  one  of  their  own 
taking,  and  the  presumption  is  that 
it  is  sufficient,  until  the  contrary 
appears." 

24  Warner  v.  Gouverneur's  Ex- 
ecutors, 1  Barb.,  36.  "The  rule  in 
these  cases,"  says  Edmonds,  J.,  p. 
38,  "where  the  mortgagee  has  not 
taken  care  to  keep  down  the  accru- 
ing interest,  by  securing  a  lien  on 
the  rents  and  profits,  is  to  interfere 
with  the  mortgagor's  possession 
prior  to  a  decree  of  foreclosure,  and 
appoint  a  receiver  of  the  rents  and 
profits,  when  the  premises  are  an 
inadequate  security  for  the  debt 
secured  by  the  mortgage,  and  the 
mortgagor,  or  other  person  in  pos- 


session, who  is  personally  liable  for 
the  debt,  is  not  of  sufficient  ability 
to  answer  for  the  deficiency.  In 
this  case,  there  seems  to  be  no  doubt 
of  the  mortgagor's  insolvency,  but 
there  does  seem  to  be  a  good  deal 
of  doubt  as  to  the  inadequacy  of 
the  security  of  the  mortgaged  prem- 
ises. The  allegation  is,  that  they 
are  not  an  adequate  security  for  'all 
just  incumbrances'  on  them.  All 
of  the  just  incumbrances,  it  would 
seem,  amount  to  near  $70,000, 
while  the  claim  of  the  defendants  is 
not  more  than  half  that  sum.  And 
while  the  defendants  do  not  say 
whether  the  premises  are  or  are  not 
adequate  security  for  the  amount 
due  to  them,  the  mortgagor,  on  the 
other  hand,  avers  that  they  are  suf- 
ficient for  that  amount.  There  is, 
therefore,  no  ground  for  the  ap- 
pointment  of   a    receiver." 

25  Burlingame  z:  Parce,  12  Hun, 
144. 

26Des  Moines  Gas  Co.  v.  West, 
44  Iowa,  23. 


CHAP.  XV.]  MORTGAGES.  821 

the  mortgagor's  benefit,  conflicting  affidavits  upon  the  question 
of  the  vakie  of  the  property.^"^  And  when  the  court  has  ap- 
pointed a  receiver  in  a  foreclosure  suit  because  of  the  inade- 
quacy of  the  security,  an  appellate  court  will  be  reluctant  to 
disturb  the  finding  of  the  court  below  as  to  the  fact  of  such 
inadequacy.^^  If,  however,  only  a  part  of  the  mortgage  in- 
debtedness is  due  and  the  premises  are  divisible  into  two  nearly 
equal  parts,  which  may  be  sold  separately  without  injury,  so 
that  the  mortgagee  is  only  entitled  to  foreclose  as  to  one  of  such 
parcels,  he  will  not  be  allowed  a  receiver  as  to  that  part  of  the 
debt  not  yet  due,  or  as  to  that  portion  of  the  premises  as  to 
which  his  right  to  foreclose  has  not  yet  accrued. ^^ 

§  668.  Grounds  for  receiver  in  Irish  Court  of  Chancery. 
Under  the  practice  of  the  Irish  Court  of  Chancery,  in  actions 
for  the  foreclosure  of  mortgages,  or  to  raise  a  charge  affecting 
lands  by  sale  thereof,  a  receiver  will  be  appointed  only  under 
the  following  circumstances :  first,  Avhen  interest  is  due  on  the 
security,  the  court  usually  requiring  an  affidavit  that  at  least 
one  year's  interest  is  due.  Second,  when  the  property  itself  is 
in  danger,  as  if  the  lands  are  held  under  a  lease,  and  the  rental 
due  thereon  has  been  permitted  to  remain  in  arrears.  Third, 
when  there  is  reason  to  apprehend  that  the  sum  which  may  be 
realized  upon  a  sale  of  the  lands  will  be  insufficient  to  satisfy 
the  incumbrances  or  charges  thereon.^^ 

§  669.  General  rule  not  followed  in  New  Jersey.  Not- 
withstanding the  clear  weight  of  authority  in  support  of  the 
rule  as  stated,  allowing  receivers  of  mortgaged  premises  in 
aid  of  a  foreclosure  when  the  security  is  inadequate  and  the 
mortgagor  insolvent,  the  courts  of  New  Jersey  were  formerly 
averse  to  the  interference  upon  this  ground,  and  it  was  held  that 
the  conditions  mentioned  were  not  sufficient  cause  for  relief  in 

27  Jackson   v.    Hooper,    107    Ala.,  29  Hollenbcck  v.   Donnell,  94   N. 
634,  18  So.,  254.     And  see,  post,  §      Y.,  342. 

672.  30  Master  of  the  Rolls  in  Herbert 

28  Pouder  v.  Tate,  96  Ind.,  330.  v.  Greene,  3  Ir.  Ch.,  N.  S..  274. 


822  RECEIVERS.  [chap.  XV. 

equity  by  a  receiver.^^  The  grounds  upon  which  the  courts  of 
that  state  based  their  refusal  to  follow  the  general  rule  were, 
that  when  one  takes  a  mortgage  security  and  permits  the  mort- 
gagor to  remain  in  possession,  if  there  is  a  default  in  payment 
the  mortgagee  must  appropriate  the  property  in  the  usual  way 
to  the  payment  of  his  debt.  If  he  has  a  first  mortgage  and 
wishes  possession,  he  must  take  his  legal  remedy  by  ejectment. 
If  he  is  a  second  incumbrancer,  he  takes  his  security  with  that 
disadvantage.^^ 

§  670.  Grounds  of  the  relief  in  New  Jersey;  fraud,  bad 
faith  and  mismanagement;  assignment  to  insolvent  per- 
son; transfer  to  wife  of  mortgagor.  The  courts  of  New 
Jersey  have,  however,  recognized  other  circumstances,  when 
coupled  with  inadequacy  of  the  security  and  insolvency  of  the 
mortgagor,  as  sufficient  foundation  for  relief  in  equity.  And 
it  is  laid  down  as  a  general  doctrine,  that  a  receiver  may  be  al- 
lowed when,  in  addition  to  the  insolvency  of  the  mortgagor  and 
inadequacy  of  the  security,  any  act  has  been  done  by  the  mort- 
gagor, or  tenant  in  possession,  which  shows  fraud  or  bad  faith 
in  appropriating  the  rents  and  profits  for  other  purposes  than 
keeping  down  the  interest  on  the  incumbrances.^^  So  it  is  said 
that  a  receiver  may  be  allowed  if  the  circumstances  have  mate- 
rially changed  after  the  giving  of  the  security,  'as  if  the  build- 
ings have  burned  down  or  been  permitted  to  decay,  or  if  waste 
has  been  committed,  or  if  the  property  has  depreciated  in  value 
through  the  fault  or  negligence  of  the  mortgagor,  or  tenant  in 
possession.  And  when,  in  addition  to  the  inadequacy  of  the 
security  and  the  mortgagor's  insolvency,  he  had  transferred  the 
property  to  a  third  person,  also  insolvent,  who  paid  no  por- 
tion of  the  purchase  money  and  failed  to  carry  out  his  agree- 
ment to  pay  a  portion  of  plaintiff's  mortgage,  by  reason  of 

31  Cortleyeu      v.      Hathaway,      3  32  Cortleyeu      v.      Hathaway,      3 

Stockt.,  39;   Frisbie  v.   Bateman,  9  Stockt.,  39. 

C.  E.  Green,  28,  approving  and  fol-  33  Cortleyeu      v.      Hathaway,      3 

lowing  Best  v.  Schermier,  2  Halst.,  Stockt.,  39. 
Ch.,  154. 


CHAP.  XV.]  MORTGAGES.  823 

which  agreement  the  mortgagee  had  delayed  the  enforcement 
of  his  demand,  the  circumstances  were  deemed  sufficient  to  war- 
rant a  receiver  of  the  crops  growing  upon  the  premises,  unless 
the  defendant  would  give  adequate  security  for  any  deficiency 
which  might  result.^^    And  when  the  mortgagee  files  a  bill  to 
foreclose,  showing  that  he  has  no  personal  security  for  his  debt, 
that  the  premises  are  an  inadequate  security,  and  that  the  mort- 
gagor who  is  in  possession  and  in  receipt  of  the  rents  has  not 
kept  down  the  interest  and  taxes,  thereby  permitting  a  lien  for 
taxes  to  be  created  paramount  to  that  of  the  mortgage,  he  is 
entitled  to  a  receiver.^^     So  when  an  action  of  ejectment  is 
brought  by  the  mortgagee  to  recover  possession,  and  upon  a  bill 
to  foreclose  he  applies  for  a  receiver  in  aid  of  the  action  at  law, 
he  is  entitled  to  the  relief  when  the  mortgagor  is  insolvent  and 
the  security  inadequate,  the  mortgagor  having  removed  from 
the  premises  and  delivered  possession  to  one  who  is  permitted 
to  retain  possession  without  payment  of  rent,  the  mortgagor 
having  also  committed  waste  and  threatening  future  waste.36 
But  the  fact  that  the  mortgagor  in  possession  had  made  an  as- 
signment, according  to  law,  of  all  his  interest  in  the  premises 
for  the  benefit  of  his  creditors,  under  which  assignment  the  as- 
signees had  sold  the  mortgagor's  interest,  and  the  purchaser 
had  voluntarily  transferred  his  purchase  to  the  wife  of  the 
mortgagor,  was  held  not  to  constitute  any  strong  ground  for 
the  appointment  of  a  receiver  of  the  profits  of  the  growing 
crops,  in  behalf  of  a  first  mortgagor,  the  case  being  regarded  as 
standing  upon  the  same  ground  as  if  there  had  been  no  assign- 
ment, and  the  application  were  made  against  the  mortgagor  in 
possession. ^"^ 

§  671.  The  doctrine  in  Mississippi.    In  Mississippi,  while 
the  mortgagor's  insolvency  and  the  inadequacy  of  the  security 

34  Cortleyeu      v.      Hathaway,      3  36  Brasted  v.  Sutton.  30  N.  J.  Eq., 

Stockt.,  39.  ^62. 

SSMkhon   V.    Crothers,   28   N.    J.  37  Frishie    v.    Batcman,   9    C    E. 

Eq.,  567 ;  Chetwood  v.  Coffin,  30  N.  Green,  28. 
J.  Eq.,  450. 


824  RECEIVERS.  [CIIAP.   XV. 

are  recognized  as  sufficient  grounds  for  a  receivership,  the  relief 
is  also  based  upon  another  ground.  And  it  is  held,  in  that  state, 
that  upon  maturity  of  the  debt  and  a  failure  to  pay,  the  legal 
title  becomes  absolute  in  the  mortgagee,  which  draws  with  it  the 
right  of  possession,  and  that  in  appointing  a  receiver,  in  such 
case,  the  court  merely  confers  upon  him  such  rights  and  powers 
as  a  court  of  law  would  have  conferred  upon  the  mortgagee, 
where  his  title  was  sufficient  to  give  him  the  possession  and  con- 
sequent use  of  the  property. ^^  g^^j.^  unless  the  mortgagee  has 
contracted  to  have  the  rents  and  income  after  default  made,  he 
is  not  entitled  to  them,  nor  to  the  aid  of  a  receiver  to  get  them 
in,  unless  the  mortgaged  property  is  insufficient  to  satisfy  the 
debt.39 

§  671a.  The  rule  in  Minnesota.  In  Minnesota,  where, 
under  the  statute,  the  legal  title  remains  in  the  mortgagor, 
the  rule  is  established  that  the  mortgagee  is  not  entiled 
to  a  receiver  of  the  rents  and  profits  except  where  it  becomes 
necessary  to  appoint  one  upon  equitable  considerations,  such  as 
to  prevent  waste  or  to  preserve  the  premises ;  and,  further,  that 
the  insolvency  of  the  mortgagor  or  the  insufficiency  of  the  se- 
curity or  both  combined  are  not  sufficient  to  justify  the  appoint- 
ment, although  insolvency  and  the  insufficiency  of  the  security 
might  be  very  material  considerations  in  passing  upon  the  pro- 
priety or  necessity  of  appointing  a  receiver  for  the  purpose  of 
preserving  the  property.^^ 

§  672.  Unpaid  taxes  and  insurance  as  ground  for  relief; 
contest  as  to  whether  property  is  covered  by  mortgage; 
assignment  by  mortgagor.  In  addition  to  the  two  prin- 
cipal elements  already  mentioned  as  the  usual  ground  upon 
which  receivers  are  allowed  in  this  class  of  cases,  the  fact  that 

38  Hill  V.  Robertson,  24  Miss.,  Cady,  75  Minn.,  241,  77  N.  W.,  831 ; 
368.  National  Fire  Ins.  Co.  v.  Broadbent, 

39  Whitehead  v.  Wooten,  43  77  Minn.,  175.  79  N.  W.,  676:  Esch 
Miss.,  523.  V.  White,  82  Minn.,  462,  85  N.  W., 

40  Marshall  &  Ilslcy  Bank  v.  238,  718;  Farmers  Trust  Co.  v. 
Cady,  76  Minn.,  112,  78  N.  W.,  Q7S.  Prndden,  84  Minn.,  126,  86  N.  W., 
And  see  Marshall  &  Ilsley  Bank  v.  887. 


CHAP.  XV.]  MORTGAGES.  825 

the  taxes  upon  the  mortgaged  property  have  been  suffered  to 
remain  unpaid,  that  a  sale  for  unpaid  taxes  has  been  had,  and 
that  the  insurance  upon  the  buildings  covered  by  the  mortgage 
has  been  neglected,  presents  strong  grounds  for  the  interference 
of  equity  by  a  receiver.^i  And  when  the  mortgagor  has  failed 
to  comply  with  his  covenant  to  keep  the  premises  insured  and 
to  pay  the  taxes,  the  mortgagee  having  been  compelled  to  pay 
insurance  and  taxes,  and  it  is  shown  that  the  premises  are  great- 
ly in  need  of  repairs,  the  court  will  not  closely  scrutinize  the 
proof  as  to  the  insufhciency  of  the  security  before  granting  the 
relief.^2  go  where  the  mortgagor  who  was  insolvent  had  made 
a  general  assignment  and  his  assignee  was  in  possession  of  the 
premises  receiving  the  rents  and  profits,  but  the  taxes  and  in- 
surance were  allowed  to  remain  unpaid,  a  proper  case  was  pre- 
sented for  the  appointment  of  a  receiver  pending  the  foreclo- 
sure.^^ So,  too,  the  existence  of  a  contest  as  to  whether  a  large 
portion  of  the  property,  constituting  the  chief  value  of  the  se- 
curity, is  covered  by  the  mortgage,  is  an  additional  ground  for 
the  relief  in  such  case.'*^  But  the  breach  by  the  mortgagor  of 
his  covenant  to  keep  the  mortgaged  property  insured  will  not 
constitute  ground  for  a  receiver  where  the  risk  is  so  great  that 
the  rates  would  be  prohibitive,  especially  where  the  mortgage 
provides  that  if  the  mortgagor  fails  to  insure,  the  mortgagee 
may  do  so  himself  and  charge  the  amounts  up  as  part  of  the 
mortgage  indebtedness.^^ 


41  Wall    Street    Fire   Ins.    Co.    v, 
Loud,  20   How.    Pr.,  95;    Finch   v. 


Houghton,   19  Wis.,   149;   Schreiber      discharge    plaintiff's    lien.      Ray    v. 


V.  Carey,  48  Wis.,  208,  4  N.  W.,  124 
Eslava  v.  Crampton,  61  Ala.,  507 
Harris  v.  United  .States  S.  F.  &  I 


though   it  is  charged   that   the   land 
alone  will   not  be  sufficient  to  fully 


Carlisle,  125  Ga.,  316. 

42  Eslava   v.    Crampton.    61    Ala., 
507.     And  see,  ante,  §  667. 


Co.,   146  Ind.,  265,  45   N.   E.,   328;  43  Winkler    v.     Magdeburg,     100 

Southern  B.  &  L.  Assn.  v.   Carey,  Wis.,  421,  76  N.  W.,  332. 

52    C.    C.    A.,    174,    114    Fed.,    288.  44  Wall    Street    Fire    Ins.    Co.   v. 

Where  plaintiff  claims  a  mechanic's  Loud.  20  How.  Pr.,  95. 

lien    upon   property,    the    failure   of  45  Eureka  Mining,  S.  &  P.  Co.  v. 

the  defendant  to  keep  the  building  Lcwiston  N.  Co.,  12  Idaho,  472,  86 

insured  constitutes  no  ground  for  a  Pac,  49. 

receiver  of  the  rents  and  profits,  al- 


326  RECEIVERS.  [chap.  XV. 

§  672a.  Mortgage  of  hotel  property.  When  the  mort- 
gaged premises  consist  of  a  hotel,  and  the  mortgagors  are  in- 
solvent, and  have  neglected  to  pay  taxes  upon  the  premises, 
and  have  discontinued  the  operation  of  the  hotel,  thereby  im- 
pairing the  value  of  the  security,  sufficient  cause  is  shown  for  a 
receiver  in  an  action  to  foreclose  the  mortgage.'^^  But  in  case 
of  a  mortgage  upon  a  building  used  for  hotel  purposes,  the  busi- 
ness itself  or  its  good  will  not  being  embraced  in  the  mortgage, 
either  expressly  or  by  necessary  implication,  while  a  receiver 
may  be  appointed  in  aid  of  a  foreclosure,  the  court  will  not 
direct  him  to  manage  the  hotel  business,  since  this  is  not  a  part 
of  the  mortgage  security.'*'^ 

§  673.  The  doctrine  in  Nevada;  when  relief  extended 
to  purchasers  under  foreclosure  sale.  In  Nevada,  under 
the  statutes  and  code  of  procedure  of  that  state,  a  mortgagee 
has  but  one  remedy  against  the  mortgagor  in  case  of  default, 
viz.,  the  ordinary  equitable  remedy  by  foreclosure  and  sale, 
and  is  neither  entitled  to  bring  ejectment  at  law,  nor  to  a  strict 
foreclosure  and  sale.  For  this  reason,  inadequacy  of  the  secu- 
rity and  the  mortgagor's  insolvency  are  held  to  be  sufficient  to 
warrant  the  appointment  of  a  receiver  in  aid  of  foreclosure 
proceedings;  especially  when  the  mortgagor  has  pledged  the 
rents  and  profits  arising  from  the  mortgaged  premises  to  keep 
down  the  interest  on  the  mortgage,  and  when  he  afterward 
diverts  the  rents  from  this  purpose.  And  when,  in  such  case, 
the  mortgagees  themselves  become  the  purchasers  at  the  fore- 
closure sale,  and  under  the  statute  a  period  of  six  months  must 
intervene  between  the  sale  and  the  time  when  the  purchasers  are 
entitled  to  a  deed  and  to  the  possession  of  the  premises,  the 
court  will  extend  the  protection  of  a  receiver  to  the  purchas- 
ers.48 

46  Lowell  V.  Doe,  44  Minn.,  144,  4S  Hyman  v.  Kelly,  1  Nev.,  179. 
46  N.  W.,  297. 

47  Whitley   v.    Challis,    (1892)    1 
Ch.,  64. 


CHAP.  XV.]  MORTGAGES.  827 

§  674.  The  doctrine  in  California;  mortgagee  not  al- 
lowed receiver  because  of  inadequacy  and  insolvency ;  the 
doctrine  in  Iowa.  In  California,  however,  under  a  statute 
similar  to  that  of  Nevada,  limiting  the  mortgagee's  remedy  to 
the  ordinary  foreclosure,  a  contrary  doctrine  prevails,  and  it  is 
held  that  the  same  reasons  for  the  interference  of  equity  do 
not  exist  as  under  the  English  practice,  in  the  appointment  of 
receivers  to  collect  the  rents  of  the  mortgaged  premises  pen- 
dente lite.  The  mortgage  being  considered  only  as  a  security 
for  the  debt,  the  estate  remains  that  of  the  mortgagor  as  owner, 
and  must  continue  so  to  remain  until,  by  foreclosure  and  sale, 
a  new  owner  is  substituted.  Hence  the  mortgagee  is  not  en- 
titled to  the  aid  of  a  receiver,  even  though  the  bill  alleges  the 
insolvency  of  the  mortgagor  and  inadequacy  of  the  security.^^ 
So  the  purchaser  at  a  foreclosure  sale  will  not  be  allowed  a  re- 
ceiver over  the  mortgaged  premises  and  the  growing  crops 
thereon  as  against  the  mortgagor  remaining  in  possession  dur- 
ing the  period  of  redemption.^^  And  a  stipulation  in  the  mort- 
gage providing  for  the  appointment  of  a  receiver  will  not 
justify  the  appointment  where  there  is  no  showing  that  the 
mortgaged  premises  are  insufficient  security;  and  in  such  case, 
a  general  allegation  that  the  mortgaged  premises  are  insuffi- 
cient security  is  a  mere  conclusion  and  as  such  insufficient  as 
the  basis  for  a  receiver.^^  And  in  Iowa,  the  mortgagor  being 
entitled  to  possession  until  the  expiration  of  a  year  from  the 
foreclosure  sale,  and  entitled  to  the  crops  during  such  period, 
the  mortgagee  will  not  be  allowed  a  receiver  because  of  inade- 
quacy of  the  security  and  insolvency  of  the  mortgagor,^^  ^j. 
though  it  is  averred  that  the  mortgagor  has  fraudulently  dis- 
posed of  other  property  upon  which  the  mortgagee  has  no 
lien.^^ 


■*9  Guy  V.  Ide,  6  Cal.,  99.  52  American    Investment    Co.    v. 

50  West  V.  Conant,  100  Cal.,  231,  Farrar,  87  Iowa,  437,  54  N.  W.,  361. 
34  Pac,  705.  53  Wliite  7'.  Griggs,  54  Iowa,  650, 

51  Bank  of  Woodland  v.  Stephens,  7  N.  W.,  125. 
144  Cal.,  659,  79  Pac,  379. 


828  RECEIVERS.  [chap.  XV. 

§  674(7.  The  doctrine  in  South  Carolina;  receiver  not 
allowed.  In  South  Carolina,  under  a  statute  enacted  in 
1791,  a  mortgage  of  real  estate  is  not  regarded  as  a  conveyance 
of  any  estate,  but  as  a  mere  contract  creating  a  lien  upon  the 
premises  as  security  for  the  payment  of  an  indebtedness.  The 
mortgagor  still  remains,  even  after  a  condition  broken,  the 
owner  of  the  premises,  retaining  all  rights  incident  to  such  own- 
ership, including  the  right  to  receive  the  rents  and  profits. 
Equity  will  not,  therefore,  upon  the  application  of  the  mort- 
gagee in  a  suit  for  foreclosure  appoint  a  receiver  of  the  rents 
and  profits  when  they  have  not  been  pledged  by  the  mortgage, 
even  though  it  is  shown  that  the  mortgagor  is  insolvent  and 
the  security  inadequate.^*  If  the  rents  and  profits  are  not 
pledged  by  the  mortgage,  they  remain  the  property  of  the  mort- 
gagor, who  may  dispose  of  them  by  assignment.  And  when 
the  mortgagor  makes  a  general  assignment  for  the  benefit  of 
his  creditors  of  all  his  property,  including  mortgaged  lands, 
the  mortgagee  will  be  denied  a  receiver  of  the  rents  and 
profits,  although  he  alleges  the  insolvency  of  the  mortgagor  and 
the  inadequacy  of  the  security. ^^ 

§  675.  When  relief  allowed  although  indebtedness  only 
partly  due ;  not  allowed  when  there  is  doubt  as  to  amount 
due,  and  bill  is  denied  by  answer.  While,  as  a  general  rule, 
the  courts  will  not  interfere  by  appointing  receivers  in  aid  of 
mortgagees  when  the  indebtedness  is  not  yet  due,^^  yet  there 
may  be  circumstances  sufficient  to  justify  a  partial  departure 
from  the  rule.  And  when,  from  the  nature  of  the  mortgaged 
premises,  it  is  apparent  that  they  are  so  indivisible  as  to  render 
it  necessary  to  sell  them  as  an  entirety  upon  a  decree  in  foreclo- 
sure, a  receiver  will  be  allowed,  although  only  a  portion  of  the 
mortgage  indebtedness  is  due,  if  it  is  satisfactorily  shown  to 
the  court  that  the  premises  are  an  inadequate  security  for  the 
debt,  and  that  the  mortgagor  is  personally  irresponsible  for  the 

54  Hardin  v.  Hardin,  34  S.  C,  11.  56  Bank      of      Ogdensburgh      v. 

55  Seignious   v.    Pate,    32    S.    C,      Arnold,  5  Paige,  38. 
134. 


CHAP.  XV.]  MORTGAGES.  -  829 

deficiency  in  tlie  secnrity.^'^  If,  however,  there  is  doubt  as  to 
the  amount  actually  due,  and  the  plaintiff's  allegations  as  to 
the  inadequacy  of  the  security  are  denied  by  the  answer,  the 
court  will  not  interfere  with  the  possession  by  appointing  a  re- 
ceiver.^^ 

§  676.  When  allowed  over  leasehold  premises  mort- 
gaged; mortgage  of  chattels.  The  interference  of  courts 
of  equity  by  appointing  receivers  over  the  mortgaged  estate 
upon  the  principal  grounds  already  discussed,  is  not  confined  to 
mortgages  of  the  fee,  but  may  also  be  allowed  in  case  of  a  mort- 
gage of  a  leasehold  interest  in  the  premises.  And  upon  a  bill 
to  foreclose  a  mortgage  of  a  leasehold,  when  the  mortgagor  is 
in  insolvent  circumstances  and  has  transferred  his  equity  of 
redemption  in  the  premises,  a  receiver  may  be  appointed,  and 
the  assignee  of  the  mortgagor  in  possession  will  be  directed  to 
attorn  to  the  receiver.  The  relief  is  regarded  as  peculiarly  ap- 
propriate in  such  case,  since  without  it  the  owner  of  the  equity 
of  redemption  might,  by  protracting  the  litigation  until  the  ex- 
piration of  the  lease,  render  the  security  utterly  valueless. ^^ 
So  insolvency  of  the  mortgagor  of  chattels,  coupled  with  in- 
adequacy of  the  security  and  danger  of  removal  of  the  prop- 
erty beyond  the  jurisdiction  of  the  court,  will  warrant  the 
appointment  of  a  receiver  in  a  suit  to  foreclose  the  mortgage. ^^ 

§  677.  Possession  by  tenant  of  mortgagor  no  bar  to  re- 
lief. In  an  action  for  the  foreclosure  of  a  mortgage,  when 
a  receiver  is  sought  by  the  mortgagee  upon  the  ground  of  in- 
adequate security  and  the  mortgagor's  insolvency,  it  is  no 
sufficient  objection  to  the  interference  of  the  court,  that  the 
premises  are  in  possession  of  a  tenant  of  the  mortgagor,  when 
the  tenant  is  before  the  court  as  a  party  to  the  suit;  since,  if 
such  possession  by  the  tenant  were  to  be  recognized  as  a  bar  to 
relief  in  equity  by  a  receiver,  it  would  be  in  the  power  of  a 

5"  Quincy  v.  Cheeseman,  4  Sandf.  ^*^  Astor  v.  Turner,  2  Barli..  444. 

Ch.,    405.      See,    also,    Buchanan    v.  CO  Reynolds    v.    Quick,    128    Ind., 

Berkshire    Life    Insurance    Co.,    96  316,  27  N.  E.,  621.     And  see,  ante, 

Ind..  510.  §  647. 

58Callanan  v.  Shaw.  19  Iowa.  183. 


830  RKCKIVERS.  [CHAi-.  XV. 

mortgagor  to  greatW  jeopardize  the  seciirit}'  and  rights  of  the 
mortgagee,  simply  by  placing  the  property  in  the  possession  of 
a  tenant.^i  So  persons  who  have  taken  possession  of  the 
mortgaged  premises  under  contract  with  the  mortgagor,  after 
default  in  payment  of  the  mortgage  indebtedness  and  with 
knowledge  of  the  mortgagor's  insolvency  and  of  the  condition 
of  the  property,  may  be  required  to  surrender  possession  to 
the  receiver,  or  to  pay  a  reasonable  rental  for  the  premises. ^^ 
§  678.  Bonds  issued  by  canal  company,  when  treated  as 
mortgage  and  receiver  allowed.  When  a  corporation  of  a 
quasi  public  nature,  as  a  canal  company,  issues  bonds  for  the 
completion  of  its  undertaking,  pledging  all  its  property,  real 
and  personal,  for  the  payment  of  the  bonds  and  interest,  and 
making  them  a  first  lien  upon  the  assets  of  the  company,  the 
bonds  will  be  regarded  as  in  the  nature  of  a  mortgage,  to  the 
extent  of  authorizing  a  receiver  in  behalf  of  the  bondholders, 
to  take  charge  of  the  affairs  of  the  company  upon  a  bill  alleg- 
ing non-payment,  and  that  the  corporation  is  insolvent  and  its 
property  going  to  ruin.^^ 

61  Keep  V.  Michigan  Lake   Shore  jection  to  the  appointment  of  a  re- 

R.  Co.,  U.  S.  Circuit  Court,  West-  ceiver,   to    whom   the   tenant   could 

ern  District  of  Michigan,  6  Chicago  be  required  to  attorn  and  pay  over 

Legal  News,  101.     This  was  an  ap-  the    rents,   instead    of   paying   them 

plication  for  a  receiver,  upon  a  bill  to  the  mortgagor,  but  without  pow- 

for  foreclosure  filed  by  trustees   in  er    in    such    receiver   to   molest   the 

a    mortgage    given    by    a    railway  possession    of    the    tenant.      When, 

company   to    secure    its   bonds,    the  however,  the  tenant  is  a  party  be- 

mortgagor    having    delivered     pos-  fore    the    court,    a    receiver    of   the 

session  of  the  property  to  a  tenant.  mortgaged    premises    may    be    ap- 

The  court,  Withey,  J.,  say,  p.   102;  pointed.      Any    other    view    would 

"The  objection  is  made  to  appoint-  place   it   in   the   power   of   a   mort- 

ing   a    receiver   because   the    Conti-  gagor,    by    leasing    the    mortgaged 

nental   Improvement  Co.   is  in  pos-  property,   to   greatly  jeopardize   the 

session  as  tenant  of  the  mortgagors,  security    and    interests    of   a   mort- 

and  it  is  claimed  the  extent  a  court  gagee." 

will  go,  in  such  case,  is  to  order  the  62  Mutual   Life  Insurance  Co.  v. 

tenant  to  attorn   to   the  mortgagee.  Spicer,  12  Hun,  117. 
If  the  tenant   was   not   a   party  be-  63  White  Water  Valley  Canal  Co. 

fore  the  court,  that  would  be  no  ob-  v.  Vallette,  21  How.,  414. 


CHAP.  XV.]  MORTGAGES.  831 

§  678a. When  receiver  allowed  in  behalf  of  wife.  The 
right  to  the  aid  of  a  receiver  in  a  foreclosure  suit  is  not  limited 
to  the  mortgagee  or  his  assigns,  and  the  relief  may  be  granted 
in  behalf  of  other  parties  to  the  action  when  necessary  for  the 
protection  of  their  interests  in  the  subject-matter  of  the  litiga- 
tion. Thus,  when  a  wife  has  joined  in  the  execution  of  a  mort- 
gage upon  lands  of  the  husband  to  secure  his  indebtedness, 
and  her  inchoate  interest  is  afterwards  set  off  and  allotted  to 
her  in  a  portion  of  the  lands  absolutely,  under  a  statute  of  the 
state,  if  the  remainder  of  the  premises  is  insufficient  to  pay  the 
debt  and  the  husband  is  insolvent,  a  receiver  may  be  appointed 
over  such  remainder  upon  the  application  of  the  wife  upon  a 
cross-bill  by  her  seeking  to  have  the  remainder  first  sold  and 
applied  in  satisfaction  of  the  mortgage  debt.^^ 

§  678^.  Exemption  of  rents.  When  a  mortgagee  seeks 
the  aid  of  a  receiver  to  collect  the  rents  and  apply  them  in 
payment  of  the  mortgage  indebtedness,  upon  the  ground  of  in- 
adequate security  and  insolvency  of  the  mortgagor,  the  proper 
time  for  the  mortgagor  to  assert  his  right  to  the  rents  as  being 
exempt  under  the  exemption  laws  of  the  state  is  upon  the  hear- 
ing of  the  application  for  the  receiver.  And  when  the  receiver 
has  been  appointed  and  directed  to  apply  the  rents  in  payment 
of  the  debt,  the  mortgagor  can  not,  by  a  subsequent  action,  re- 
cover such  rents  from  the  receiver  upon  the  ground  that  they 
are  exempted  from  seizure,  the  order  appointing  the  receiver,  in 
such  case,  being  regarded  as  res  judicata  upon  the  question  of 
the  rio^ht  to  the  rents. ^^ 


64  Main  v.  Giuthert,  92  Ind.,  180.  «3  Storm  v.  Ermantrout,  89  Ind., 

214. 


S32  RECEIVERS.  ICTIAP.  XV. 


IIT.  Receivers  as  Between  Different  Mortgagees. 

§  679.     Receiver  not  granted  as  against  prior  mortgagee  in  possession. 

680.  The  rule  applied  against  judgment  creditors,  and  against  heirs- 

at-la\v. 

681.  Relief  granted  when  nothing  appears  to  be  due  prior  mortgagee 

in  possession. 

682.  Subsequent  mortgagees  may  have  receiver  when  prior  mort- 

gagee   not    in   possession;    consent   of   prior    mortgagee    not 
necessary. 

683.  Annuitants  allowed  receiver  when  prior  mortgagees  have  not 

taken  possession. 

684.  Right  to  relief  when  mortgagor  is  beyond  jurisdiction  of  court. 

685.  Appointment  made  without  prejudice  to  prior  equities. 

686.  Receiver  granted  to  mortgagee  of  corporate  property. 

687.  When    judgment    creditor    denied    relief    as    against    a    puisne 

mortgagee  in  possession. 

688.  Right  to  rents;  mortgagee  first  obtaining  receiver  entitled  to 

priority;  subrogation;  payment  according  to  priority. 

689.  Contrary  doctrine  in  Virginia. 

690.  Prior  mortgagee  denied  receiver  of  rents  which  have  been  as- 

signed by  mortgagor  to  junior  mortgagee. 

691.  Receiver  allowed  on  bill  by  junior  mortgagee  for  foreclosure 

and  to  compel  prior  mortgagee  to  exhaust  another  mortgage; 
tenants  required  to  attorn  to  receiver. 
691a.  Consolidation  of  actions  to  foreclose  different  mortgages. 

§  679.  Receiver  not  granted  as  against  prior  mortgagee 
in  possession.  Under  the  English  practice,  when  there  are 
several  mortgages  of  different  priority  upon  the  same  premises, 
the  first  mortgagee,  being  vested  with  the  legal  title  and  the 
right  to  immediate  possession,  is  called  the  legal  mortgagee, 
and  all  others  are  equitable  mortgagees  or  incumbrancers.  And 
the  doctrine  of  the  English  Court  of  Chancery,  announced  in 
strong  terms  by  Lord  Eldon,  and  which  has  also  been  recog- 
nized and  enforced  in  this  country,  was  that  as  against  a  prior 
mortgagee  in  possession  of  the  property  under  his  mortgage, 
a  receiver  would  never  be  granted  in  behalf  of  subsequent  mort- 
gagees, while  anything  remained  due  to  the  prior  mortgagee 
under  his  incumbrance.  In  such  cases,  the  only  remedy  open 
to  the  second  or  equitable  mortgagee  is  to  pay  off  the  prior  in- 
cumbrancer and  redeem  from  the  lien  of  his  mortgage.     The 


CHAP.  XV.] 


MORTGAGES. 


833 


rule  is  based  upon  the  unwillingness  of  courts  of  equity  to  inter- 
fere with  the  legal  title  or  with  possession  under  it,  and  their 
disinclination  to  substitute  another  security  for  that  for  which 
the  mortgagee  contracted.  The  courts  refuse,  therefore,  to 
grant  a  receiver  in  this  class  of  cases,  or  to  interfere  with  the 
receipt  of  the  rents  and  profits  by  the  prior  mortgagee  in  posses- 
sion, since  such  interference  would  virtually  have  the  effect 
of  dispossessing  him.^^  And  upon  motion  for  a  receiver  against 
a  mortgagee  in  possession,  who  insists  by  his  answer  that  he 
has  not  been  fully  paid,  the  court  will  not,  by  affidavits  upon  the 


66  Bemey  v.  Sewell,  1  Jac.  &  W., 
647;  Rowe  v.  Wood,  2  Jac.  &  W., 
553;  Hiles  v.  Moore,  15  Beav.,  175; 
Trenton  Banking  Co.  v.  Woodruff, 
2  Green  Ch.,  210.  See,  also,  Cod- 
rington  v.  Parker,  16  Ves.,  469; 
Faulkener  v.  Daniel,  10  L.  J.,  N.  S. 
Ch.,  2)2 ;  Quinn  v.  Brittain,  3  Edw. 
Ch.,  314.  In  Berney  v.  Sewell,  1 
Jac.  &  W.,  647,  the  rule  was  stated 
by  Lord  Eldon  as  follows:  "If  a 
man  has  a  legal  mortgage,  he  can 
not  have  a  receiver  appointed ;  he 
has  nothing  to  do  but  to  take  pos- 
session. If  he  has  only  an  equi- 
table mortgage,  that  is,  if  there  is  a 
prior  mortgagee,  then,  if  the  prior 
mortgagee  is  not  in  possession,  the 
other  may  have  a  receiver  without 
prejudice  to  his  taking  possession; 
but,  if  he  is  in  possession,  you  can 
not  come  here  for  a  receiver ;  you 
must  redeem  him,  and  then,  in 
taking  the  accounts,  he  will  not  be 
allowed  any  sums  that  he  may 
have  paid  over  to  the  mortgagor 
after  notice  of  the  subsequent  in- 
cumbrance. If  you  recollect,  in 
Mr.  Beckford's  case,  I  went  to  the 
very  utmost ;  I  said  then  that  if 
Mr.  Beckford  would  swear  that 
there  was  sixpence  due  to  him,  I 
would  not  take  away  the  possession 

Receivers — 53. 


from  him.  If  there  is  anything 
due,  I  can  not  substitute  another 
security  for  that  which  the  mort- 
gagee has  contracted  for.  I  know 
no  case  where  the  court  has  ap- 
pointed a  receiver  against  a  mort- 
gagee in  possession,  unless  the 
parties  making  the  application  will 
pay  him  off,  and  pay  him  off  ac- 
cording to  his  demand  as  he  states 
it  himself.  I  can  not  appoint  the 
receiver  against  these  defendants, 
unless  you  can  bring  me  their  con- 
fession that  they  are  paid  off,  or 
their  refusal  to  accept  what  is  due 
to  them.  The  rule  about  receivers 
is  very  clear;  a  mortgagee  who  has 
the  legal  estate  can  not  have  a 
receiver;  an  equitable  mortgagee 
may,  but  he  can  not  if  the  first  is 
in  possession.  I  remember  a  case 
where  it  was  much  discussed 
whether  the  court  would  appoint  a 
receiver  when  it  appeared  by  the 
bill  that  there  was  a  prior  mort- 
gagee who   was  not  in  possession. 

1  have  a  note  of  that  case.  There 
Lord  Thurlow  made  the  appoint- 
ment without  prejudice  to  the  first 
mortgagee's  taking  possession,  and 
that  was  afterward  followed  by 
Lord  Kenyon."    See  Rowe  v.  Wood, 

2  Jac.  &  W.,  553. 


834  RECEIVERS.  [CIIAP.  XV. 

hearing  of  tlie  motion,  try  the  question  as  to  whether  any  bal- 
ance is  still  due  to  the  mortgagee.^'^  Nor  will  the  court  inter- 
pose, even  though  the  priority  of  the  first  mortgagee  in  posses- 
sion is  contested  by  the  other  mortgagee,  when  he  does  not 
show  that  the  mortgagee  in  possession  is  insolvent  and  unable 
to  respond  in  case  it  should  be  determined  that  he  has  not  a 
priority  of  lien.^^ 

§  680.  The  rule  applied  against  judgment  creditors,  and 
against  heirs-at-law.  The  rule  as  laid  down  in  the  preceding 
section  is  not  confined  to  cases  where  the  subsequent  claimant  is 
strictly  a  mortgagee,  but  is  sometimes  extended  to  cases  where 
the  claim  or  right  asserted  as  against  the  estate  is  of  another 
nature.  Thus,  it  is  held  that,  as  against  a  mortgagee  in  pos- 
session, holding  the  premises  as  security  for  his  debt,  a  court  of 
equity  will  not  appoint  a  receiver  of  the  rents  and  profits  on  a 
creditor's  bill  filed  by  a  judgment  creditor  of  the  mortgagor, 
when  the  mortgagee  has  not  been  paid  the  amount  due  him 
and  is  fully  able  to  respond  for  what  he  may  receive. ^^  So, 
too,  as  against  mortgagees  in  possession,  whose  mortgage  and 
other  charges  upon  the  estate  have  not  been  fully  satisfied,  the 
heirs-at-law  of  the  testator,  upon  a  bill  against  the  mortgagees 
for  an  account,  are  not  entitled  to  a  receiver  of  the  mortgaged 
premises.  And  in  such  case,  it  is  a  sufficient  answer  to  the  appli- 
cation for  a  receiver  that  the  mortgage  and  other  charges  upon 
the  estate  prior  to  the  claim  of  the  heirs  have  not  been  dis- 
charged. "^^ 

§  681.  Relief  granted  when  nothing  appears  to  be  due 
prior  mortgagee  in  possession.  In  the  application  of  the 
rule  under  discussion,  denying  a  receiver  as  against  a  first 
mortgagee  in  possession,  it  must  clearly  appear  that  something 
remains  actually  due  to  such  mortgagee.'^!     And  when  the 

67Rowe  V.  Wood,  2  Jac.  &  W.,  314.      See,    also,    United    States    v. 

553.  Masich.  44  Fed.,  10. 

68  Trenton  Banking  Co.  v.  Wood-  70  Faulkener  v.  Daniel,  10  L.  J., 
ruff,  2  Green  Ch.,  210.  N.  S.  Ch.,  33. 

69  Quinn  v.  Brittain,  3  Edw.  Ch.,  71  See  Codrington  v.   Parker,  16 


CHAP.  XV.]  MORTGAGES.  835 

mortgagee  in  possession  had  been  so  negligent  in  keeping  his 
accounts,  that  it  could  not  be  determined  what  was  due  under 
his  mortgage,  the  court  allowed  the  motion  for  a  receiver  to 
stand  over  in  order  that  defendant  might  show  by  affidavit  how 
much  was  due  him,  and  directed  that,  if  he  failed  to  give  such 
information,  a  receiver  should  be  allowed.'^2  g^  ^^.^g^  ^  t|-,jj.(j 
mortgagee  took  possession  of  the  premises,  and  afterward 
bought  up  a  first  mortgage  with  a  view  to  tacking  the  securi- 
ties, and  remained  in  possession  several  years,  receiving  con- 
siderable sums  of  money  from  the  premises,  a  receiver  was  al- 
lowed as  against  him  upon  the  application  of  the  second  mort- 
gagee, when  it  did  not  satisfactorily  appear  that  anything  was 
due  under  the  first  mortgage.  The  interference  of  the  court, 
under  such  circumstances,  rests  upon  the  necessity  of  protecting 
the  rents  and  profits  of  the  estate  for  the  benefit  of  those  who 
shall  ultimately  be  found  entitled  to  them.'^^ 

§  682.  Subsequent  mortgagees  may  have  receiver  when 
prior  mortgagee  not  in  possession;  consent  of  prior  mort- 
gagee not  necessary.  It  has  been  shown  in  the  preceding 
sections,  that  the  doctrine  of  non-interference  as  against  prior 
mortgagees  is  strictly  limited  to  cases  where  the  mortgagee 
has  actually  taken  possession  of  the  premises  under  his  mort- 
gage, and  has  no  application  to  cases  where  the  prior  mort- 
gagee is  out  of  possession.  And  the  rule  is  well  settled,  that 
when  the  first  mortgagee  has  not  taken  possession  of  the  prop- 
erty, equity  may  properly  interfere  in  behalf  of  subsequent 
mortgagees  or  equitable  incumbrancers  and  creditors,  and  may 
appoint  a  receiver  for  their  protection,  but  without  prejudice  to 
the  rights  of  the  first  mortgagee.'^'*  The  only  doubt  which 
seems  to  have  existed  as  to  the  propriety  of  the  doctrine  has 

Ves.,  469;  Hiles  v.  Moore,  15  Beav.,  flicting    mortgagees,    where    a    re- 

175.  ceiver  is   sought   of  the   rents   and 

■72  Codrington  v.  Parker,  16  Ves.,  profits. 

469.  74  Bryan  v.  Cormick,  1  Cox,  422; 

73  Hiles  V.  Moore,  15  Beav.,  175.  Dalmer  v.  Dashwood,  2  Cox,  378; 

And  see  this  case  as  to  the  practice  Tanfield  v.  Irvine,  2  Russ.,  149. 
in   determining   the   rights   of  con- 


836  RECEIVERS.  [chap.  XV. 

been  upon  the  question  of  the  necessity  of  first  obtaining  con- 
sent of  the  prior  mortgagee  before  interfering  by  a  receiver. 
And  in  a  case  decided  by  Lord  Thurlow  in  1783,  the  rule  was 
stated  to  be,  that  a  second  mortgagee  could  not  have  a  receiver 
without  the  consent  of  the  first,  since  the  court  could  not  pre- 
vent the  first  mortgagee  from  bringing  an  action  of  ejectment 
against  the  receiver  immediately  upon  his  appointment.'^^  Sub- 
sequently, however,  the  same  learned  chancellor  seems  to  have 
become  convinced  that  the  consent  of  the  prior  mortgagee  was 
not  necessary  to  confer  jurisdiction,  and  in  a  case  decided  by 
him  in  1788,  a  receiver  was  allowed  of  mortgaged  premises 
in  behalf  of  subsequent  equitable  creditors,  although  it  was  ob- 
jected on  the  part  of  mortgagees  that  the  court  never  appointed 
a  receiver  of  a  mortgaged  estate  without  the  consent  of  the 
mortgagee.'^^  And  the  court  will  not  permit  the  prior  incum- 
brancer to  prevent  the  appointment  of  a  receiver  by  anything 
short  of  a  personal  assertion  of  his  legal  right,  and  the  taking 
possession  himself.'^'^     And  in  an  action  to  foreclose  a  second 

75  Phipps  V.  Bishop  of  Bath,  Dick.,  ship  said  he  could  see  no  reason, 
608.  This  was  an  application  on  if  a  mortgagee  had  not  thought 
behalf  of  a  second  mortgagee  for  proper  to  take  possession,  why  the 
a  receiver,  and  that  he  might  apply  court  should  not  put  a  receiver  on 
the  rents  in  keeping  down  the  in-  the  estate,  so  as  that  it  should  be 
terest  of  a  mortgage,  and  of  an-  without  prejudice  to  the  mort- 
other  charge  upon  the  estate,  and  gagee's  right  to  obtain  the  posses- 
pay  the  surplus  rents  into  bank.  sion.  Where  a  receiver  has  been 
The  first  mortgagee  had  declined  appointed  of  a  mortgaged  estate, 
any  steps  to  get  possession.  Lord  the  mortgagee  not  being  brought 
Thurlow  held  as  follows:  "A  sec-  before  the  court,  the  mortgagee 
ond  mortgagee,  the  mortgagor  liv-  must  apply  to  the  court  for  liberty 
ing,  can  not  have  a  receiver  with-  to  bring  an  ejectment,  which  is  of 
cut  the  consent  of  the  first  mort-  course.  So  here,  if  the  receiver  is 
gagee,  because  the  court  can  not  appointed  without  prejudice  to  the 
prevent  the  first  mortgagee  from  mortgagee's  right,  there  could  be 
bringing  an  ejectment  against  the  no  objection  to  it.  And  his  lord- 
receiver  as  soon  as  he  is  appointed."  ship     ordered     that     the     receiver 

76  Bryan  v.  Cormick,  1  Cox,  422.  should  be  appointed  without  preju- 
Lord  Thurlow  asked  if  the  mort-  dice,"  etc. 

gagees  were  in  possession,  "and  it  77  Silver  v.  Bishop  of  Norwich,  3 

appearing  they  were  not,  his  lord-      Swans.,  112,  note. 


CHAP.  XV.]  MORTGAGES.  837 

mortgage  it  is  proper  to  appoint  a  receiver  of  the  rents  and  prof- 
its, when  the  mortgagor  is  insolvent  and  the  premises  are  an 
inadequate  security  for  both  mortgages,  and  when  the  pur- 
chaser of  the  equity  of  redemption  of  the  mortgagor  refuses  to 
keep  down  the  interest  upon  the  first  incumbrance.'^^  But 
when  receivers  are  appointed  in  behalf  of  second-mortgage 
bondholders  and  sell  the  mortgaged  property  for  their  benefit, 
it  is  improper  to  charge  the  commissions  and  compensation  of 
the  receivers  against  first-mortgage  bondholders.'^^ 

§  683.  Annuitants  allowed  receiver  when  prior  mort- 
gagees have  not  taken  possession.  As  illustrative  of  the 
rule  allowing  receivers,  in  behalf  of  subsequent  equitable  mort- 
gagees or  incumbrancers,  upon  the  grounds  already  stated,  it 
is  held  that  annuitants  whose  annuities  are  chargeable  upon 
real  estate  which  has  been  previously  mortgaged  to  different 
mortgagees,  are  entitled  to  the  aid  of  equity  by  a  receiver  of 
the  rents  of  the  mortgaged  premises,  when  the  prior  mort- 
gagees have  not  yet  taken  possession.  And  in  such  a  case,  it 
is  not  necessary  that  the  prior  incumbrancers  should  be  made 
parties  to  the  action,  but  the  order  for  the  receiver  will  be  made 
without  prejudice  to  their  rights.*^^ 

§  684.  Right  to  relief  when  mortgagor  is  beyond  juris- 
diction of  court.  There  is  some  conflict  in  the  English  de- 
cisions in  this  class  of  cases,  as  to  whether  the  subsequent  in- 
cumbrancer or  mortgagee  is  entitled  to  a  receiver  of  the  rents 
and  profits,  in  a  case  otherwise  sufficient  for  the  relief,  when  the 
mortgagor  is  beyond  the  jurisdiction  of  the  court,  and  has  not 
been  served  with  process.  The  better-considered  doctrine  ap- 
pears to  be,  that  the  court  may  properly  interfere  in  such  a  case 
and  that  it  ought  not  to  permit  the  rights  of  a  subsequent  in- 
cumbrancer to  be  lost,  by  the  circumstance  that  the  mortgagor 
has  not  entered  an  appearance,  and  can  not  be  compelled  to  ap- 

78Haugan  v.  Netland,  51  Minn.,  so  Dalmer  v.  Dashwood,  2   Cox, 

552,  53  N.  W.,  873.  378. 

79  Tome  v.  King,  64  Md.,  166,  21 
Atl.,  279. 


838  RECEIVERS.  [chap.  XV. 

pear  because  beyond  the  jurisdiction  of  the  court. ^^  But  a  con- 
trary doctrine  was  held  in  another  case,  and  a  receiver  was  re- 
fused in  behalf  of  an  equitable  mortgagee,  upon  a  bill  against 
the  mortgagor  and  a  subsequent  equitable  incumbrancer,  when 
the  mortgagor  resided  beyond  the  jurisdiction  of  the  court  and 
had  not  appeared  to  the  suit.  And  the  refusal  to  interfere  was 
based  upon  the  ground  that  the  court  had  no  jurisdiction,  for 
the  purposes  of  an  application  for  a  receiver,  against  the  posses- 
sion of  a  party  who  was  not  before  the  court  to  defend  him- 
self.82 

§  685.  Appointment  made  without  prejudice  to  prior 
equities.  While,  as  has  thus  been  shown,  courts  of  equity 
may,  in  proper  cases,  interfere  by  appointing  receivers 
in  aid  of  subsequent  equitable  incumbrancers  or  creditors,  they 
yet  proceed  in  the  exercise  of  this  branch  of  their  jurisdiction 
with  much  caution.  And  the  established  rule  is,  that  the  court 
will  only  grant  a  receiver  in  behalf  of  an  equitable  creditor  or 
incumbrancer,  by  making  the  order  without  prejudice  to  per- 
sons having  prior  interests  or  estates  in  the  property.  If  their 
prior  estates  are  legal  estates  or  interests,  the  court  by  its  ap- 
pointment does  not  prevent  them  from  proceeding  to  obtain 
possession  under  their  legal  title,  if  they  think  proper.  If  they 
are  equitable  estates,  the  court  takes  care,  in  the  appointment  of 
its  receiver,  not  to  disturb  any  prior  equities,  and  for  this  pur- 
pose directs  inquiries  to  determine  priorities  among  the  differ- 
ent equitable  incumbrancers.^^  And  the  appointment  of  a  re- 
ceiver, in  cases  where  there  are  incumbrancers  or  mortgagees 

81  Tanfield  v.  Irvine,  2  Russ.,  149.  the  High  Court  of  Chancery.    And 

82 v.    Chadvvick,    4   L.    J.,  additional    doubt    is    thrown    upon 

Ch.,  67.    In  this  case,  a  bailiff  of  the  its   weight   as   authority   by    a   note 

mortgagor    received    the    rents    of  of  the  reporter,   who  adds :     "It  is 

the    estate    and    remitted    them    to  supposed  by  some  of  the  most  ex- 

the    mortgagor    residing    in    a    for-  perienced    king's    counsel,    that    the 

eign   country.     The  decision,   how-  lord    chancellor    has    appointed    re- 

ever,  being  in   the  vice-chancellor's  ceivers  in  similar  cases." 

court,  can  hardly  be  regarded  as  of  83  Davis  v.  Duke  of  Marlborough, 

equal  authority  with  Tanfield  v.  Ir-  2  Swans.,  137,  138,  165. 
vine,  2  Russ.,  149,  which  was  before 


CHAP.  XV.]  MORTGAGES.  839 

interested  ad\ersely  to  the  plaintiff  obtaining  the  receiver,  is 
for  the  benefit  of  such  incumbrancers  only  so  far  as  expressed 
to  be  for  their  benefit,  or  so  far  as  they  choose  to  avail  them- 
selves of  it,  since  a  court  of  equity  will  not  interfere  to  deprive 
them  of  the  advantage  of  their  legal  rights.84 

§  686.  Receiver  granted  to  mortgagee  of  corporate 
property.  When  it  is  satisfactorily  made  to  appear  to  the 
court,  that  a  receiver  in  behalf  of  the  mortgagee  of  the  prop- 
erty of  a  corporation  is  necessary  to  protect  the  mortgagee's  in- 
terests, it  is  no  sufficient  objection  to  granting  the  relief  that  a 
large  number  of  other  mortgagees  of  the  same  property  are 
satisfied  with  the  management  of  the  corporation,  which  is  in 
the  hands  of  a  manager  or  trustee  for  the  benefit  of  the  mort- 
gagees. And  the  court  will  grant  a  receiver,  in  such  case, 
although  the  mortgagee  seeking  the  relief  represents  only  one- 
ninth  of  the  mortgage  indebtedness. ^^ 

§  687.  When  judgment  creditor  denied  relief  as  against 
a  puisne  mortgagee  in  possession.  Under  the  practice  of 
the  Irish  Court  of  Chancery,  a  receiver  will  not  be  appointed  on 
the  application  of  a  judgment  creditor,  after  his  debtor  is  ad- 
judicated a  bankrupt,  as  against  a  puisne  mortgagee  in  posses- 
sion.^^ 

§  688.  Right  to  rents ;  mortgagee  first  obtaining  receiv- 
er entitled  to  priority ;  subrogation ;  payment  according  to 
priority.  The  question  of  the  right  to  rents  and  profits  of 
the  mortgaged  estate,  upon  the  appointment  of  receivers,  when 
there  are  different  mortgagees,  is  one  of  considerable  import- 
ance and  deserving  of  special  notice.  The  general  rule  is  that 
a  junior  mortgagee,  who  obtains  a  receiver  of  the  rents  and 
profits,  in  aid  of  a  bill  to  foreclose  his  mortgage,  is  entitled  to 
the  rents  and  profits  at  the  hands  of  such  receiver,  up  to  the 

84  Gresley  v.  Adderley,  1  Swans.,  86  Ryan  v.  Lefroy,  3  Ir.  Ch.,  N. 
573.                                                          S.,  351. 

85  Fripp  V.  The  Bridgewater  Co., 
11  Hare.  239;  S.  C,  17  Jur.,  887,  22 
L.  J..  1084. 


840  RECEIVERS.  [chap.  XV. 

time  of  appointing  a  receiver  upon  a  bill  by  a  prior  mortgagee, 
not  a  party  to  the  original  suit.  And  the  prior  mortgagee  is 
entitled  to  have  of  the  receiver  only  such  rents  and  profits  as 
accrue  after  the  appointment  in  aid  of  such  prior  mortgagee,  al- 
though one  and  the  same  person  is  appointed  in  both  cases.  The 
rule  is  based  upon  the  consideration  that,  until  the  elder  mort- 
gagee sees  fit  to  assert  his  right  to  the  rents  and  income,  a  junior 
incumbrancer  has  a  right  so  to  do,  and  the  first  mortgagee  not 
being  a  party  to  the  former  suit,  and  having  no  lien  on  the  rents 
and  profits,  and  no  right  to  recover  the  back  rents,  he  can  only 
assert  his  right  thereto,  as  against  the  receiver,  from  the  date  of 
appointment  in  his  own  suit.^^  The  proper  course,  therefore, 
for  an  incumbrancer  to  take  who  is  desirous  of  having  the  bene- 
fit of  a  receiver  already  appointed,  is  to  file  a  bill  for  that  pur- 
pose and  obtain  an  order  extending  the  receiver  to  his  incum- 
brancers In  such  case,  the  extension  of  the  receiver  is  regarded 
as  a  new  appointment,  and  the  rents  theretofore  received  by  him 
are  treated  as  by-gone  rents  which  the  mortgagee  last  asserting 
his  right  has  suffered  other  claimants  to  realize,  and  the  order 
extending  the  receiver  for  the  benefit  of  the  prior  mortgagee 
will  attach  only  to  the  rents  thereafter  received.89    And  until 

87  Howell  V.  Ripley,  10  Paige,  43 ;  comes  in  and  makes  a  motion  for  the 
Ranney  v.  Peyser,  83  N.  Y.,  1;  discharge  of  the  receiver  or,  in  the 
Washington  Life  Insurance  Co.  v.  alternative,  to  be  let  into  the  pos- 
Fleischauer,  10  Hun,  117;  Goddard  session  of  the  rents  and  profits,  the 
V.  Clarke,  81  Neb.,  373,  116  N.  W.,  first  mortgagee  is  entitled  to  rents 
41.  And  see  Post  v.  Dorr,  4  Edw.  paid  to  the  receiver  after  the  date 
Ch.,  412;  Sanders  v.  Lord  Lisle,  Ir.  of  the  service  of  the  notice  of  his 
Rep.,  4  Eq.,  43;  Agra  &  Master-  motion  and  not  merely  those  paid 
man's  Bank  v.  Barry,  Ir.  Rep.,  3  to  him  after  the  motion  is  subse- 
Eq.,  443;  Lanauze  v.  Belfast,  Holy-  quently  granted.  Preston  v.  Tun- 
wood  &  Bangor  R.  Co.,  id.,  454;  bridge  W.  O.  H..  (1903)  2  Ch.,  323. 
Miltenberger  v.  Logansport  Rail-  88  Sanders  v.  Lord  Lisle,  Ir.  Rep., 
way  Co.,  106  U.  S.,  286,  1  Sup.  Ct.  4  Eq.,  43. 

Rep.,    140.      And    where    a    second  89  Agra  &  Masterman's  Bank  v. 

mortgagee  has  procured  the  appoint-  Barry,  Ir.  Rep.,  3  Eq.,  443 ;  Lanauze 

ment  of  a  receiver  of  the  rents  and  v.  Belfast,  Holy  wood  &  Bangor  R. 

profits   in   an   action   to   which   the  Co.,  id.,  454.    But  see  Beverley  v. 

first    mortgagee    was    not    a    party,  Brooke,  4  Grat.,  187. 
and   afterward  the   first   mortgagee 


CHAP.  XV.]  MORTGAGES.  841 

this  course  is  pursued,  the  incumbrancer  upon  whose  applica- 
tion the  receiver  was  originally  appointed  is  entitled  to  have  the 
rents  received  applied  in  satisfaction  of  his  demarfd,  irrespective 
of  any  question  of  priority,  since  such  rents  are  realized  by  his 
superior  diligence.  Hence  the  court  will  refuse  to  direct  the 
receiver  already  appointed  to  pay  out  of  the  rents  and  profits 
the  arrears  due  to  the  mortgagee  or  incumbrancer  who  has  not 
yet  filed  his  bill  or  obtained  an  order  extending  the  receiver  for 
his  protection,  since  such  order  would  deprive  the  mortgagee 
first  obtaining  a  receiver  of  all  benefit  or  advantage  gained  by 
his  diligence.^^  But  when  the  receiver  is  appointed  in  a  suit  to 
foreclose  the  first  mortgage,  the  second  mortgagee  being  a 
party,  and  the  first  mortgage  is  satisfied  out  of  the  proceeds  of 
the  foreclosure  sale,  leaving  a  surplus  which  is  applied  to  the 
payment  of  the  second  mortgage,  if  such  surplus  is  insufficient 
to  pay  the  second  mortgage  in  full,  resort  may  be  had  for  the 
deficiency  to  the  rents  collected  by  the  receiver.  In  such  case, 
the  first  mortgagee  having  procured  the  receiver  and  having  the 
right  to  satisfy  his  debt,  either  out  of  the  proceeds  of  sale  or 
out  of  the  rents  collected  by  the  receiver,  if  he  elects  to  take 
the  proceeds  of  sale,  the  second  mortgagee  is  entitled  to  be  sub- 
rogated to  the  rents. ^1  So  where  the  mortgaged  property  is 
sold  for  only  enough  to  satisfy  the  first  mortgage  and  a  de- 
ficiency decree  has  been  entered  in  favor  of  the  junior  mort- 
gagee and  it  appears  that  the  property  is  insufficient  security 
and  the  mortgagor  is  insolvent,  the  junior  mortgagee  is  en- 
titled to  a  receiver  of  the  rents  and  profits  during  the  period  of 
redemption,  and  the  relief  will  be  granted  in  such  case  although 
the  second  mortgage  does  not  expressly  pledge  the  rents  and 
profits.92  And  where  the  junior  of  three  mortgagees  is  in  law- 
ful possession  of  the  mortgaged  premises  and  is  receiving  the 

90  Sanders  v.  Lord  Lisle,  Ir.  Rep.,  92  Roach  v.  Glos,  181  111.,  440,  54 
4  Eq.,  43;  Ranney  v.  Peyser,  83  N.      N.  E.,  1022. 

Y.,  L 

91  Keogh  V.   McManus,  34  Hun, 
521. 


842  RECEIVERS.  [chap.  XV. 

rents  therefrom  during  the  period  of  redemption  from  a  sale 
in  satisfaction  of  the  first  mortgage  indebtedness,  and  is  after- 
ward deprived  of  such  possession  by  the  improper  appointment 
of  a  receiver  made  at  the  instance  of  the  second  mortgagee, 
such  junior  mortgagee  is  entitled,  as  against  such  second  mort- 
gagee, to  the  net  rentals  collected  by  the  receiver  during  the 
period  of  his  appointment.^^  Sq  when  the  first  mortgagee  files 
a  bill  to  foreclose  against  the  mortgagor  and  a  second  mort- 
gagee, and  the  first  mortgage  is  decreed  to  be  released  and  dis- 
charged, and  a  sale  of  the  premises  in  satisfaction  of  the  second 
mortgage  proves  insufficient  by  more  than  the  amount  of  the 
rents  collected  by  the  receiver  to  discharge  the  second  mortgage, 
such  rents  should  be  paid  to  the  second  mortgagee,  rather  than 
to  the  mortgagor.^'*  But  the  rule  as  thus  announced  as  to  the 
right  of  a  junior  mortgagee  to  a  receiver  of  the  rents  and 
profits  applies  only  where  the  holder  of  the  prior  mortgage  is 
not  a  party  to  the  proceeding  brought  by  the  junior  mortgagee 
and  where  the  order  appointing  the  receiver  is  for  the  sole  bene- 
fit of  the  junior  mortgagee.  Where,  therefore,  the  appointment 
is  made  upon  the  application  of  a  junior  mortgagee  in  an  action 
to  which  all  the  prior  mortgagees  are  made  defendants,  and  the 
appointment  is  not  limited  to  or  made  in  behalf  of  the  junior 
mortgagee,  but  is  general  in  its  nature,  the  fund  collected  by 
the  receiver  is  applicable  to  the  payment  of  the  different  mort- 
gages in  the  order  of  their  priority.^^  But  where  the  receiver 
is  appointed  at  the  instance  of  the  junior  mortgagee  in  a  pro- 
ceeding to  which  the  first  mortgagee  is  a  party  defendant  but 
the  appointment  is  expressly  limited  to  the  use  and  benefit  of  the 
plaintiff,  the  latter  is  entitled  to  the  rents  and  profits  until  the 
first  mortgagee  pursues  the  proper  course  for  the  enforcement 
of  his  rights. ^^    And  where  a  receiver  has  been  appointed  to 

93  Ruprecht   v.    Muhlke,   225   111.,  St.,  682 ;  Cross  v.  Will  County  Natl. 
18a  80  N.  E.,  106.  Bank,  177  111.,  2,i,  52  N.  E,,  322. 

94  Hitz  V.  Jenks,   123  U.   S.,  297,  96  Anderson  v.  Matthews,  8  Wyo., 
8  Sup.  Ct.  Rep.,  143.  513,  58  Pac,  898. 

95  Williamson  v.  Gerlach,  41  Ohio 


CHAP.  XV.]  MORTGAGES.  843 

collect  the  rents  and  profits  for  the  benefit  of  the  junior  mortga- 
gee, the  senior  mortgagee  who  is  a  party  to  the  suit  and  who 
does  not  object  to  the  receivership  for  the  benefit  of  the  junior 
mortgagee,  can  not,  after  a  sale  and  deficiency,  have  the  order 
so  modified  as  to  secure  to  himself  the  benefit  of  the  rents  and 
profits  collected  under  such  order.97  And  where  one  division 
of  a  railroad  which  has  been  in  the  possession  of  a  receiver  has 
been  sold  at  a  foreclosure  sale  subject  to  the  lien  of  a  senior 
mortgage  and  afterwards  a  bill  is  filed  to  foreclose  the  latter 
mortgage  and  the  former  receiver  is  continued  in  possession 
under  the  latter  proceeding,  the  purchaser  at  the  sale  who  makes 
his  bid  subject  to  the  prior  mortgage  is  not  entitled  to  the  net 
income  of  the  division  which  has  accumulated  in  the  hands  of 
the  receiver  subsequently  to  his  appointment  in  the  second  suit 
but  such  income  passes  to  the  senior  mortgage  bondholders 
under  the  conditions  of  their  mortgage.^^ 

§  689.  Contrary  doctrine  in  Virginia.  Notwithstanding 
the  rule  as  stated  in  the  preceding  section,  as  to  the  right  to 
rents  in  the  hands  of  a  receiver,  where  there  are  different  mort- 
gagees, is  supported  by  the  clear  weight  of  authority,  a  some- 
what different  doctrine  has  been  established  in  Virginia.  And 
it  is  there  held,  as  between  different  incumbrancers  of  the  same 
property,  whose  rights  are  conflicting  and  who  are  seeking  to 
gain  priority  by  different  suits  in  the  same  court,  that  the  ap- 
pointment of  a  receiver  in  behalf  of  the  plaintiff  in  one  of  the 
suits  is  for  the  benefit  of  all  parties  in  interest ;  and  that  when 
the  plaintiff  in  another  suit  succeeds  in  maintaining  his  priority 
of  right,  he  is  entitled  to  a  decree  for  an  account  of  the  rents 
and  proceeds  in  the  hands  of  the  receiver  appointed  in  the  other 
action,  and  an  appropriation  of  so  much  thereof  as  may  be 
necessary  for  the  satisfaction  of  his  debt.  The  appointment  of 
a  receiver,  as  against  the  mortgagor  and  a  prior  mortgagee, 
is  also  held  to  be  in  the  nature  of  an  injunction  defeating  the 

97  Goddard    v.    Clarke,    81    Neb.,       Trust  Co.,  24  C.  C.  A.,  500,  79  Fed., 
373,  116  N.  W.,  41.  215,  52  U.  S.  App.,  79. 

®8  Downs    V.    Farmers'    Loan    & 


844  RECEIVERS.  [chap.  XV. 

mortgag^ee's  right  of  election  to  take  possession  of  the  property, 
so  that  he  can  not  afterwards  take  possession  if  he  would,  the 
court  having  taken  possession  for  him,  and  maintaining  it  until 
his  right  is  determined.  And  this  is  held  to  be  equally  true, 
whether  his  right  be  impeached  in  an  adverse  suit  brought 
against  him,  or  if,  not  being  a  party  to  the  litigation,  he  obtains 
leave  to  be  examined  therein  pro  inter  esse  siio.  But  the  two 
cases  are  regarded  as  distinguishable  in  this,  that  in  the  former 
he  has  only  to  await  the  decision  of  the  controversy,  and  re- 
ceive the  proceeds  from  the  hands  of  the  court;  while  in  the 
latter  it  is  his  duty  to  come  forward  within  a  reasonable  time, 
since  if  he  suffers  the  fund  to  be  paid  over  to  the  mortgagor  or 
to  subsequent  incumbrancers,  he  will  be  too  late.^^  The  Vir- 
ginia doctrine,  however,  while  ingenious  in  theory,  lacks  the 
support  of  authority,  and  is  clearly  opposed  to  the  English 
rule,  that  the  appointment  of  a  receiver  in  behalf  of  a  junior 
incumbrancer  is  always  without  prejudice  to  the  rights  of  an 
elder  mortgagee.^ 

§  690.  Prior  mortgagee  denied  receiver  of  rents  which 
have  been  assigned  by  mortgagor  to  junior  mortgagee. 
It  has  already  been  shown,  that  the  courts  of  New  Jersey  have 
always  been  averse  to  extending  the  aid  of  receivers  to  mort- 
gagees, when  the  mortgagor  is  in  possession  of  the  premises, 
and  the  usual  grounds  of  insolvency  of  the  mortgagor  and  in- 
adequacy of  the  security,  upon  which  the  relief  is  generally 
based,  are  not  recognized  in  that  state  as  sufficient  cause  for 
a  receiver.2  It  is  also  held,  in  that  state,  that  as  between  prior 
and  subsequent  mortgagees  of  the  same  premises,  upon  a  bill 
by  the  piior  mortgagee  for  a  foreclosure,  the  court  will  not 
grant  a  receiver  of  the  rents  and  profits  of  the  premises,  when 


99  Beverley  z;.  Brooke,  4  Grat.,  187.  Stockt.,  39;   Frisbie  v.  Bateman,  9 

1  See  Bryan  v.  Cormick,  1  Cox,  C.  E.  Green,  28,  approving  and  fol- 
422;  Dalmer  v.  Dashwood,  2  Cox,  lowing  Best  v.  Schermier,  2  Halst. 
378;  Tanfield  v.  Irvine,  2  Russ.,  149.  Ch.,  154. 

2  Cortleyeu      v.      Hathaway,      3 


CHAP.  XV.]  MORTGAGES.  845 

they  have  been  assigned  by  the  mortgagor  to  the  junior  mort- 
gagee as  additional  security  for  his  indebtedness.^ 

§  691.  Receiver  allowed  on  bill  by  junior  mortgagee  for 
foreclosure  and  to  compel  prior  mortgagee  to  exhaust  an- 
other mortgage;  tenants  required  to  attorn  to  receiver. 
Upon  a  bill  for  a  foreclosure  by  a  junior  mortgagee  against 
the  mortgagor  and  a  prior  mortgagee,  the  bill  also  seeking  to 
compel  the  prior  mortgage  to  first  exhaust  another  mortgage 
held  by  him  upon  other  property  for  the  same  indebtedness, 
it  is  proper  that  a  receiver  should  be  had  to  collect  the  rents, 
upon  satisfying  the  court  of  the  insufficiency  of  the  security. 
And  this  course  is  deemed  preferable  to  that  of  compelling  the 
first  mortgagee  to  bring  ejectment  to  obtain  possession,  to  be 
followed  by  an  action  for  the  mesne  profits.  It  is  also  held,  that, 
in  such  a  case,  it  is  proper  to  appoint  the  receiver  upon  motion 
of  the  defendant,  the  first  mortgagee,  as  against  his  co-defend- 
ant, the  mortgagor.  And,  upon  appointing  a  receiver  of  mort- 
gaged premises,  the  court  has  the  right  to  compel  the  tenants 
of  the  premises  to  attorn  to  the  receiver.*  So  when  a  second 
mortgagee  obtains  a  decree  of  foreclosure,  but  a  sale  of  the 
property  is  stayed  at  the  suit  of  a  third  person  assailing  the  title 
to  the  mortgage,  such  mortgagee  is  entitled  to  a  receiver  until 
the  determination  of  the  controversy,  the  mortgagor  in  posses- 
sion being  insolvent,  the  taxes  and  insurance  being  unpaid,  and 
there  being  doubt  as  to  the  adequacy  of  the  security. ^  But  if 
the  rents  are  being  applied  in  payment  of  the  mortgage  indebt- 
edness, taxes,  insurance  and  care  of  the  property,  a  receiver  wall 
not  be  allowed  at  the  suit  of  junior  mortgagees,  the  senior 
mortgagees  being  content  with  the  management  of  the  property, 


3  Best  V.  Schermier,  2  Halst.  Ch.,  gagor    was    entitled    to    the    rents 

154.     And  the  chancellor  observed  while  in  possession  by  his  tenants. 

that    he    had     uniformly     declined  ^  Henshaw  v.   Wells,  9  Humph., 

applications  for  a  receiver  of  rents  568. 

on    the    filing   of    foreclosure   bills,  5  Warwick  v.  Hammell,  32  N.  J. 

upon    the    ground    that    the    mort-  Eq.,  427. 


846  RECEIVERS.  [chap.  XV. 

and  not  desiring  a  receiver,  even  though  it  is  charged  that  the 
security  is  inadequate  and  the  mortgagor  insolvent.^ 

§  691(7.  Consolidation  of  actions  to  foreclose  difEerent 
mortgages.  Where  a  receiver  has  already  been  appointed 
in  an  action  brought  to  foreclose  a  first  mortgage  and  subse- 
quently a  bill  is  filed  for  the  foreclosure  of  a  junior  incum- 
brance, the  proper  practice  is  to  extend  the  first  receivership 
to  the  second  proceeding  and  have  the  two  causes  consoli- 
dated.7 

6  Myton   V.   Davenport,   51    Iowa,  ply  the  rents  in  payment  of  ground 

583,  2  N.  W.,  402.     As  to  the  duty  rent  and  taxes  upon  the  premises, 

of  a   receiver,   appointed   in  a   su't  see  Ranney  v.  Peyser,  20  Hun,  11. 

for  the  foreclosure  of  a  junior  mort-  7  Lloyd   v.   Chesapeake,   O.  &   S. 

gage  of  a  leasehold  interest,  to  ap-  W.  R.  Co.,  65  Fed.,  351. 


CHAPTER  XVI. 

OF  RECEIVERS  IN  CASES  OF  TRUSTS. 

I.  Principles  Governing  the  Relief  §  692 

II.  Receh'ers  Over  Executors  and  Administrators 706 

III.  Receivers  Over  Estates  of  Infants  725 

IV.  Receivers  Over  Estates  of  Lunatics 7Z2> 

I,  Principles  Governing  the  Relief. 

§  692.     Principles  referred  to  general  jurisdiction  of  equity  over  trusts; 
scope  of  the  present  chapter. 

693.  Equity  averse  to  displacing  trustee  under  express  trust. 

694.  Testamentary  trusts;  relief  granted  when  trustees  under  will 

refuse  to  act. 

695.  Court  will  only  consider  probability  of  trust  estate  being  wast- 

ed; bad   habits  and  unfitness  of  trustee,  when  not  sufficient 
ground. 

696.  Trust  for  management  of  public  lands  vested  in  state  officers; 

court  reluctant  to  interfere. 

697.  Receiver  appointed  pendente  lite  in  action  to  remove  trustee  for 

unfitness;  fraud;  misconduct;  breach  of  trust. 

698.  Mingling  funds  by  trustee,  when  not  sufficient  ground;  relief 

not  granted  because  productive  of  no  harm. 

699.  Receiver  granted  heir-at-law  over  lands  fraudulently  conveyed 

by  trustee. 

700.  When  devisee  of  personal  property  entitled  to  relief  as  against 

husband  of  a  deceased  wife. 

701.  Litigation  to  revoke  probate  of  will  no  ground  for  receiver. 

702.  Refused  as  against  trustee  of  persons  interested  under  contract 

for  public  works. 

703.  Courts    averse    to    appointing    as     receivers    persons    occupying 

fiduciary  relations;  when  departure  from  rule  permissible. 

704.  When  management  of  estate  transferred  from  receiver  to  new 

trustees. 

705.  When  granted  over  pension. 

§  692.  Principles  referred  to  general  jurisdiction  of 
equity  over  trusts;  scope  of  the  present  chapter.  The  ap- 
pointment of  receivers  is  frequently  necessary  in  cases  of  trusts, 

847 


848  RECEIVERS.  [chap.  XVI. 

either  express  or  implied,  as  against  trustees  and  persons  oc- 
cupying fiduciary  relations,  and  the  principles  governing  this 
branch  of  the  subject  may  be  appropriately  referred  to  the 
general  jurisdiction  of  courts  of  equity  over  trusts.  Strictly 
speaking,  many  of  the  cases  in  which  relief  is  granted  by  ap- 
pointing a  receiver  over  corporations  are  dependent  to  a  con- 
siderable degree  upon  the  doctrine  of  trusts,  the  officers  of  a 
corporation  occupying  a  fiduciary  relation  toward  its  sharehold- 
ers and  creditors,  and  the  abuse  of  their  trust  constituting  a 
frequent  ground  for  the  interference  of  equity  by  a  receiver. 
The  principles  governing  the  relief,  in  such  cases,  have  been 
elsewhere  treated,^  and  it  is  proposed,  in  the  present  chapter, 
to  consider  the  subject  only  in  its  application  to  cases  of  express 
trust,  such  as  those  created  under  wills,  cases  of  executors  and 
administrators,  of  infancy  and  of  lunacy. 

§  693.  Equity  averse  to  displacing  trustee  under  express 
trust.  It  may  properly  be  observed,  at  the  outset,  that 
the  courts  are  averse  to  the  displacement  by  a  receiver  of  a 
trustee  under  an  express  trust,  unless  for  good  cause  shown. ^ 
And  equity  will  not,  at  the  instance  of  one  of  several  parties 
interested  in  an  estate,  displace  a  competent  trustee  in  whom  the 
estate  has  been  vested  by  a  testator,  and  take  the  possession 
from  him  and  place  it  in  the  hands  of  a  receiver,  unless  he  wil- 
fully or  ignorantly  permits  the  property  to  be  placed  in  a  condi- 
tion of  insecurity,  which  might  be  prevented  by  due  care.^  So 
when  a  trustee  has  been  in  possession  of  the  property  in  con- 
troversy in  the  administration  of  his  trust  for  many  years,  upon 
a  bill  for  his  removal  the  court  will  not  appoint  a  receiver  be- 
fore answer  when  it  is  not  shown  that  there  is  any  great  or 
impending  danger  to  the  property  or  fund,  or  that  plaintiff  will 

1  See  chapter  X,  ante.  3  Barkley  v.  Lord  Reay,  2  Hare, 

2  Barkley  v.  Lord   Reay,  2  Hare,  306.      And    see    Poythress    v.    Poy- 
306;  Hatcher  v.  Massey,  66  Ca.,  66;  thress,  16  Ga.,  406;  Orphan  Asylum 
Latham    v.    Chafee,    7    Fed.,    525 ;  v.  McCartee,  Hopk.  Ch.,  429. 
Etowah  Mining  Co.  v.  Wills  Valley 

M.  &  M.  Co.,  106  Ala.,  492,  17  So., 
522. 


CHAP.  XVI.]  TRUSTS.  849 

suffer  irreparable  loss  by  delay.^  And  in  an  action  to  set  aside 
an  assignment  of  his  goods  by  a  debtor  to  a  trustee  for  the  ben- 
efit of  creditors,  upon  the  ground  of  fraud,  a  receiver  will  not  be 
appointed  over  the  property  held  by  such  trustee  pending  a  de- 
termination as  to  the  good  faith  of  such  assignment,  the  fraud 
being  denied  and  the  trustee  being  solvent  and  able  to  respond 
to  any  judgment  v^hich  may  be  recovered  against  him.^  But 
if,  in  such  a  case,  the  defendants  are  insolvent,  and  there  is 
probable  ground  for  believing  that  the  goods  will  be  fraudu- 
lently disposed  of  before  a  hearing  upon  the  merits,  a  receiver 
may  be  allowed,  if  plaintiff  shows  a  reasonable  probability  that 
he  will  ultimately  succeed  in  his  action.^ 

§  694.  Testamentary  trusts;  relief  granted  when  trus- 
tees under  will  refuse  to  act.  When  a  trust  created  by  a 
will,  to  receive  the  rents  and  profits  of  real  estate  belonging  to 
the  testator,  devolves  upon  a  court  of  chancery,  there  being  no 
person  to  manage  the  trust,  one  of  the  trustees  having  died  and 
the  others  refusing  to  act,  a  proper  case  is  presented  for  the  ap- 
pointment of  a  receiver  to  take  charge  of  the  rents  and  profits 
of  the  realty,  upon  a  bill  filed  by  an  heir-at-law  and  devisee 
under  the  will  to  have  the  question  of  its  validity  and  of  his 
rights  thereunder  determined.  Under  such  circumstances,  a 
receiver  becomes  necessary  for  the  preservation  of  the  rents  and 
profits,  in  order  that  a  proper  decree  may  be  made  as  to  their 
disposition  upon  the  final  determination  of  the  suitJ  And 
when  property,  real  and  personal,  has  been  devised  to  trustees, 
to  be  held  upon  certain  trusts  declared  in  the  will,  and  some  of 
the  trustees  refuse  to  act,  a  receiver  may  be  appointed  when  all 
parties  in  interest  are  before  the  court  and  consent  to  the  ap- 
pointment.^ 

§  695.  Court  will  only  consider  probability  of  trust  es- 
tate being  wasted;  bad  habits  and  unfitness  of  trustee, 
when   not   sufficient  ground.     Upon   a   bill   filed   by   the 

4  Latham  v.  Chafee,  7  Fed.,  525.  7  McCosker  v.  Brady,  1  Barb.  Ch., 

5  Levenson  v.  Elson,  88  N.  C,  182.       329. 

6  Ellett  V.  Newman,  92  N.  C,  519.  8  Brodie  v.  Barry,  3  Moriv.,  695. 

Receivers — 54. 


850  RECEIVERS.  [chap.  XVI. 

cestui  que  trust  against  a  testamentary  trustee,  seeking  an  ac- 
count of  his  trust  and  a  receiver  to  take  charge  of  the  property 
ad  interim,  the  only  ground  for  rehef  which  the  court  will  con- 
sider is,  whether  the  trust  estate  is  likely  to  be  wasted  before  the 
termination  of  the  litigation.  And  when  this  is  not  shown,  the 
alleged  bad  habits  of  the  trustee,  and  his  unfitness  to  execute 
the  trust  devolved  upon  him  by  the  testator's  will,  are  not  suffi- 
cient to  warrant  a  court  of  equity  in  the  exercise  of  its  extra- 
ordinary powers  by  the  appointment  of  a  receiver.^ 

§  696.  Trust  for  management  of  public  lands  vested  in 
state  officers;  court  reluctant  to  interfere.  In  the  case  of 
a  trust  created  by  an  act  of  legislature  and  vested  in  certain 
public  officers,  who  hold  their  trust  ex  officio,  a  portion  of  the 
duties  required  of  them  being  of  a  public  nature,  equity  is  ex- 
tremely averse  to  interfering  by  a  receiver,  and  it  must  be  a 
very  strong  case  which  will  justify  the  court  in  taking  the 
property  oyt  of  the  control  in  which  it  has  been  placed  by  the 
legislature,  and  putting  it  into  the  hands  of  its  own  officers. 
Thus,  when  the  legislature  of  a  state  has  vested  certain  public 
lands  belonging  to  the  state  in  the  governor  and  other  state 
officers  as  trustees,  to  constitute  an  internal  improvement  fund, 
and  to  serve  as  a  guaranty  of  bonds  to  be  issued  by  certain  rail- 
way companies,  and  the  trustees  are  authorized  to  fix  the  prices 
of  the  lands,  and  to  make  provision  for  their  drainage,  settle- 
ment and  cultivation,  the  court  will  not  interfere  by  a  receiver 
except  for  the  most  cogent  reasons,  nor  until  every  other  reme- 
dy has  been  tried  in  vain.^^ 

9  Poythress  v.  Poythress,  16  Ga.,  the  property  out  of  their  hands  and 
406.  put    it   into   the   hands    of   its    own 

10  Vose  V.  Reed,  1  Woods,  647.  officers.  The  legislature  has  seen 
Mr.  Justice  Bradley  observes,  p.  651,  fit  to  intrust  the  chief  officers  of 
as  follows :  "Now  these  public  and  the  state  with  these  important  du- 
political  objects  of  the  trust  make  ties,  and  it  would  show  a  great  dis- 
it  extremely  fitting  th?,t  the  chief  respect  to  this  co-ordinate  branch 
executive  officers  of  the  state  should  of  the  government  for  the  judiciary, 
administer  the  fund.  And  it  must  on  light  grounds,  to  displace  these 
be  a  very  strong  case,  indeed,  officers  from  the  trust,  and  to  put 
which  will  induce  the  court  to  take  appointees  of  its  own  in  their  stead. 


CHAP,  XVI.] 


TRUSTS. 


851 


§  697.  Receiver  appointed  pendente  lite  in  action  to  re- 
move trustee  for  unfitness;  fraud;  misconduct;  breach  of 
trust.  Notwithstanding  the  aversion  already  indicated, 
which  courts  of  equity  entertain  toward  the  appointment  of  re- 
ceivers to  displace  trustees  except  for  good  cause  shown,  it  has 
been  held,  when  the  object  of  the  action  was  the  removal  of  a 
trustee  from  his  trust  on  the  ground  of  unfitness,  that  the  court 
might  properly  appoint  a  receiver  pendente  lite,  the  propriety 
of  the  relief,  in  such  a  case,  being  regarded  as  a  matter  resting 
in  the  discretion  of  the  court  to  which  the  application  was  ad- 
dressed.ii  And  when  land  is  devised  to  a  trustee,  to  hold  and 
manage  it  and  to  pay  the  rents  and  income  to  certain  benefi- 
ciaries, the  insolvency  of  the  trustee  and  his  misapplication  of 
the  proceeds  of  sales  of  the  property,  and  his  failure  to  apply 
the  income  in  accordance  with  the  terms  of  the  trust,  and  his  ap- 


If  they  are  guilty  of  breach  of 
duty  they  can  be  enjoined;  they 
can  be  made  personally  responsible; 
the  fund  can  be  followed  in  the 
hands  of  persons  getting  hold  of  it 
in  a  fraudulent  manner.  It  would 
be  very  strange  if  the  courts  could 
not  in  some  way  secure  the  rights 
of  parties  having  an  interest  in  the 
fund,  without  removing  from  the 
trust  those  official  personages  to 
whose  administration  it  has  been 
intrusted  by  the  legislature.  The 
court  will  not  shut  its  eyes  to  the 
fact  that  these  officers  are  con- 
stantly being  changed  by  the  suf- 
frages of  the  people  of  the  state  and 
the  constituted  power  of  appoint- 
ment; and  it  would  be  very  incon- 
venient and  awkward  for  the  court, 
by  the  appointment  of  a  receiver,  to 
withhold  the  property  from  the 
possession  and  management  of  new 
state  officers,  fresh  from  the  confi- 
dence of  the  people,  and  against 
whom  no  charges  of  incapacity  or 


want  of  integrity  have  been  made. 
To  my  mind  it  seems  to  be  a  case 
in  which,  if  a  receiver  can  be  ap- 
pointed at  all,  the  appointment 
ought  not  to  be  made  until  every 
other  remedy  has  been  tried  in 
vain.  Besides,  looking  at  the  pecu- 
liar and  important  duties  attaching 
to  the  trust,  how  could  a  receiver, 
how  could  a  court,  without  the 
greatest  embarrassment,  adminis- 
ter the  trust?  How  could  the  court 
take  cognizance  of  the  require- 
ments of  a  vast  political  territory 
in  reference  to  drainage,  develop- 
ment, pre-emption  and  population? 
It  would  be  a  Herculean  task  for  a 
court,  or  the  receiver  of  a  court,  to 
perform.  I  do  not  feel  that  I  ought 
to  take  the  trust  fund  out  of  the 
hands  of  the  state  officers,  in  this 
case,  and  place  it  in  the  hands  of  a 
receiver.  The  motion  for  a  receiver 
is  therefore  denied." 

11  Janeway  v.  Green,  cited  in  note 
to  Darrow  v.  Lee,  16  Ab.  Pr,  215. 


852  RECEIVERS.  [chap.  XVI. 

propriation  of  such  income  to  his  own  use,  constitute  sufficient 
ground  for  an  injunction  and  a  receiver  in  an  action  by  the 
beneficiaries  for  an  accounting.i^  So  the  failure  of  trustees, 
to  whom  leasehold  property  is  devised  upon  certain  specified 
trusts,  to  keep  the  premises  in  proper  repair,  and  thereby  to 
prevent  a  forfeiture  of  the  leasehold,  has  been  held  to  be  suffi- 
cient ground  for  appointing  a  receiver  of  the  rents  for  the  pur- 
pose of  applying  them  to  needed  repairs. ^^  And  when  a  trustee 
violates  the  express  conditions  of  his  trust  by  loaning  funds 
contrary  to  the  provisions  of  the  instrument  by  which  the  trust 
is  defined,  and  by  loaning  a  portion  of  such  funds  to  a  bankmg 
firm  of  which  he  is  a  member,  and  which  soon  afterward  be- 
comes insolvent,  sufficient  ground  is  afforded  to  justify  the  ap- 
pointment of  a  receiver.  Nor  can  the  conduct  of  the  trustee,  in 
such  case,  be  justified  by  the  fact  that  he  took  securities  for  the 
loan  which  he  regarded  as  good  and  sufficient  at  the  time.^*  So 
when  lumber  is  sold  to  be  used  in  a  building  upon  particular 
premises,  the  seller  being  ignorant  that  such  premises  are  held 
in  trust  by  the  purchaser,  but  believing  them  to  be  his  indi- 
vidual property,  and  the  building  erected  with  such  lumber 
proves  beneficial  to  the  trust  estate,  adding  to  its  permanent 
value  and  increasing  its  rentals,  if  the  trustee  is  insolvent,  a  re- 
ceiver may  be  appointed  to  collect  the  rents,  nothing  having 
been  paid  for  the  material  or  for  the  erection  of  the  building.^^ 
So  the  withholding  of  trust  funds  by  defendant  is  sufficient 
ground  for  a  receiver  upon  a  bill  by  the  beneficiary  for  an  ac- 
counting as  to  such  funds. 16  And  under  the  Supreme  Court  of 
Judicature  Act  in  England,  when  a  defaulting  trustee  has  been 
ordered  to  pay  money  into  court  which  is  due  from  him  in 
respect  to  an  alleged  breach  of  trust,  and  he  has  gone  beyond  the 
jurisdiction  of  the  court,  so  that  the  order  can  not  be  enforced 

12  Albright  v.  Albright,  91  N.  C,  15  Malone  v.  Buice,  60  Ga.,  152. 
220.  16  Hagenbeck  v.  Hagenbeck  Z.  A. 

13  In  re  Fowler,  16  Ch.  D..  723.  Co.,  59  Fed.,  14. 

14  North  Carolina  R.  Co.  v.  Wil- 
son, 81  N.  C,  223. 


CHAP.  XVI.]  TRUSTS.  853 

by  attachment,  the  appointment  of  a  receiver  over  his  property 
is  an  appropriate  remedy  for  enforcing  the  order.^'^ 

§  698.  Mingling  funds  by  trustee,  when  not  sufficient 
ground ;  relief  not  granted  because  productive  of  no  harm. 
Where  by  his  will  a  testator  devises  real  estate  to  trustees  for 
the  purpose  of  carrying  out  the  provisions  of  the  will,  it  is  not 
sufficient  ground  for  appointing  a  receiver  to  take  the  property 
from  the  custody  of  the  trustees,  that  one  of  them  has  mingled 
the  trust  fund  with  his  own  private  funds,  when  it  is  not  al- 
leged that  the  fund  is  in  danger,  and  when  it  is  not  denied  that 
he  keeps  a  proper  account  of  the  fund.  And  the  court  will  not, 
in  such  a  case,  appoint  a  receiver  merely  upon  the  ground  that 
it  can  be  productive  of  no  harm.^^  i 

§  699.  Receiver  granted  heir-at-law  over  lands  fraudu- 
lently conveyed  by  trustee.  Upon  a  bill  by  an  heir-at-law 
as  cestui  que  trust,  against  a  trustee  and  others  to  whom  the 
trustee  has  conveyed  real  estate  in  which  the  plaintiff  claims  an 
equitable  interest,  the  object  of  the  bill  being  to  set  aside  the 
conveyance  as  a  fraud  upon  the  cestui  que  trust,  it  is  proper  for 
the  court  to  decree  that  defendants  convey  the  property  to  a  re- 
ceiver to  be  appointed  by  the  court,  and  that  such  receiver  be 
authorized  to  sell  and  convey  the  lands,  and  out  of  the  proceeds 
to  pay  the  amount  due  to  the  plaintiff  under  a  former  decree 
against  the  trustee.  And  while  such  a  remedy  may  justly  be 
regarded  as  a  summary  one,  it  is  yet  a  proper  exercise  of  the 
discretionary  powers  of  a  court  of  equity  as  against  a  wrong- 
doer, and  the  court  will  not  compel  the  cestui  que  trust  to  resort 
to  a  sale  by  execution.!^ 

§  700.  When  devisee  of  personal  property  entitled  to 
relief  as  against  husband  of  a  deceased  wife.  When  per- 
sonal property  has  been  bequeathed  to  defendant's  wife,  with 
an  executory  devise  over  to  plaintiff  upon  the  death  of  defend- 

17 /n  re   Coney,   29  Ch.   D.,  993.  18  Orphan   Asylum   v.    McCartce, 

See,  also,  Stanger  Leathes  v.  Stan-  Hopk.  Ch.,  429. 

ger   Leathes,   Weekly   Notes,   1882,  19  Gunn  v.  Blair,  9  Wis.,  352. 
p.  71. 


854  RECEIVERS.  [chap.  XVI. 

ant's  wife  without  issue,  and  upon  such  death  defendant,  the 
husband,  takes  possession  of  the  property,  the  devisee  is  en- 
titled to  a  receiver,  in  an  action  for  an  accounting  and  to  re- 
cover possession  of  the  property,  upon  showing  that  the  de- 
fendant in  possession  is  irresponsible,  having  conveyed  away 
his  real  estate  and  having  no  property  subject  to  execution. 
Under  such  circumstances,  the  danger  to  the  fund  in  contro- 
versy is  regarded  as  sufficient  ground  for  the  interposition  of 
a  court  of  equity  pendente  lite.^^ 

§  701.  Litigation  to  revoke  probate  of  will  no  ground 
for  receiver.  While  there  are  frequent  instances  where 
the  English  Court  of  Chancery  allowed  receivers,  pending  liti- 
gation as  to  the  probate  of  a  will,  when  the  relief  was  necessary 
for  the  preservation  of  the  estate,  the  fact  that,  after  a  will  has 
been  duly  admitted  to  probate,  litigation  is  instituted  to  recall 
or  revoke  the  probate,  does  not  of  itself  constitute  sufficient 
ground  to  justify  a  court  of  equity  in  interfering  by  a  receiver 
with  the  possession  of  the  parties  entitled  thereto  under  the 
probate.21 

§  702.  Refused  as  against  trustee  of  persons  interested 
under  contract  for  public  works.  Where  there  are  differ- 
ent parties  in  interest  in  the  profits  of  a  contract  for  the  per- 
formance of  certain  public  work,  and  a  trustee  has  been  ap- 
pointed to  receive  the  money  due  thereon  and  to  pay  it  over 
to  the  parties  in  interest,  a  receiver  will  not  be  appointed  to 
take  charge  of  the  contract  upon  the  application  of  one  only 
of  the  parties,  who  holds  but  a  small  interest,  when  it  is  mani- 
fest to  the  court  that  the  appointment  may  result  in  destroy- 
ing the  value  of  the  contract,  and  when  no  misconduct  is  shown 
against  the  trustee.^^ 

20Ladd  V.  Harvey,  21  N.  H.,  514.  21  Newton  v.  Ricketts,  10  Beav., 

As  to  the  circumstances  which  will      525. 

justify  a  court  in  appointing  a  re-  22  Devlin   v.   Hope,    16  Ab.    Pr., 

ceiver  over  real  estate  held  in  trust      314. 
for  a  wife  who  is  entitled  to  a  por- 
tion   of    the    annual    income    there- 
from, see  Robert  v.  Tift,  60  Ga.,  566, 


CHAP.  XVI.]  TRUSTS.  855 

§  703.  Courts  averse  to  appointing  as  receivers  persons 
occupying  fiduciary  relations;  when  departure  from  rule 
permissible.  Courts  of  equity  have  always  been  extremely 
averse  to  the  appointment  as  receivers  of  persons  occupying 
fiduciary  relations  toward  the  property  or  estate  forming  the 
subject-matter  of  the  receivership,  and  as  a  general  rule  a  trus- 
tee of  an  estate  will  not  be  appointed  receiver  for  its  manage- 
ment.23  fhg  reason  for  the  rule  is  found  in  the  fact  that  the 
court-  expects  a  trustee  to  watch  the  proceedings  with  an  ad- 
verse eye,  to  see  that  the  receiver  does  his  duty.24  Where, 
however,  considering  the  trustee's  knowledge  of  the  estate, 
it  seems  advisable  and  for  the  best  interests  of  the  estate  that 
he  should  be  appointed,  a  departure  from  the  rule  is  allowable, 
but  only  upon  condition  that  he  shall  receive  no  compensation 
for  his  services  as  receiver.^s 

§  704.  When  management  of  estate  transferred  from  re- 
ceiver to  new  trustees.  When  real  estate  has  been  de- 
vised to  trustees  upon  certain  specified  trusts,  and  a  receiver  of 
the  estate  is  appointed  upon  the  ground  of  their  misconduct 
and  incapacity,  it  is  proper,  upon  the  appointment  of  new 
trustees,  that  the  management  of  the  estate  should  be  trans- 
ferred from  the  receiver  to  such  new  trustees,  and  the  court 
will  so  order,  if  satisfied  that  it  may  be  done  without  injury 
to  the  legatees  under  the  will,  and  when  it  is  apparent  that  it 
will  result  to  the  advantage  of  the  estate  by  doing  away  with 
the  expense  of  the  receivership.-^ 

§  705.  When  granted  over  pension.  A  receiver  has  been 
appointed  over  a  government  pension,  which  had  been  paid 
through  a  trustee,  when  the  trustee  had  refused  payment,  and 
had  put  a  stop  to  the  pension  and  had  then  gone  beyond  the 

23 V.  JoHand,  8  Ves.,  72;  Sykes    v.    Hastings,    11    Ves.,    363. 

Sykes    V.    Hastings,    U    Ves.,   363;  See.    also,    Newport    v.    Bury,    23 

Sutton  V.  Jones,  15  Ves.,  584.  Beav..  30. 

24  Sykes  z;.  Hastings,  11  Ves.,  363.  26  Bainbrigge    v.    Blair,    3    Beav., 

25  Hibbert    v.    Jenkins,    cited    in  421. 


856  RECEIVERS.  [chap.  XVI. 

jurisdiction  of  the  court. 2"  And  a  receiver  has  been  allowed 
in  behalf  of  a  judgment  creditor  over  a  civil-service  pension 
due  to  the  debtor  in  monthly  instalments.^^  And  a  receiver 
has  been  appointed  by  way  of  equitable  execution  upon  be- 
half of  a  judgment  creditor  over  the  pension  of  a  retired 
officer  of  the  Royal  Irish  Constabulary.29  But  a  receiver 
was  refused  over  a  pension  granted  by  the  government  to  de- 
fendant, when  he  had  conveyed  his  interest  therein,  with  oth- 
er property,  to  secure  an  annuitant.^^ 

2"  Noad  V.  Backhouse,  2  Y.  &  C.  30  Davis  v.  Duke  of  Marlborough, 

C.  C,  529.  1   Swans.,  74;   S.   C,  2  Wils.   Ch., 

28  Molony  v.  Cruise,  30  L.  R.,  In,       130.    See  S.  C,  2  Swans.,  113. 
99. 

29  Manning  v.   MuIIins,   (1898)  2 
L.  R.  Ir.,  34. 


CHAP.   XVI.]  TRUSTS.  857 


II.  Receivers  Over  Executors  and  Administrators. 

§  706.     Courts  averse  to  interference;  doctrine  of  quia  timet;  imminent 
danger  must  be  shown. 

707.  Executor  not  displaced  upon  slight  grounds;  nor  upon  charges 

made  on  information  and  belief;  must  be  shown  to  be  irre- 
sponsible. 

708.  Serious   waste    and   mismanagement   ground   for   relief;    inca- 

pacity of  husband  of  executrix;  breach  of  trust. 

709.  Receiver  not  allowed  because  of  executor's  poverty;  nor  when 

charges  of  bill  are  denied  by  answer. 

710.  Misconduct   in   addition   to   insolvency   ground   for   relief;    re- 

ceiver may  act  with  solvent  executor;  executors  required  to 
surrender  books  and  assets. 

711.  Actual  bankruptcy  ground  for  receiver. 

712.  Removal  of  executor  from  state  sufficient  cause. 

713.  Receiver  allowed  by  English  Court  of  Chancery  over  foreign 

executors  or  estates. 

714.  Receiver  granted  in  England  pending  litigation  in  ecclesiasti- 

cal  court  concerning  probate   or  administration. 

715.  When  receiver  allowed  judgment  creditors  of  estate  as  against 

executor. 

716.  Not  allowed  when  it  would  interfere  with  administration. 

717.  Receiver  of  administratrix  in  personal  capacity  not  entitled  to 

rents   due   in    representative   capacity;    action   to    recover   such 
rents. 

718.  Death  of  one  executor  and  refusal  of  another  to  act,  ground 

for     receiver;     misunderstanding     between     executors     not 
ground. 

719.  Plaintifif  equitably  interested  in  real  estate  devised  to  executors 

may  have  receiver  to  effect  sale. 

720.  Court  will  not  look  into  executor's  account  rendered  to  probate 

court. 

721.  Surety  on  administrator's  bond  can  not  have  receiver  on  default 

of  administrator  to  secure  him;  surety  for  intestate. 

722.  When  receiver  allowed  in  behalf  of  ward  against  administrator. 

723.  On  removal  of  receiver  from  country,  executors  may  again  act. 

724.  Appointment  of  receiver  does  not  remove  executor. 

§  706.  Courts  averse  to  interference;  doctrine  of  quia 
timet;  imminent  danger  must  be  shown.  The  jurisdiction 
of  equity  by  the  appointment  of  receivers  over  executors  and 
administrators,  upon  the  ground  of  an  abuse  of  their  trust, 
although  well  established,  is  nevertheless  exercised  with  ex- 


858  RECEIVERS.  [chap.  XVI. 

treme  caution,  and  the  courts  are  exceedingly  averse  to  grant- 
ing the  reHef  unless  in  pressing  cases,  since  it  is  for  the  tes- 
tator to  say  in  whom  the  management  of  his  estate  shall  be 
vested  after  his  decease.^!  And  while  courts  of  equity  have 
unquestioned  power,  in  a  proper  case,  to  take  the  adminis- 
tration of  the  estate  of  a  decedent  out  of  the  hands  of  his 
administrator  or  executor,  and  to  manage  it  by  a  receiver, 
this  summary  relief  should  only  be  granted  in  cases  of  mani- 
fest danger  of  loss,  destruction  or  material  injury  to  the  es- 
tate. It  is  only  under  extraordinary  circumstances  that  equity 
will  thus  wrest  the  administration  from  the  hands  of  the  legal 
representative,  and  place  it  in  the  hands  of  a  receiver,  and  the 
interference  can  be  justified  only  by  evidence  of  gross  mis- 
conduct or  personal  disability.^^  And  the  principle  on  which 
the  relief  is  granted,  in  this  class  of  cases,  is  said  to  rest  on 
the  doctrine  of  quia  timet,  the  interference  being  justified  for 
the  prevention  of  a  future  and  probable  injury,  and  not  to 
redrsss  a  grievance  which  has  already  occurred.^^  It  is, 
therefore,  necessary  that  a  strong  case  should  be  shown  of 
imminent  danger  to  the  estate  unless  a  receiver  is  appointed. 
And  when  the  bill  fails  to  show  any  immediate  danger  of 
waste,  or  of  any  wrong  which  the  probate  court  may  not  ef- 
fectually prevent,  and  the  charges  of  the  bill  are  wanting  in 
certainty,  a  court  of  equity  will  not  interpose  its  extraordi- 
nary aid  by  appointing  a  receiver.34 

"1  See   Powell   z>.   Quinn,  49  Ga.,  Dougherty  v.    McDougald,    10  Ga., 

523;  Harrup  v.  Winslet,  37  Ga.,655;  121;  Brooker  v.  Brooker,  3  Sm.  & 

Dougherty  v.    McDougald,    10  Ga.,  G.,    475.      See,    also,     Shannon    v. 

121 ;  Stairley  v.  Rabe,  McMul.  Eq.,  Davis.  64  Miss.,  717,  2  So.,  240. 

22;    Brooker  v.   Brooker,   3   Sm.   &  33  Dougherty    v.    McDougald,    10 

G.,    475;     Hervey     v.     Fitzpatrick,  Ga.,  121.     See,  also,  Perrin  v.  Lep- 

Kay,  421 ;    Middleton  v.   Dodswell,  per,  56  Mich..  351,  23  N.  W.,  39. 

13  Ves.,  266;  Kendall  v.  Kendall,  1  34  Powell  v.  Quinn,  49  Ga.,  523; 

Hare,  152;  Steele  v.  Cobham,  L.  K.,  Wanneker   v.    Hitchcock,    38    Fed., 

1  Ch.  App.,  325 ;  Haines  v.  Carpen-  383.     In   Powell  v.   Quinn,  49  Ga., 

ter,  1  Woods,  262;  West  v.  Mercer,  523,    McCay,    J.,    observes,    p.    529: 

130  Ga.,  357,  60  S.  E.,  859.  "It  ought  to  be  a  very  strong  case 

32  Harrup  v.  Winslet,  37  Ga.,  655 ;  indeed    to    justify    a    chancellor    in 


CHAP.  XVI.]  TRUSTS.  859 

§  707.  Executor  not  displaced  upon  slight  grounds ;  nor 
upon  charges  made  on  information  and  belief;  must  be 
shown  to  be  irresponsible.  An  executor,  duly  appointed 
by  the  will  of  a  testator,  who  has  qualified  in  the  proper  court 
and  given  bond  for  the  faithful  performance  of  his  duties, 
and  who  has  entered  upon  the  performance  of  his  trust  and 
is  in  possession  of  the  estate,  will  not  be  displaced  upon  slight 
grounds,  and  a  strong  case  must  be  made  out  to  warrant 
equity  in  interfering  if  the  executor  is  willing  to  act.  It  does 
not  follow,  because  a  suit  is  instituted  against  him  by  a  per- 
son claiming  an  interest  in  the  estate,  that  the  trust  created 
by  the  testator  is  to  be  set  aside.  And  when  a  devisee,  claim- 
ing an  interest  in  the  estate,  files  a  bill  against  the  executor, 
to  enforce  the  trusts  of  the  will,  and  seeks  a  receiver  upon  the 
ground  of  the  executor's  incompetency  and  mismanagement, 
and  alleges  that  he  is  endeavoring  to  defeat  the  bequest  to 
plaintiff,  and  that  he  has  confederated  with  others  to  insti- 
tute fictitious  suits  against  the  estate  to  swallow  up  the  assets, 
the  court  will  not  appoint  a  receiver  if  these  charges  are  made 
only  upon  information  and  belief,  and  are  not  supported  by 

appointing    a    receiver    and    taking  or  of  any   wrong  which  the   ordi- 

the   assets   of  an   estate   out  of  the  nary    may    not    effectually    grapple 

hands  of  an  administrator  duly  ap-  with  and  prevent.     The  charges  in 

pointed   by   the   court   of   ordinary.  the    bill    are    wanting    in    certainty, 

The  ordinary  has  constitutional  ju-  and   it  would  be   dangerous  to   use 

risdiction    over    the    subject-matter,  the     extraordinary    power    of    ap- 

and  special    reasons   should   appear  pointing  a  receiver  on  such  allega- 

why  that  jurisdiction  does  not  an-  tions.     Fraud  is  charged,  and  mis- 

swer  the  ends  of  justice.     The  or-  representation      in      obtaining      the 

dinary   may   discharge   an   adminis-  letters,  but  no  specification  is  made, 

trator     and     appoint     another;     he  no  facts  detailed.     This  is  entirely 

may   require   new   security,   and   he  too   loose  and  indefinite."     But  see 

may  compel   the   delinquent   admin-  Knight  v.  Knight,  75  Ga.,  386.     For 

istrator  to   account   and   deliver   up  circumstances     which     justify     the 

the  property  as  well  as  a  court  of  appointment     of     a     receiver     over 

chancery   can    do   it.     There   is    no  property     which     an     administrator 

charge  in  this  bill,  as  far  as  the  as-  seeks    to    administer,    the    title    to 

sets  of  Mrs.  Victoria  Quinn's  estate  which    is    in    another,    see    Hill    v. 

are  concerned,  that  shows  any  im-  Arnold,  79  Ga.,  367,  4  S.  E.,  751. 
mediate  imminent  danger  of  waste, 


860 


RECEIVERS. 


[chap.  XVI. 


affidavits.  And  even  though  a  danger  to  the  trust  property 
is  estabhshed,  that  alone  will  not  suffice,  but  it  must  also  ap- 
pear that  the  defendant  executor  in  possession  is  irresponsible.^^ 
§  708.  Serious  waste  and  mismanagement  ground  for 
relief ;  incapacity  of  husband  of  executrix ;  breach  of  trust. 
W'hile,  as  is  thus  seen,  a  strong  case  of  abuse  of  trust  or  mis- 
management must  be  made  out  to  warrant  a  court  of  equity 
in  granting  a  receiver,  as  against  an  executor  of  an  estate 


35  Haines  v.  Carpenter,  1  Woods, 
262.  The  principles  governing,  in 
such  case,  are  very  clearly  stated  in 
the  opinion  of  Mr.  Justice  Woods, 
as  follows,  p.  265:  "The  party  in 
possession  of  the  property  for  which 
a  receiver  is  asked  is  the  executor 
named  in  the  will  of  the  testatrix, 
who  has  qualified  in  the  probate 
court  and  given  bond  for  the  faith- 
ful discharge  of  his  trust.  Under 
these  circumstances,  the  court 
should  not  displace  him  upon  light 
grounds.  And  though  a  suit  be  in- 
stituted by  a  party  having  an  inter- 
est in  the  estate,  it  does  not  follow 
that  the  trust  created  by  the  testator 
is  to  be  set  aside.  A  strong  case 
must  be  made  out  to  induce  the 
court  to  dispossess  a  trustee  or  ex- 
ecutor who  is  willing  to  act.  The 
grounds  upon  which  this  court  is 
asked  to  dispossess  the  executor  and 
turn  over  the  property  of  the  suc- 
cession to  a  trustee,  are  that  Car- 
penter, the  executor,  is  unfit  and  in- 
competent to  manage  and  success- 
fully control  the  estate;  that  he  has 
only  cultivated  a  part  of  the  land 
susceptible  of  cultivation,  when,  in 
the  opinion  of  the  complainants,  all 
of  it  should  have  been  cultivated; 
that  he  is  endeavoring  to  defeat  the 
bequest  to  the  said  Baptist  church 
by  depreciating  the  value  of  the  es- 
tate,  and   that   he   is  confederating 


with  said  Elias  S.  Dennis  to  insti- 
tute fictitious  suits  against  the  es- 
tate, in  order  to  sweep  away  its 
assets.  These  charges  are  not  di- 
rectly made,  but  are  stated  on  the 
information  and  belief  of  complain- 
ants, and  they  are  not  supported  by 
a  single  affidavit  to  any  fact.  The 
application  to  appoint  a  receiver 
must  be  supported  by  evidence 
showing  that  the  appointment  is 
necessary.  There  is  absolutely  no 
testimony  to  support  the  applica- 
tion in  this  case.  It  is  true  that  one 
of  the  complainants  swears  to  the 
bill,  but  in  doing  so  he  only  swears 
that  he  has  been  informed  of  and 
believes  certain  statements  in  his 
bill.  This  is  not  evidence,  and  gives 
no  support  to  the  application.  The 
fact  is  that  the  court  is  asked  to 
appoint  a  receiver,  in  this  case,  on 
mere  rumor,  without  any  proof 
showing  the  necessity  of  the  ap- 
pointment. But  even  if  the  fact 
were  established  that  the  trust 
property  was  in  danger,  that,  of 
itself,  would  not  be  sufficient.  It 
must  be  further  shown  that  the 
party  in  possession  is  irresponsible. 
There  is  no  proof  that  the  executor 
is  irresponsible,  or  his  bond  insuffi- 
cient, nor  is  there  any  averment  in 
the  bill  to  that  effect.  The  motion 
for  a  receiver  must,  therefore,  be 
overruled." 


CHAP.  XVI.]  TRUSTS.  861 

designated  by  the  testator's  will,  yet  when  the  abuse  of  the 
trust  is  manifest,  and  it  is  plainly  apparent  that  there  have 
been  serious  waste  and  misappropriation  of  the  funds,  equity 
may  properly  interfere  by  a  receiver.36  Especially  is  this 
true  when  the  mismanag-ement  is  shown  not  in  a  single  in- 
stance, but  from  an  habitual  course  of  dealing,  involving  the 
property  in  danger,  and  when  the  other  executors  consent  to 
the  appointment.  The  court,  in  such  case,  treats  an  executor 
like  any  other  trustee,  and  will  take  from  his  hands  the  man- 
agement of  the  trust  if  he  has  been  guilty  of  waste  and  gross 
mismanagement.  And  in  such  case,  the  appointment  may  be 
made  before  defendant  has  answered.^"^  So  when,  after  the 
death  of  a  testator,  his  widow  becomes  executrix  under  the 
will,  and  she  afterward  marries  and  intrusts  the  management 
of  the  estate  to  her  husband,  who  is  incapable  of  properly  con- 
ducting it,  and  under  whose  supervision  the  funds  are  mis- 
appropriated, and  the  estate  is  involved  in  debt,  an  appropriate 
case  is  presented  for  a  receiver  upon  application  of  the  minor 
heirs  of  the  deceased.^^  And  when  an  executor  has,  upon  his 
own  admission,  wasted  and  misappropriated  the  trust  funds 
in  his  hands,  and  refuses  to  disclose  how  and  where  he  has 
done  so,  and  has  permitted  a  co-executor  also  to  misappro- 
priate the  funds,  such  a  breach  of  trust  is  shown  as  to  clearly 
require  the  court  to  take  the  management  of  the  estate  out 
of  the  executor's  hands  by  placing  it  in  the  hands  of  a  receiver. 
In  such  case,  the  assets  of  the  estate  will  be  delivered  to  the 
receiver,  and  the  debts  will  be  paid  to  him,  but  this  only  ex- 
tends to  assets  and  property  within  the  state  and  debts  due 
from  residents  of  the  state,  or  secured  upon  property  therein. 39 
So  if  the  conduct  of  an  administrator  is  such  as  to  hinder 
and  impede  the  collection  of  the  debts  due  to  the  estate,  a  re- 

36  Middleton  v.  Dodswell,  13  Ves.,  37  Middleton  v.  Dodswell,  13  Ves., 

266;  Stairley  v.  Rabe,  McMnl.  Eq.,  266. 

22;  Harmon  v.  Wagener,  33  S.  C,  38  Stairley  v.  Rabe,  McMul.   Eq., 

487,  12  S.  E.,  98.     And  see  Thomp-  22. 

son  V.  Orser,  105  Ga.,  482,  30  S.  E.,  39  Price's     Executrix    v.     Price's 

626.  Executors,  8  C.  E.  Green,  428. 


862  RECEIVERS.  [chap.  XVI. 

ceiver  may  be  appointed  to  collect  and  liold  the  assets,  and  the 
court,  in  such  case,  may  retain  jurisdiction  for  the  purpose  of 
finally  settling  the  estate.'*^  And  when  an  executor  converts 
both  the  real  and  personal  estate  into  money  and  notes,  thus 
giving  rise  to  a  reasonable  apprehension  that  the  estate  is  not 
sufficiently  secured,  in  an  action  against  him  for  an  account- 
ing and  settlement  of  his  trust,  the  court  may  properly  order 
that  he  give  a  bond  for  the  protection  of  the  estate,  and  to 
secure  the  performance  of  whatever  decree  may  be  finally  re- 
covered against  him,  or,  in  default  thereof,  that  a  receiver  be 
appointed.^^ 

§  709.  Receiver  not  allowed  because  of  executor's  pov- 
erty ;  nor  when  charges  of  bill  are  denied  by  answer.  Equi- 
ty will  not  interfere  by  a  receiver  with  the  management  of 
an  estate  in  the  hands  of  executors  merely  upon  the  ground 
of  their  poverty,  or  because  they  are  not  in  affluent  circum- 
stances, when  no  suggestion  is  made  of  improper  conduct, 
especially  when  this  was  the  condition  of  the  executor  at  the 
time  of  his  appointment;  since  the  interference  upon  such 
ground  would  have  the  effect  of  changing  the  trust  created 
by  the  will,  although  no  misbehavior  is  shown.  Unless,  there- 
fore, some  misconduct  or  negligence  is  shown  on  the  part  of 
the  executor,  or  some  danger  of  a  loss  for  which  he  will  not 
be  able  to  respond  by  reason  of  his  poverty,  the  court  will  not 
transfer  the  management  of  the  estate  from  his  hands  to 
those  of  a  receiver.'*^     Nor  will  a  receiver  be  allowed  over  an 

40  Du  Val  V.  Marshall,  30  Ark.,  other  property  than  an  annuity  of 
230.  £20,   given  to   her  by  the   testator. 

41  Gray  v.  Gaither,  74  N.  C.,  237.  Sir  William  Grant,    Master  of  the 

42  Knight  V.  Duplessis,  1  Ves.,  324 ;  Rolls,  observes,  p.  5  :  "There  is  no 
Howard  v.  Papera,  1  Madd.,  141,  doubt  that  in  several  instances,  as 
1st  American  edition,  p.  86;  Fair-  if  the  executor  has  wasted  the 
bairn  v.  Fisher,  4  Jones  Eq.,  390;  effects,  or  in  other  respects  misoon- 
Johns  V.  Johns,  23  Ga.,  31;  Anony-  ducted  himself,  this  court  will  in- 
mous,  12  Ves.,  4  The  case  last  terfere;  but  has  the  court  ever 
cited  was  a  motion  made  before  taken  the  disposition  out  of  the 
answer  for  a  receiver,  upon  the  hands  of  the  executor  on  account 
ground   that   the   executrix   had   no  of  his   mean   circumstances;    for   it 


CHAP.  XVI.]  TRUSTS.  863 

estate  in  the  hands  of  executors  because  of  their  right  to  re- 
tain assets  in  satisfaction  of  a  mortgage  indebtedness  due  to 
them  from  the  testator  to  the  prejudice  of  general  creditors, 
when  it  is  not  shown  that  the  executors  have  been  guilty  of 
waste  or  improper  conduct  in  the  management  of  the  estate."*^ 
And  when  the  charges  of  the  bill,  as  to  insolvency  and  mis- 
management of  the  business  by  the  defendant  executor,  are 
fully  and  completely  denied  by  his  answer,  a  receiver  should 
not  be  allowed.^"* 

§  710.  Misconduct  in  addition  to  insolvency  ground  for 
relief;  receiver  may  act  with  solvent  executor;  executors 
required  to  surrender  books  and  assets.  Where,  however, 
in  addition  to  insolvency,  serious  misconduct  is  shown  on  the 
part  of  the  executor,  as  well  as  danger  of  loss  to  the  estate, 
a  different  case  is  presented,  and  the  court  may  properly  in- 
terfere by  a  receiver  to  prevent  the  assets  from  being  wasted. 
Thus,  upon  a  bill  filed  in  behalf  of  the  heirs  of  an  estate, 
showing  great  and  unnecessary  delay  by  the  executors  in 
settling  the  estate;  that  some  of  the  heirs  have  received  large 
sums  in  excess  of  their  just  proportion ;  that  some  of  the  ex- 
ecutors have  misapplied  funds;  and  that  three  of  the  four 
executors  are  insolvent,  a  fitting  case  is  presented  for  the  in- 
terference of  equity  by  a  receiver.  Under  such  circumstances, 
the  receiver  is  appointed  in  lieu  of  the  insolvent  executors, 
to  act  with  the  solvent  executor  if  the  latter  will  consent  so 
to  act;  otherwise  he  is  appointed  generally,  to  act  in  lieu  of 
them  all.    And  the  executors  will  be  required  to  deliver  over 

comes   to    that?     You   must    prove  but  at  present  no  case  is  made  for 

the    unfitness    of    the    person.      In  a  receiver."    See  as  to  the  effect  of 

this  case,  the  only  ground  is  that  an   executor   having   engaged    in    a 

she    is    not    a    person    of    property.  hazardous  business  as  ground  for  a 

.     .     .    The  allegation  goes  no  fur-  receiver   pendente   lite,   Bowling   v. 

ther  than  this  executrix  is  in  mean  Scales,  2  Tenn.,  Ch.,  63. 

circumstances.       If     any     miscon-  43 /„  r?  Wells,  45  Ch.  D.,  569. 

duct,    waste,    or    improper    disposi-  44  Fairbairn    v.    Fisher,    4    Jones 

tion  of  the  assets  were  shown,  the  Eq.,  390. 
court     would     instantly     interfere; 


864  RECEIVERS.  [chap.  XVI. 

to  the  receiver,  under  oath,  all  books,  vouchers,  securities,  title 
deeds,  property  and  money  belonging  to  the  estate.*^ 

§  711.  Actual  bankruptcy  ground  for  receiver.  While, 
as  already  shown,  mere  insolvency  of  an  executor  is  not  of 
itself  sufficient  ground  for  a  receiver,  an  actual  adjudication 
in  bankruptcy  presents  much  stronger  ground  for  the  relief. 
And  where  a  sole  executor  and  trustee  of  the  estate  of  a  de- 
ceased testator  has  been  adjudged  bankrupt,  upon  his  own  pe- 
tition, and  assignees  of  his  estate  have  been  appointed,  a  re- 
ceiver may  be  allowed  on  the  ground  that  there  is  no  person 
to  protect  the  assets,  the  assignees  of  the  bankrupt  executor 
having  no  power  to  interfere  with  the  trust  estate.  And  it 
is  not  a  sufficient  objection  to  the  relief,  in  such  a  case,  that 
the  assignees  have  not  been  brought  before  the  court.^^  So 
where  an  executor  had  become  bankrupt,  a  receiver  was  ap- 
pointed of  the  rents  and  profits  of  the  real  estate,  but  without 
prejudice  to  an  application  by  the  next  of  kin  for  a  receiver 
of  the  personalty  when  the  will  should  be  proven. ^"^ 

§  712.  Removal  of  executor  from  state  sufficient  cause. 
The  removal  of  an  executor  from  the  state,  leaving  both  his 
cestui  que  trust  and  the  trust  estate  within  the  state,  is  suffi- 
cient ground  for  the  interference  of  equity  by  a  receiver,  upon 
the  application  of  the  cestui  que  trust.  The  court  proceeds, 
in  such  a  case,  upon  the  ground  that  there  is  an  abandonment 
of  his  trust  on  the  part  of  the  executor,  and  as  his  removal 
places  him  beyond  the  jurisdiction  of  the  court  and  out  of 
reach  of  its  process,  he  is  no  longer  liable  to  account.  It  is, 
therefore,  the  duty  of  the  court  to  see  that  such  removal  or 
abandonment  does  not  prejudice  the  beneficiaries  of  the  estate, 
and  for  this  purpose  to  grant  them  the  aid  of  a  receiver.^^ 

45  Jenkins  v.  Jenkins,  1  Paige,  243.  a.     See,  also,  Langley  v.  Hawk,  5 

46  Steele  v.  Cobham,  L.  R.,  1  Ch.  Madd.,  46,  1st  American  edition,  36. 
App.,  325.  48  Ex  parte  Galluchat,  1  Hill  Eq., 

47  Gladdon  v.  Stoneman,  1  Madd.,  148.  The  court,  O'Neall,  J.,  say, 
141,  1st  American  edition,  86,  note  p.  151:     "As  long  as  the  executor 


CHAP.  XVI,]  TRUSTS.  865 

§  713.  Receiver  allowed  by  English  Court  of  Chancery 
over  foreign  executors  or  estates.  The  aid  of  a  receiver 
was  sometimes  granted  by  the  EngHsh  Court  of  Chancery, 
as  against  executors  or  administrators  of  an  estate  situated  in 
a  foreign  country.  Thus,  when  a  person  claiming  to  be  the 
administrator  of  an  estate  situated  in  a  foreign  country  had 
come  within  the  jurisdiction  of  the  court  of  chancery,  and  had 
brought  with  him  a  portion  of  the  estate,  a  receiver  was  ap- 
pointed pendente  lite,  upon  a  bill  by  the  English  administrator 
to  prevent  the  removal  of  the  assets  beyond  the  jurisdiction 
of  the  court,  although  no  misconduct  was  alleged  against  the 
<iefendant.49  So  an  executor  residing  in  England,  the  assets 
of  the  deceased  being  in  India,  and  a  co-executor  in  India 
having  died,  was  allowed  a  receiver  of  the  property  in  India, 
but  was  required  to  giv^e  sureties  resident  in  England. ^^  And 
when  the  devisee  in  trust  and  the  executors  of  the  will  of  a 
deceased  testator  resided  beyond  the  jurisdiction  of  the  court, 
but  all  of  the  realty  and  part  of  the  personalty  were  in  Eng- 

remains  within  the  jurisdiction  of  the  benefit  of  the  estate,  the  court 
the  court,  the  court  would  not,  un-  would  not  interfere  to  prevent  the 
less  under  very  extraordinary  cir-  attorney  of  an  executor  who  has 
■cumstances,  deprive  him  of  the  removed  from  the  state,  from  man- 
management  of  the  trust;  yet  aging  the  trust  estate.  But  gener- 
when  he  removes  from  the  state,  ally,  when  an  executor  removes 
will  the  court  permit  him,  either  to  from  a  state,  leaving  both  his  cestiii 
remove  the  trust  estate,  or  manage  que  trust  and  the  trust  estate  in 
it?  His  removal  places  him  beyond  the  state,  it  is  the  duty  of  the  court 
the  process  of  the  court,  and  he  is  of  equity,  on  the  application  of  the 
no  longer  liable  to  account  to  it.  cestui  que  trust,  to  appoint  a  re- 
His  removal  of  the  trust  estate  ceiver.  For  there  would,  in  such 
-might  enable  him  to  defeat  the  a  case,  be  an  abandonment  of  the 
trust,  and  his  management  of  it  by  trust,  voluntary  it  is  true,  on  the 
attorney  might  place  it  in  irrespon-  part  of  the  executor,  and  which  can 
sible  hands  and  have  the  same  not,  therefore,  benefit  him,  but 
effect.  In  some  cases,  as  when  the  which  the  court  will  take  care  shalj 
■executor  and  his  cestui  que  trust  not  prejudice  the  cestui  que  trust." 
remove  together,  the  court  would  49  Hervey  z;.  Fitzpatrick,  Kay,  421. 
permit  him  to  remove  the  trust  cs-  ^^  Cockburn  v.  Raphael,  2  Sim.  & 
tate,  and  it  may  be  that,  imder  cir-  St.,  453. 
-cumstances  showing  that  it  was  for 
Receivers — 55. 


866  RECEIVERS.  [chap.  XVI. 

laml.  a  devisee  and  legatee  under  the  will  resident  in  Eng- 
land was  alUnved  a  receiver  to  take  charge  of  the  estate/'^ 

§  714.  Receiver  granted  in  England  pending  litigation 
in  ecclesiastical  court  concerning  probate  or  administra- 
tion. Under  the  practice  of  the  English  Court  of  Chan- 
cery, receivers  were  sometimes  appointed  for  the  preservation 
of  an  estate,  pending  a  contest  in  the  ecclesiastical  courts  over 
the  probate  of  the  estate  and  the  right  to  administer.52  And 
while  that  court  proceeded  with  extreme  caution  in  granting 
a  receiver  as  against  an  executor  in  possession,  when  it  was 
not  yet  apparent  who  had  the  actual  right  to  administer  the 
estate,  yet  when  there  was  a  bona  fide  litigation  pending  in 
the  ecclesiastical  court  to  determine  the  right  to  probate  or  to 
administer,  the  court  of  chancery  would  properly  interfere  by 
a  receiver,  not  because  of  the  contest  over  the  probate,  but  be- 
cause there  was  no  proper  person,  pending  such  contest,  to 
receive  the  assets.^^  Thus,  upon  a  bill  by  one  claiming  to  be 
an  executor,  showing  that  a  contest  was  pending  in  the  ecclesi- 
astical courts  as  to  whether  the  deceased  left  any  testamentary 
disposition  of  his  property,  and  that,  pending  such  contest, 
there  was  no  person  legally  entitled  to  receive  any  part  of  the 
effects  of  the  deceased,  the  court  would  grant  a  receiver-^"* 
The  main  question,  in  such  case,  was,  whether  it  was  neces- 
sary for  the  protection  of  the  interests  of  all  persons  con- 
cerned that  there  should  be  a  receiver,  and  the  jurisdiction  of 
equity  for  this  purpose  being  clear,  it  afforded  no  objection 
to  the  exercise  of  that  jurisdiction  that  there  was  no  person 
in  whose  name  an  action  might  be  brought  to  recover  the 
property.  Nor  was  it  a  sufficient  objection  to  the  motion  for 
a  receiver,  that  the  bill  was,  to  a  considerable  extent,  a  bill 

•"-1  Smith  v.   Smith,   10  Hare,  Ap-  ^>^'  Rendall    v.    Kendall,    1     Hare, 

pendix,  Ixxi.  152;   Wood    v.    Hitchings,   2   Beav., 

52  See  Rendall  v.  Rendall,  1  Hare,  289.     See  S.  C,  3  Beav.,  504. 

152;    Wood   v.   Hitchings,   2   Beav.,  54  Wood    v.    Hitchings,    2    Beav., 

289 ;  Anderson  v.  Guichard,  9  Hare.  289.     See  S.  C,  3  Beav..  504. 
275. 


CHAP.  XVI.]  TRUSTS.  867 

for  discovery. ^5  g^j^  when  a  controversy  was  pending  be- 
tween different  executors  of  the  same  estate,  and  the  right  to 
probate  the  estate  was  in  contest  in  the  proper  court,  and  an 
apphcation  was  made  for  a  receiver  pendente  lite,  who  was 
appointed,  it  was  held  that  there  was  no  necessity  for  bring- 
ing such  apphcation  to  a  final  hearing,  and  that  such  a  prac- 
tice was  without  precedent.^^ 

§  715.  When  receiver  allowed  judgment  creditors  of  es- 
tate as  against  executor.  The  aid  of  a  receiver  is  some 
times  invoked  in  belialf  of  judgment  creditors  against  execu- 
tors. And  when  judgment  creditors  of  the  estate  of  a  de- 
ceased person  show  by  their  bill  that  the  executor,  who  has 
been  removed  from  his  trust,  has,  by  false  and  fraudulent  repre- 
sentations, possessed  himself  of  a  large  fund  belonging  to  the 
estate,  which  he  has  misapplied,  and  that  he  is  wholly  irre- 
sponsible and  insolvent,  they  are  entitled  to  a  receiver  to  take 
charge  of  the  fund.  Such  a  case  is  regarded  as  presenting 
strong  grounds  for  the  interposition  of  equity  under  its  gen- 
eral power  over  trusts  and  trust  estates,  in  the  exercise  of 
which  power  a  receiver  is  frequently  indispensable.^''^  And 
when  a  judgment  creditor  of  a  deceased  debtor  files  a  bill 
against  the  executor,  showing  that  he  has  given  no  security, 

55  Wood  V.  Hitchings,  2  Beav.,  for  the  appointment  of  a  receiver, 
289.     See  S.  C,  3  Beav.,  504.  as   against   an   executor,   yet   where 

56  Anderson  v.  Guichard,  9  Hare,  it  is  coupled  v^-ith  other  facts  or 
275.  circumstances,  showing  that  he  has 

57  £;r  parte  Walker,  25  .Ma.,  81.  proceeded  not  in  accordance  with 
"Nothing  is  more  common  in  chan-  law  (as  where  he  has  made  private 
eery  practice,"  say  the  court,  Chil-  sales  of  the  property  of  the  estate, 
ton,  C.  J.,  p.  104,  "than  the  ap-  or  is  dealing  with  it  on  his  private 
pointment  of  receivers  in  suits  account),  especially  where  it  is 
against  executors,  where  there  is  doubtful  whether  he  is,  in  fact,  llic 
danger  to  the  fund  without  such  legal  representative,  or  is  not  shorn 
appointment ;  so,  also,  if  he  has  of  his  authority  by  removal,  the 
wasted  the  effects,  or  in  other  re-  court,  in  all  such  cases,  should 
•spects  has  misconducted  himself.  promptly  secure  the  effects  by 
Although  mere  poverty,  of  itself,  placing  them  in  the  hands  of  a 
may   not    furnish    sufficient   ground  receiver." 


868  RECEIVERS.  [chap.  XVI. 

that  he  is  insolvent  and  of  extravagant  habits,  and  that  he  is 
mismanaging  the  estate  and  is  about  to  leave  the  country,  and 
praying  an  injunction  and  a  receiver,  it  is  error  to  dismiss  the 
bill,  no  answer  being  filed  and  its  equities  not  being  denied.^S 

§  716.  Not  allowed  when  it  would  interfere  with  admin- 
istration. Where,  however,  a  judgment  is  obtained  against 
a  debtor  and  a  creditor's  bill  is  filed  thereon  during  his  life- 
time, and  after  his  death  the  creditor's  suit  is  revived  against 
his  administrator,  a  receiver  will  not  be  appointed  over  the 
effects  of  the  deceased  on  the  application  of  plaintiff  in  the 
creditor's  suit.  In  such  case  the  assets  are  to  be  disposed  of 
in  due  course  of  administration,  according  to  the  laws  of  the 
state,  and  the  priority  which  plaintiff  may  have  gained  by  fil- 
ing his  bill  dies  with  the  defendant,  and  a  receiver,  in  such 
case,  is  both  unnecessary  and  would  interfere  with  the  due 
course  of  administration.59  But  it  is  held  that  if  a  receiver 
had  already  been  appointed,  and  had  obtained  possession  of 
property  or  money  belonging  to  the  debtor,  before  his  death, 
the  court  appointing  him,  having  possession  through  its  offi- 
cer, would  not  part  with  that  possession  to  the  executor  or 
administrator,  but  would  apply  the  fund  in  payment  of  the 
debt,  due  regard  being  had  to  the  statutory  rights  of  other 
creditors. ^^ 

§  717.  Receiver  of  administratrix  in  personal  capacity 
not  entitled  to  rents  due  in  representative  capacity ;  action 
to  recover  such  rents.  When  a  judgment  is  obtained 
against  an  administratrix  in  her  personal  capacity,  and  a  re- 
ceiver is  appointed  over  her  effects  in  aid  of  the  judgment 
creditor,  such  receiver  is  not  entitled  to  the  rents  due  to  the 
administratrix  in  her  representative  capacity.  And  in  such 
case,  tenants  of  the  estate  have  a  right  of  action  to  recover  back 
money  thus  improperly  paid,  and  having  assigned  such  right 

58  Chappell  r.  Akin,  39  Ga.,  177.  60  Mathews    v.    Neilson,    3    Edw. 

59  Sylvester  v.  Reed,  3  Edw.  Ch.,       Ch.,  346. 
296;  Mathews  v.  Neilson,  id.,  346. 


CHAP.  XVI.]  TRUSTS.  869 

of  action  to  the  administratrix,  she  may  maintain  the  action 
for  the  benefit  of  the  estate.^! 

§  718.  Death  of  one  executor  and  refusal  of  another  to 
act,  ground  for  receiver;  misunderstanding  between  ex- 
ecutors not  ground.  The  death  of  one  of  two  executors, 
and  the  refusal  of  the  other  to  act,  afford  sufficient  ground 
for  the  interference  of  equity  by  appointing  a  receiver  to  take 
charge  of  the  assets,  upon  the  appHcation  of  persons  beneficial- 
ly interested  in  the  estate.^^  g^^-  ^j^g  rnere  fact  of  a  misun- 
derstanding existing  between  two  executors,  as  to  the  man- 
agement of  the  estate  intrusted  to  their  charge,  is  not  suffi- 
cient ground  for  a  receiver  to  take  the  control  of  the  estate 
out  of  their  hands.^^  If,  however,  a  receiver  is  appointed  up- 
on the  ground  of  the  misconduct  of  one  of  two  executors,  his 
co-executor  not  having  qualified  as  such  until  after  such  mis- 
conduct, but  before  the  appointment  of  the  receiver,  the  man- 
agement of  the  estate  will  not  be  restored  to  such  co-execu- 
tor when  he  has  acquiesced  in  the  appointment  without  ob- 
jection or  appeal.^'* 

§  719.  Plaintiff  equitably  interested  in  real  estate  de- 
vised to  executors  may  have  receiver  to  effect  sale.  A 
receiver  has  been  allowed  for  the  purpose  of  effecting  a  sale 
of  real  estate  of  a  deceased  person,  which  he  had  devised  to 
his  executors,  but  in  which  plaintiff  was  equitably  interested 
under  an  agreement  with  the  deceased  for  a  proportion  of  the 
profits  arising  from  a  sale  of  the  premises.  And  in  such  a  case, 
the  ground  for  relief  would  seem  to  be,  that  the  executors 
occupy  to  a  certain  extent  a  possession  adverse  to  that  of  the 
plaintiff,  rendering  it  necessary  that  an  impartial  person  be 
appointed  to  make  the  sale.^^ 

61  Barker  v.  Clark,  12  Ab.  Pr.,  64  Praser  v.  City  Council,  19  S. 
N.  S.,  106.  C,  384. 

62  Palmer  v.  Wright,  10  Beav.,  65  Marvine  v.  Drexcl's  Executors, 
234.  68  Pa.  St.,  362. 

63  Fairbairn    v.    Fisher,    4    Jones 
Eq.,  390. 


870  RECEIVERS.  [chap.  XVI. 

§  720.  Court  will  not  look  into  executor's  account  ren- 
dered to  probate  court.  Upon  a  bill  filed  against  an  execu- 
tor for  a  receiver,  upon  the  ground  of  his  alleged  waste  and 
mismanagement  of  the  estate,  it  is  not  competent  for  the  court 
to  look  into  the  accuracy  of  the  executor's  account  rendered 
to  the  probate  court,  with  a  view  to  support  the  grounds  made 
by  the  bill  for  a  receiver.  In  such  case,  the  probate  court  be- 
ing the  appropriate  tribunal  to  act  upon  the  executor's  ac- 
count, a  court  of  chancery  will  not  base  any  action  upon  such 
account,  having  no  control  or  jurisdiction  in  the  premises. ^^ 

§  721.  Surety  on  administrator's  bond  can  not  have  re- 
ceiver on  default  of  administrator  to  secure  him ;  surety  for 
intestate.  Equity  will  not  entertain  a  bill  in  behalf  of  a 
surety  upon  the  official  bond  of  an  administrator,  to  compel 
the  administrator  to  give  security  to  plaintiff  for  his  obliga- 
tion of  suretyship,  or  in  default  thereof  that  a  receiver  be  ap- 
pointed of  the  estate  in  the  administrator's  hands.  Such  a 
case  presents  no  ground  for  the  aid  of  a  receiver,  unless  the 
relief  should  become  necessary  for  the  protection  of  minor 
heirs  of  the  estate  upon  the  refusal  of  the  probate  court  to 
appoint  guardians  of  such  minors. ^^  And  a  surety  for  a  debt 
due  from  one  who  has  died  intestate  can  not  maintain  an  ac- 
tion for  a  receiver  to  collect  the  assets  and  to  administer  the 
estate  of  the  deceased,  against  persons  improperly  controlling 
or  managing  the  assets,  without  authority. ^^ 

§  722.  When  receiver  allowed  in  behalf  of  ward  against 
administrator.  When  a  ward,  through  her  guardian,  files 
a  bill  against  the  administrator  of  the  estate,  showing  that  she 
is  entitled,  under  a  previous  decree,  to  a  specific  interest  in 
certain  lands  held  by  the  administrator,  a  receiver  may  be  ap- 

66  Simmons  v.  Henderson,  Freem.  which    has    once    been    sold    by    an 

(Miss.),  493.  administrator,  upon  a  bill  by  sure- 

ST  Delaney    v.    Tipton,    3    Hayw.  ties  upon  a  bond  given  for  the  piir- 

(Tenn.),  14.  chase-money   at   such    sale,    the   ad- 

68  Walker  v.  Drew.  20  Fla.,  908,  ministrator   being   insolvent   and   in 

As  to  the  circumstances  which  will  possession    of    the    land,    see    Sten- 

warrant  a  receiver  over  real  estate  house  v.  Davis,  82  N.  C,  432. 


CHAP.  XVI.]  TRUSTS.  871 

pointed  to  take  charg-e  of  the  land,  the  bill  showing  that  the 
administrator  is  committing-  waste,  and  that  he  and  his  sur- 
eties are  wholly  insolvent.^^  But  a  receiver  will  not  be  al- 
lowed over  an  estate  in  the  hands  of  an  administrator  mere- 
ly because  of  alleged  misconduct  of  the  deceased  touching  the 
property  in  his  life-time,  in  the  absence  of  any  showing  of 
waste  or  improper  conduct  by  the  administrator."^^ 

§  723.  On  removal  of  receiver  from  country,  executors 
may  again  act.  When  a  receiver  had  been  appointed  be- 
cause of  the  refusal  of  executors  to  act  under  the  will  of  the 
testator,  but  he  subsequently  removed  from  the  country,  and 
the  executors  w^ere  willing  to  act,  instead  of  appointing  a  new 
receiver  the  court  ordered  the  executors  to  act,  and  directed 
the  receiver  to  pass  his  accounts. "^^ 

§  724.  Appointment  of  receiver  does  not  remove  execu- 
tor. While  a  court  of  equity,  as  has  been  shown,  may,  in 
proper  cases,  enjoin  an  executor  from  proceeding  further  with 
his  duties,  and  may  appoint  a  receiver  to  take  charge  of  the 

G^  Ware  z^.  Ware,  42  Ga.,  408.  The  difficulties  to  refuse  now  to  e.xam- 
conrt,  Lochrane,  C.  J.,  say,  p.  411:  ine  the  jurisdiction  invoked  and 
"The  decree  gives  a  specific  inter-  interposed  by  proper  process  to 
est  in  this  property  to  the  com-  compel  a  settlement  of  the  interest 
plainant  to  the  amount  of  $2,850,  by  decree  vested  in  this  ward, 
and  operates  as  a  conveyance  to  And  we  therefore  reverse  the  juds- 
that  effect.  The  character  of  the  ment  of  the  court  below  dismissing 
litigation  now  develops  just  such  a  the  bill  for  want  of  equity,  and 
case  as  belongs  particularly  to  a  direct  him  to  appoint  a  proper  re- 
court  of  equity  to  take  jurisdiction  ceiver,  who  shall  take  custody  of 
of  and  determine.  This  ward  may  the  property,  protect  the  same 
be  delayed  in  the  recovery  of  her  from  waste  and  injury,  and  that 
rights,  after  adjudication  by  the  all  parties  in  interest  be  cited  to 
courts,  interminably  by  the  intro-  appear,  and  be  made  parties  to  this 
duction  of  new  matters  arising  out  bill,  and  the  property  sold  for  the 
of  the  facts  disclosed  by  the  record,  purpose  of  division  among  the 
unless  the  chancellor  lays  his  hands  claimants." 

on    this    property    and    compels    all  ''^  Perrin    7'.    Lepper.    56    Mich., 

parties  in  interest  to  come  forward  351.  23  N.  W.,  39. 

and  present  their  respective  claims  71  Davy  v.   Gronow,  14  L.  J.,  N. 

for     adjudication     and     settlement.  S.  Ch.,  134. 
Tt    would    end    in   a   multiplicity   of 


872  RECEIVERS.  [chap.  XVI. 

estate,  to  be  administered  under  the  direction  of  the  court, 
such  appointment  does  not  have  the  effect  of  removing  the 
executor,  since  the  power  of  removal  is  not  within  the  juris- 
diction of  equity,  but  rests  in  the  probate  courts.'^^  And  a 
receiver  appointed  over  the  estate  of  a  deceased  person  has  no 
authority  to  interfere  with  suits  pending  against  the  executor 
at  the  time  of  such  appointment,  unless  authorized  by  the 
court  so  to  do ;  and,  in  the  absence  of  such  authority,  he  will 
be  treated  as  a  stranger  to  such  suits.'^^ 

72  Leddel's  Executor  v.  Starr,  4  '^3  Gadsden  v.  Whaley,  14  S.  C.» 

C.  E.  Green,  159.  210. 


CHAP.  XVI.]  TRUSTS.  873 


III.  Receivers  Over  Estates  of  Infants. 

§  725.  Jurisdiction  founded  on  general  doctrine  of  trusts;  misappro- 
priation of  funds  by  husband  of  executrix  ground  for  re- 
ceiver. 

726.  Relief  under  the  English  practice;  infant  tenant  in  tail  allowed 

receiver  on  absconding  of  executor. 

727.  Refusal   of  one   of  several   trustees   to  act  no  ground   for  re- 

ceiver; may  be  allowed  on  refusal  of  one  of  two. 

728.  When    receiver    allowed    on    behalf    of    infant    as    against    mort- 

gagee in  possession  of  infant's  store. 

729.  Trustee  of  infant  ineligible  as  receiver;  next  friend  ineligible; 

when  executor  allowed  to  act. 

730.  When  receiver  of  infant's  estate  chargeable  with  interest  on 

failing  to  invest  funds. 

731.  When  receiver  authorized  to  expend  money  for  relief  of  ten- 

ants. 

732.  Receiver  not  discharged  on  one  infant  coming  of  age  before 

the  other. 

§  725.  Jurisdiction  founded  on  general  doctrine  of 
trusts;  misappropriation  of  funds  by  husband  of  execu- 
trix ground  for  receiver.  The  appointment  of  receivers 
for  the  protection  of  the  property  rights  of  infants,  as  against 
executors  or  other  persons  occupying  fiduciary  relations  to- 
ward the  infant's  estate,  rests  upon  the  general  doctrine  of 
trusts  already  discussed,  and  is  governed  by  the  same  general 
principles.  And  while  courts  of  equity  are  averse  to  inter- 
fering with  the  management  of  estates  by  executors,  even  in 
behalf  of  infants,  a  receiver  will  be  granted  in  a  clear  case  of 
mismanagement  and  misappropriation  of  the  funds,  or  of 
hazard  to  the  infant's  estate.  Thus,  when  an  executrix  in- 
trusts the  control  of  the  estate  to  her  husband,  who  is  in- 
capable of  properly  managing  the  trust,  and  under  whose 
supervision  the  funds  are  misappropriated  and  the  estate  is 
involved  in  debt,  a  fitting  case  is  presented  for  a  receiver  upon 
the  application  of  minor  heirs  of  the  deceased  testator.'''* 

74  Stairley  v.  Rabe,  McMul.  'Rq.,  of  a  receiver  over  (he  estate  of  a 
22.    As  to  the  powers  and  functions      ward  upon  the  removal  of  a  guard- 


874  RECEIVERS.  [CH,\P.  XVI. 

§  726.  Relief  under  the  English  practice;  infant  tenant 
in  tail  allowed  receiver  on  absconding  of  executor.     The 

relief,  in  this  class  of  cases,  has  been  more  frequently  grant- 
ed under  the  English  practice  than  in  this  country,  and  the 
jurisdiction  has  been  well  settled  in  that  country  from  an 
early  period.  And  upon  a  bill  by  an  infant  tenant  in  tail  of 
an  estate  which  had  been  in  possession  of  an  executor,  it  ap- 
pearing that  the  executor  had  absconded  for  a  period  of  over 
two  years,  and  that  there  was  danger  of  the  property  being 
lost  for  want  of  management,  it  was  regarded  as  a  strong 
case  for  a  receiver.'^-^ 

§  727.  Refusal  of  one  of  several  trustees  to  act  no 
ground  for  receiver;  may  be  allowed  on  refusal  of  one  of 
two.  \\'hen  a  testator  has  devised  his  property  to  sev- 
eral trustees  to  carry  out  certain  trusts  specified  in  his  will, 
a  receiver  of  the  estate  will  not  be  appointed  in  behalf  of  in- 
fant heirs  merely  because  one  of  the  trustees  has  disclaimed 
or  refused  to  act,  since  the  court  will  not  presume  misconduct 
on  the  part  of  the  other  trustees. '^^  But  where  there  were  two 
trustees  of  an  estate,  one  of  whom  had  never  acted  and  de- 
clined so  to  do,  a  receiver  was  appointed  of  the  rents  and 
profits  in  behalf  of  infant  cestuis  que  trnstcnt,  although  the 
other  trustee  was  desirous  of  acting.''"^ 

§  728.  When  receiver  allowed  on  behalf  of  infant  as 
against  mortgagee  in  possession  of  infant's  store.  The 
necessity  of  protecting  an  infant's  property  and  estate,  when 
it  is  not  vested  in  a  trustee,  but  is  in  the  adverse  possession 
of  a  person  hostile  to  the  infant's  interests,  may  afford  suffi- 

ian,    under    the    statutes    of    North  receiver  of  the  rents  and  profits  of 

Caroh'na,   see   Temple   v.    Williams,  an   infant's   estate,   when  there   was 

91  N.  C,  82.  no  bill  depending  in  court;  but  that 

'^^  Pitcher   v.   Helliar,   Dick.,   580.  if  it  were  only  filed,  there  might  be 

And  Lord  Thurlow  observed,  in  this  an  application  for  a  receiver  on  be- 

case,  that  he  would  have  ordered  a  half  of  the   infants.     See,   also,  Ex 

receiver,  even  if  there  had  been  no  parte  Whitfield,  2  Atk.,  315. 

bill    filed.      But    in    Anonymous,    1  70  Browell  v.   Reed,   1   Hare,  434. 

Atk.,    489,    it    was    said    that    there  77  Tait  v.  Jenkins,   1   Y.'&  C.   C. 

was    no    instance    of    appointing    a  C,  492. 


CHAP.   XVI.]  TRUSTS.  875 

cient  gToiind  for  the  interference  of  equity  by  a  receiver. 
Thus,  when  an  infant  has  purchased  a  stock  of  goods  for  pur- 
poses of  trade,  and  has  mortgaged  them  to  secure  payment 
of  a  portion  of  the  purchase-money,  and  the  mortgagee  upon 
defauh  takes  possession  of  all  the  goods  in  plaintiff's  store, 
including  other  goods  not  covered  by  the  mortgage,  in  an 
action  by  the  infant  to  disaffirm  the  contract,  although  the 
mortgagee  is  entitled  to  the  goods  which  he  had  sold  to  the 
infant,  yet  there  being  a  mixture  of  the  property,  and  de- 
fendant being  in  possession  and  claiming  a  right  to  sell  the 
whole  for  his  own  benefit,  a  receiver  may  be  allowed  until  the 
respective  rights  of  the  parties  can  be  ascertained.'^^ 

§  729.  Trustee  of  infant  ineligible  as  receiver;  next 
friend  ineligible;  when  executor  allowed  to  act.  As  re- 
gards the  selection  of  a  proper  person  to  be  appointed  receiver 
of  an  infant's  estate,  it  is  generally  held  that  one  who  sustains 
a  relation  of  trust  toward  the  infant  is  ineligible  as  receiver, 
the  two  characters  being  incompatible.'^^  Thus,  when  a  bill 
is  filed  by  the  next  friend  of  infants  against  the  executors  of 
an  estate  for  an  accounting  and  a  receiver,  the  next  friend  is 
not  regarded  as  a  proper  person  to  be  appointed,  since  it  is  his 
duty  to  watch  the  accounts  and  conduct  of  the  receiver,  and 
the  two  characters  are  incompatible,  and  can  not  be  united  in 
the  same  person. 80  So  a  trustee  and  executor  of  an  estate 
devised  to  an  infant  is  not  ordinarily  eligible  as  receiver  of 
the  estate;  and  this  is  so,  regardless  of  whether  he  is  a  sole 
trustee,  or  whether  there  are  others  joined  with  him  as  co- 
trustees.81  g^^t  where  a  testator  had  appointed  as  trustee  and 
executor  of  his  will  a  person  who  had  for  many  years  acted 
as  receiver  of  a  portion  of  his  property,  he  was  regarded  as  a 

78  Skinner  v.  Maxwell,  66  N.  C,  «"  Stone  v.  Wishart,  2  Madd..  63. 
45.     See  S.  C,  68  N.  C,  400.  1st  American  edition.  .174. 

79  Stone  V.  Wishart,  2  Madd.,  63,  81 v.   Jolland,   8   Vcs.,   72. 

l.st    American   edition,   374;    See,    also,    Sykes    v.    Hastings.    11 

V.   Jolland,   8   Ves..   72.     See,   also,  Ves.,  363. 

Sykes  v.  Hastings,  11  Ves.,  363. 


876  RECEIVERS.  [chap.  XVI. 

proper  person  to  be  continued  as  receiver  for  the  protection 
of  an  infant  tenant  for  life.^^ 

§  730.  When  receiver  of  infant's  estate  chargeable  with 
interest  on  failing  to  invest  funds.  When  a  receiver  is  ap- 
pointed over  the  estate  of  an  infant  during-  liis  minority,  the 
infant  having  no  guardian,  and  the  receiver  is  directed  by  the 
decree  to  place  the  surplus  rents  and  profits  during  infancy 
at  interest,  as  fast  as  they  amount  to  a  sufficient  sum  for  in- 
vestment, if  he  fails  thus  to  invest  the  funds  he  will  be  liable 
for  interest.  And  in  such  a  case,  the  fact  that  the  infant,  im- 
mediately on  coming  of  age,  has  a  settlement  with  the  re- 
ceiver, and,  after  looking  over  the  accounts,  admits  the  bal- 
ance in  the  receiver's  hands  to  be  correct,  and  receives  it  with- 
out objection,  is  no  bar  to  charging  the  receiver  with  the  in- 
terest.^^ 

§  731.  When  receiver  authorized  to  expend  money  for 
relief  of  tenants.  In  the  Irish  Court  of  Chancery,  a  re- 
ceiver of  a  minor's  estate  has  been  authorized  by  order  of 
court  to  expend  money  belonging  to  the  estate  for  the  relief  of 
tenants  who  were  in  destitute  circumstances,  and  where,  ow- 
ing to  the  failure  of  their  crops,  they  were  in  an  impoverished 
condition. ^^ 

§  732.  Receiver  not  discharged  on  one  infant  coming  of 
age  before  the  other.  A  receiver  appointed  for  the  protec- 
tion of  the  estate  of  infants  will  not  be  discharged  until  the 
object  of  his  appointment  has  been  fully  attained.  Thus,  as 
between  tenants  in  common  of  real  estate,  two  of  whom  are 
infants,  when  a  receiver  is  appointed  for  the  protection  of  the 
infants,  with  directions  to  pay  to  the  adults  their  share,  he 
will  not  be  discharged  upon  the  application  of  one  of  the  in- 
fants on  his  coming  of  age,  the  other  not  yet  having  attained 
his  majority.^5 

82  Newport  v.  Bury,  23  Beav..  30.  84  Jackson    v.    Jackson,    2    Hog., 

83  Hicks  V.  Hicks,  3  Atk.,  274.  238. 

85  Smith  v.  Lyster,  4  Beav.,  227. 


CHAP.  XVI.]  TRUSTS.  877 


IV.  Receivers  Over  Estates  of  Lunatics. 

§  733.  Jurisdiction  unquestioned,  but  seldom  exercised;  when  receiver 
appointed  on  death  of  lunatic;  must  surrender  to  adminis- 
trator. 

734.  Relief   a   matter  of  discretion;    when   refused,   there  being  rival 

heirs. 

735.  Solicitor  under  commission  of  lunacy  ineligible  as  receiver. 

736.  When    receiver    ordered    to   account;    reference   to   master   to 

ascertain  condition  of  property  and  income. 

§  733.  Jurisdiction  unquestioned,  but  seldom  exercised ; 
when  receiver  appointed  on  death  of  lunatic ;  must  surren- 
der to  administrator.  A  receiver  is  sometimes  necessary 
for  the  preservation  of  the  estate  of  a  lunatic,  and  while  there 
are  but  few  reported  cases  bearing  upon  this  subject,  the  power 
of  a  court  of  equity  to  thus  interfere  is  unquestioned.^^  Up- 
on the  death  of  a  lunatic  or  insane  person  whose  property 
has  been  managed  by  a  trustee  or  committee  appointed  by  the 
court  in  conformity  with  the  laws  of  the  state,  since  the  trus- 
tee's functions  terminate  with  the  death  of  the  lunatic,  it  is 
proper  for  a  court  of  chancery  to  appoint  a  receiver  to  take 
charge  of  the  assets  and  estate  until  it  may  be  determined 
who  is  entitled  thereto. ^"^  But  the  object  of  the  appointment, 
in  such  case,  being  the  protection  of  the  estate  until  it  rt^y 
be  determined  who  is  properly  entitled  to  possession,  the  re- 
ceiver will  be  continued  only  while  such  necessity  exists.  And 
when  the  proper  court  of  probate  has  acquired  jurisdiction 
over  the  estate  of  the  deceased,  and  has  appointed  an  admin- 
istrator pendente  lite,  the  court  of  chancery  will  surrender 
the  possession  of  its  receiver,  and  will  deliver  the  property 
to  the  administrator  pendente  lite.^^ 

§  734.  Relief  a  matter  of  discretion ;  when  refused,  there 
being  rival  heirs.    The  relief,  in  this  class  of  cases,  would 

86  See  as  to  facts  held  to  consti-  87 /,i  re  Rachel  Colvin,  3  Md.  Ch., 

tute  a  prima  facie  case  for  the  ap-  288. 

pointment    of    an    interim    receiver  8S  /«  re  Rachel  Colvin,  3  Md.  Ch., 

over  the  estate  of  a  lunatic,  In  re  288. 
Fountain,  37  Ch.  D.,  609. 


878  RECEIVERS.  [chap.  XVI. 

seem  to  be  largely  a  question  of  judicial  discretion.  And 
after  the  death  of  a  lunatic,  whose  estate  had  been  in  her  life- 
time managed  by  a  committee,  there  being  two  rival  claim- 
ants as  heirs  of  the  estate,  each  of  whom  filed  a  bill  for  a  re- 
ceiver of  the  estate  pending  the  litigation  as  to  their  rights, 
the  English  Court  of  Chancery  declined  to  interfere  by  the 
exercise  of  its  original  jurisdiction  for  the  appointment  of 
a  receiver,  treating  the  case  as  if  there  had  been  no  lunacy, 
and  allowing  the  application  to  be  made  in  the  first  instance 
before  the  vice-chancellor.^^ 

§  735.  Solicitor  under  commission  of  lunacy  ineligible  as 
receiver.  One  who  sustains  such  a  relation  toward  the  es- 
tate of  a  lunatic  as  to  make  it  his  duty  to  call  the  receiver  to 
an  account  is  not,  upon  general  principles  of  equity,  eligible 
as  a  receiver.  Hence  a  solicitor  under  a  commission  of  lun- 
acy should  not  be  appointed  receiver  of  the  lunatic's  estate. ^^ 

§  736.  When  receiver  ordered  to  account;  reference  to 
master  to  ascertain  condition  of  property  and  income.  In 
the  case  of  a  receivership  over  the  estate  of  a  lunatic,  when 
the  receiver  has  never  made  a  full  or  complete  report  of  the 
income  and  disbursements  of  the  estate  committed  to  his 
charge,  any  party  to  the  cause  is  entitled  to  move  for  such  an 
account,  which  it  is  the  receiver's  plain  duty  to  make  in  his 
capacity  as  an  officer  of  the  court.  And  the  court  may  there- 
upon order  a  full  account  to  be  taken  msfantcr  on  proper  no- 
tice. And  it  may  also  order  a  reference  to  ascertain  and  re- 
port as  to  the  situation  of  the  lunatic's  property ;  the  liens,  if 
any,  upon  it;  the  existing  debts;  the  probable  income  for  the 
ensuing  year,  and  the  probable  charges  thereon.  The  refer- 
ence may  also  be  directed  to  ascertain  what  amount  of  the 
income  from  the  estate  will  be  needed  for  the  comfortable 
support  of  the  lunatic,  whose  interests  are  to  .  be  first 
giiarded.^^ 

89  /„    re    Ferrior,    L.    R.,    3    Ch.  "0  Ex  parte  Pincke,  2  Meriv..  452. 

App.,  175.     See  Carrow  v.  Ferrior,  91  Lowe  v.  Lowe,  1  Tenn.  Ch..  515. 

id..  719. 


CHAPTER  XVII. 

OF  RECEIVERS  IN  CONNECTION  WITH  INJUNCTIONS. 

I.  The  Remedies   Compared    §  737 

II.  The  Remedies  as  Applied  to  Corporations   749 

III.  Creditors'  Suits   755 

IV.  Partnerships     760 

V.  Real    Property    772 

I.  The  Remedies  Compared. 

§  1Z7.     Points  of  resemblance;  both  remedies  branches  of  the  preventive 
jurisdiction  of  equity;  neither  changes  title;  discretionary  nature. 

738.  Auxiliary    nature    of    the    remedies;    do    not    determine    ultimate 

rights  of  parties. 

739.  Principal  difference  consists  in  effect  on  possession. 

740.  Provisional  remedies  under  Nev\r  York  code;  when  injunction 

a  bar  to  receiver  in  another  court. 

741.  Neither  remedy  granted  vt-hen  relief  may  be  had  at  law. 

742.  Long  acquiescence  a  bar  to  either  form  of  relief. 

743.  Distinct  nature  of  the  remedies;  one  not  a  necessary  incident 

of   the    other;    no    receiver   where    injunction    affords    ample 
protection. 

744.  Neither  remedy  applicable  to  determine  disputed  questions  of 

title  to  public  offices. 

745.  Either  may  be  granted  although  property  in  a  foreign  coun- 

try. 

746.  Conflict    of   jurisdiction    between    state    and    federal    courts    a 

ground  for  both   remedies. 

747.  Injunctions  to  protect  receiver's  possession, 

748.  When  receiver  enjoined  from  litigation. 

§  737.  Points  of  resemblance;  both  remedies  branches 
of  the  preventive  jurisdiction  of  equity;  neither  changes 
title;  discretionary  nature.  The  dLscussion  of  the  law  of 
receivers,  as  thus  far  developed,  has  shown  many  strikinof 
points  of  resemblance  between  this  branch  of  the  extraordinary 
jurisdiction  of  equity,  and  that  which  is  invoked  in  the  "grant- 
ing- of   preliminary   or   interlocutory   injunctions.      The   two 

879 


880  RECEIVERS.  [chap.   XVII. 

remedies  are  alike  branches  of  the  general  preventive  jurisdic- 
tion of  courts  of  equity,  and  are  prospective  rather  than  re- 
trospective in  their  operation,  being  invoked  on  suitable  occa- 
sions  for  the  prevention  of  future  injuries,  rather  than  for  the 
redress  of  grievances  already  committed.     Thus,  the  object 
of  an  interlocutory  injunction  is  to  preserve  the  subject  in 
controversy  in  its  then  condition,  and,  without  determining 
the  questions  of  right  involved,  it  seeks  to  prevent  the  fur- 
ther perpetration  of  wrong,  or  the  doing  of  any  threatened 
act  which  may  result  in  injury  to  the  rights  of  the  party 
complaining.!     go  the  object  sought  in  appointing  a  receiver 
pendente  lite  is  to  prevent  injury  to  the  thing  in  controversy, 
the  res,  and  to  preserve  it  unimpaired  for  the  security  of  all 
parties  in  interest,  that  it  may  be  disposed  of  in  accordance 
with  the  final  decree  of  the  court. 2     Both  are  extraordinary 
remedies  in  the  strict  sense  of  the  term,  as  distinguished  from 
the  usual  and  accustomed  modes  of  procedure  at  law  and  in 
equity,  since  they  seize  upon  and  control  the  subject-matter  of 
the  litigation  in  limine,  and  without  awaiting  the  final  deter- 
mination of  the  court,  or  its  final  process.     Neither  remedy 
has  the  effect  of  changing  the  title,  or  of  creating  any  special 
lien  upon  the  property,  their  common  object  being  only  to  se- 
cure its  preservation,  until  the  rights  of  all  parties  in  inter- 
est may  be  fully  ascertained  and  judicially  determined.^    And 
both  remedies  rest,  to  a  considerable  extent,  in  the  sound  ju- 
dicial discretion  of  the  court  to  which  the  application  is  ad- 
dressed, to  be  governed  by  a  consideration  of  all  the  circum- 
stances of  the  case.'* 

1  See  Murdock's  Case,  2  Bland,  tory  injunctions,  United  States  v. 
461;  Bosley  v.  Susquehanna  Canal,  Duluth,  1  Dillon's  C.  C,  469;  Red- 
3  Bland,  63.  dall  v.   Bryan,   14   Md.,  444;   Hay- 

2  Mays  V.  Rose,  Freem.  (Miss.),  wood  v.  Cope,  25  Beav.,  151.  See, 
703.  as  to   the   application   of  the   same 

3  Ellis  v.  Boston,  Hartford  &  Erie  doctrine  to  applications  for  receiv- 
R.  Co.,  107  Mass.,  1.  ers,  Owen  v.  Homan,  3  Mac.  &  G., 

4  See,  as  to  this  element  of  discre-  378,  affirmed  on  appeal  to  the  House 
tion   on   applications    for   interlocu-  of  Lords,  4  H.  L.  Rep.,  997;  Ham- 


CHAP.  XVII.]  INJUNCTIONS.  881 

§  738.  Auxiliary  nature  of  the  remedies;  do  not  deter- 
mine ultimate  rights  of  parties.  Another  point  of  resem- 
blance between  these  extraordinary  equitable  remedies,  when 
invoked  in  limine,  is  that  they  are  of  a  provisional  or  auxiliary 
nature,  and  frequently  employed  merely  as  an  adjunct  to  the 
principal  relief  sought  by  the  action,  and  not  always  or  neces- 
sarily the  ultimate  or  principal  object  of  the  action.  And  the 
granting  of  either  species  of  relief,  upon  an  interlocutory  ap- 
plication, is  not  a  final  determination  of  any  questions  of 
right  or  title  which  may  be  involved  in  the  litigation ;  and  the 
court,  in  passing  upon  the  application,  in  no  manner  antici- 
pates its  ultimate  judgment  upon  the  rights  of  the  parties, 
the  fundamental  idea  upon  the  preliminary  application  be- 
ing only  to  preserve  the. fund  or  property  in  litigation  in  statu 
quo,  for  the  benefit  of  whoever  may  finally  be  determined 
to  be  entitled  thereto.  The  court,  in  granting  the  relief,  only 
recognizes  that  sufficient  cause  is  presented  to  warrant  its 
summary  interference  in  limine,  and  until  a  final  hearing 
on  the  merits,  without  expressing,  and  frequently  without 
having  the  means  of  forming  an  opinion  as  to  the  ultimate 
rights  of  the  parties.^  Indeed,  upon  an  interlocutory  ap- 
plication for  a  receiver,  if  plaintiff  shows  an  apparent  title 
to  the  thing  in  controversy,  and  presents  a  prima  facie  case, 
and  if  the  court  is  satisfied  that  there  is  imminent  danger  of 
loss  unless  it  shall  interpose  the  aid  of  a  receiver,  it  may 
grant  the  relief  without  further  investigation  into  the  mer- 

burgh  Manufacturing  Co.  v.  Edsall,  80;    Blakeney  v.   Dufaur,   15  Beav., 

4  Halst.  Ch.,  141;  Pullan  v.  Cincin-  40;   Leavitt  v.   Yates,  4  Edw.   Ch., 

nati   &   Chicago   R.    Co.,   4  Bisscll,  162;  Brown  z-.  Northrup,  15  Ab.  Pr., 

47;  Mays  v.  Rose,  Freem.   (Miss.),  N.    S.,   333;    Ex   parte   Walker,   25 

703 ;  Whelpley  v.  Erie  Railway  Co.,  Ala.,    104.      The    doctrine    is    very 

6  Blatchf.,  271.  clearly  expressed  by  McCoun,  Vice- 

5  See  this  doctrine  applied  to  in-  Chancellor,    in    Leavitt   v.   Yates,   4 

tcrlocutory   applications    for   receiv-  Edw.  Ch.,   162.     For  its  application 

ers,    in    Hottenstein    v.    Conrad,    9  to  cases  of  preliminary  injunctions, 

Kan..  435;  Cooke  v.  Gwyn,  3  Atk.,  see   Great   Western   R.   Co.   v.    Bir- 

6S9;  Huguenin  v.  Baseley,  13  Vcs.,  nnngham    h    Oxford    Junction    R. 

105;    Ellicott    V.    Warford,    4    Md.,  Co.,  2  Ph.,  597. 

Receivers — 56. 


SS2  RECEIVERS.  [CIIAP.  XVII. 

its.^  And  since  the  court  is  bound  to  express  its  opinion  on- 
ly so  far  as  to  show  the  grounds  upon  which  it  determines 
the  apphcation,  it  will  usually  confine  itself  to  the  point  which 
it  is  called  upon  to  decide,  without  going  into  the  merits  of 
the  case  at  large. "^ 

§  739.  Principle  difference  consists  in  efEect  on  posses- 
sion. In  instituting  a  comparison  between  these  principal 
extraordinary  remedies  of  equity,  the  most  striking  point  of 
difference  between  them  is  found  in  their  effect  or  operation 
upon  the  possession  of  the  fund  or  property  in  litigation.  An 
injunction  never  operates  to  change  possession ;  a  receiver 
always  and  necessarily  has  this  direct  and  immediate  effect. 
An  injunction  can  not  be  used  to  take  property  out  of  the 
custody  and  control  of  one  party  and  place  it  in  the  posses- 
sion of  another ;  ^  while  in  appointing  a  receiver,  a  court  of 
equity  at  once  wrests  possession  from  the  defendant ;  assumes 
and  continues  by  its  officer  the  entire  management  and  con- 
trol of  the  property  or  fund ;  frequently  changes  its  form,  or 
absolutely  disposes  of  it,  and  usually  retains  this  exculsive 
possession  until  the  rights  of  all  persons  in  interest  are  final- 
ly adjusted.  An  injunction  merely  restrains  action,  and  aims 
at  preserving  the  subject-matter,  as  well  as  the  attitude  of 
all  parties  in  interest  thereto,  m  statu  quo;  while  a  receiver- 
ship changes  at  once  the  attitude  of  all  parties  toward  the 
subject-matter  of  the  litigation;  divests  defendant's  posses- 
sion, and  interposes  the  officer  of  the  court  as  a  custodian  of 
the  property  or  fund,  for  the  common  benefit  of  all  parties 
concerned. 

§  740.  Provisional  remedies  under  New  York  code; 
when  injunction  a  bar  to  receiver  in  another  court.  Under 
the  code  of  procedure  prevailing  in  New  York,  the  granting 

SLeavitt   v.   Yates,   4   Edw.    Ch.,  8  Murdock's  Case,  2  Bland.,  461; 

162;  Brown  v.  Northrup,  15  Ab.  Bosley  v.  Susquehanna  Canal,  3 
Pr.,  N.  S.,  333.  Bland,  63. 

~  Skinners  Company  v.  Irish  So- 
ciety, 1  Myl.  &  Cr.,  162. 


CHAP.  XVII.]  INJUNCTIONS.  883 

of  injunctions  and  the  appointment  of  receivers,  in  limine,  are 
known  as  provisional  remedies,  and  are  treated  by  the  courts 
of  that  state  as  of  equal  weight  and  importance.  And  while 
the  two  remedies  are  frequently  administered  in  one  and  the 
same  action,  the  granting  of  an  injunction  by  a  court  of  com- 
petent jurisdiction  operates  as  a  bar  to  the  appointment  of  a 
receiver,  in  a  subsequent  proceeding  between  the  same  parties 
in  another  court.  The  jurisdiction  of  the  court,  and  its  con- 
trol over  all  subsequent  proceedings,  being  regarded  as  attach- 
ing upon  the  service  of  process,  or  the  allowance  of  a  provi- 
sional remedy,  when  the  court  first  moving  has  acquired  ju- 
risdiction by  the  granting  of  an  injunction,  another  court  will 
decline  to  interfere.^ 

§  741.  Neither  remedy  granted  when  relief  may  be  had 
at  law.  From  the  points  of  resemblance  between  these 
remedies,  which  have  been  already  indicated,  it  necessarily  fol- 
lows that  certain  well-defined  and  elementary  principles  by 
which  courts  of  equity  are  governed  in  the  exercise  of  their 
extraordinary  jurisdiction,  are  equally  applicable  in  determin- 
ing applications  for  both  species  of  relief.  A  controlling  prin- 
ciple of  this  class,  and  one  which  is  believed  to  be  of  general 
application,  is,  that  the  existence  of  an  adequate  remedy  at 
law  is  ahvays  a  bar  to  the  aid  of  equity  by  granting  either  of 
the  remedies  under  consideration.  Courts  of  equity  will  al- 
ways refuse  to  lend  their  aid  for  the  protection  of  rights,  or 
for  the  prevention  of  wrongs,  when  the  ordinary  legal  rem- 
edies are  adequate  to  afford  redress ;  and  when  it  does  not  ap- 
pear that  the  remedy  at  law  is  insufficient,  or  that  the  party 
aggrieved  is  entitled  to  more  speedy  relief  than  may  be  had 
by  the  ordinary  and  accustomed  modes  of  procedure  at  law, 
an  injunction  will  be  refused. ^^     Legal  rights  are  left  to  the 

J' McCarthy    v.    Peake,    18    How.  v.  Seldcn,  I  Barb.,  316;  Sliernian  v. 

Pr.,  138;  S.  C,  9  Ab.  Pr.,  164.  Ciark,  4  NdV.,  138;  Mullen  v.  Jen- 

lOCoughron  J/.  Swift,  18  111.,  414;  niiiKs.     1     Slockt.,     192;     Hart    v. 

Winkler   v.    Winkler,    40    111..    179;  MarMiall,  4  Minn.,  294;  Wooden  v. 

Poage  V.  Boll,  3  Rand.,  586;  Web-  Wooden,  2  Green  Ch.,  429. 
ster  V.  Couch,  6  Rand.,  519;  Akrill 


S84  RECEIVERS.  [chap.  XVII. 

decision  of  a  legal  forum,  and  in  the  absence  of  special  cir- 
cumstances warranting-  the  interposition  of  the  extraordinary 
aid  of  courts  of  equity  by  an  injunction,  such  courts  will  not 
interfere  for  the  protection  of  a  strictly  legal  right  which  may 
be  properly  tried  at  \awM  And  upon  similar  principles,  equity 
refuses  to  extend  the  aid  of  a  receiver  in  all  cases  where  the 
persons  aggrieved  may  obtain  ample  redress  in  the  usual 
course  of  proceedings  at  law,  or  where  courts  of  law  afford 
a  safe  and  expedient  remedy  for  the  particular  grievance.^*^ 
And  when  the  person  aggrieved  has  had  ample  opportunity  of 
asserting  his  rights  in  an  action  at  law,  but  has  negligently 
omitted  so  to  do,  he  is  barred  from  obtaining  relief  in  equity 
by  an  injunction.!^  So,  too,  when  a  person  having  an  ade- 
quate remedy  at  law  for  the  redress  of  a  particular  grievance, 
loses  that  remedy  by  his  own  laches,  he  can  not  come  into  a 
court  of  equity  and  obtain  a  receiver  upon  the  same  grounds 
which  should  have  been  asserted  in  the  action  at  law.^^ 

§  742.  Long  acquiescence  a  bar  to  either  form  of  relief. 
It  is  also  to  be  noticed,  that  long  acquiescence  in  a  particular 
grievance,  without  effort  to  redress  it,  is  usually  held  to  be  a 
complete  bar  to  relief  in  equity  either  by  a  receiver  or  an  in- 
junction. And  plaintiffs,  who  have  quietly  acquiesced  in  de- 
fendant's possession  of  property  for  a  long  period  of  years, 
without  attempting  to  assert  their  rights  to  the  property,  and 
who  then  seek  to  change  such  possession  by  a  receiver,  will 
be  denied  the  aid  of  the  court  in  limine. '^^  And  when  the  ap- 
plication for  a  receiver  is  based  upon  the  alleged  misconduct 
of  defendant,  but  it  is  shown  that  the  state  of  affairs  com- 
plained of  has  existed  for  many  years,  with  full  knowledge  of 
plaintiffs  and  without  their  objection,  equity  will  refuse  to 

11  Wooden  v.  Wooden,  2  Green  How.  Pr.,  497;  S.  C,  12  Ab.  Pr., 
Ch.,  429.  N.  S.,  427. 

12  Sollory  V.  Leaver,  L.  R.,  9  Eq.,  13  Tapp  v.  Rankin,  9  Leigh,  47& 
22;  Cremen  v.  Havvkes,  2  Jo.  &  Lat.,  14  Drewry  v.  Barnes,  3  Riiss.,  94. 
674;  Parmly  v.  Tenth  Ward  Bank.  15  Gray  v.  Chaplin,  2  Russ.,  126. 
3  Edw.  Ch.,  395 ;  Corey  v.  Long,  43 


CHAP.  XVII.]  INJUNCTIONS.  885 

lend  its  aid  by  a  receiver.i^  The  same  principle  prevails  in 
administering  relief  by  interlocutory  injunction,  and  the  courts 
have  almost  uniformly  held  that  long-continued  acquiescence 
by  the  plaintiff  in  any  particular  grievance  or  violation  of  his 
rights,  which  he  afterward  seeks  to  redress  by  the  preventive 
aid  of  an  injunction,  operates  as  a  bar  to  relief  in  equity,  and 
courts  of  equity  will  decline  to  interfere  in  behalf  of  persons 
thus  negligent  in  the  assertion  of  their  rights. ^"^ 

§  743.  Distinct  nature  of  the  remedies;  one  not  a  neces- 
sary incident  of  the  other ;  no  receiver  where  injunction  af- 
fords ample  protection.  From  the  points  of  resemblance 
already  indicated  between  these  remedies,  and  from  the  appli- 
cation of  certain  fundamental  principles  of  equity  in  admin- 
istering both,  it  is  not  to  be  inferred  that  the  appointment 
of  a  receiver  necessarily  follows  the  granting  of  an  injunction 
in  all  cases,  or  that  an  injunction  is  a  necessary  incident  to  a 
receivership,  or  that  the  two  remedies  are  always  inseparable. 
And  while  there  are  cases  where  an  injunction  follows  a  re- 
ceivership almost  as  of  course,!^  or  where  a  receiver  is  a  nec- 
essary incident  to  an  injunction;  ^^  and  while  it  frequently 
happens  that  the  courts  are  called  upon  to  administer  both 
remedies  in  one  and  the  same  action  and  at  one  and  the  same 
time,  it  by  no  means  follows  that  the  one  is  a  necessary  in- 
cident of  the  other,  and  the  two  are  to  be  regarded  as  separate 
and  independent  remedies.  In  other  words,  while  both  are 
branches  of  the  extraordinary  preventive  jurisdiction  of  equi- 
ty, they  are  yet  distinct  and  separate  branches,  used  for  the 
attainment  of  different  results,  and  a  court  of  equity  may  prop- 
erly refuse  a  receiver,  although  an  appropriate  case  is  pre- 

16  Skinners  Company  v.  Irish  So-  N.  S.,  91 ;  Maythorne  v.  Palmer,  11 
ciety,  1  Myl.  &  Cr.,  162.  Jnr.,  N.  S..  230. 

17  Wood  V.   Sutcliffe,  2  Sim.,  N.  18  See    Seigliortncr    v.    Wcisscn- 
S.,   163;   Payne  v.   Paddock,  Walk.  born,  5  C.  E.  Green.  172. 
rivrich.).  487;   Jacox  v.   Clark,   id.,  19  Sec    Penn    v.    Whiteheads,    12 
249 ;  Powell  v.  Allarton,  4  L.  J.  Ch.,  Grat.,  74. 


886  RECEIVERS.  [chap.  XVII. 

sented  for  an  injunction.^O  So  the  appointment  of  a  receiver 
is  properly  denied  where  an  injunction  will  afford  ample  pro- 
tection for  the  rights  of  the  plaintiff.^l  So,  upon  the  other 
hand,  it  is  regarded  as  proper  to  appoint  a  receiver,  if  the 
facts  showing  the  necessity  for  the  relief  and  the  proper  par- 
ties are  before  the  court,  although  the  application  was  made 
for  an  injunction,  and  did  not  specify  the  appointment  of  a 
receiver.22  But  if  the  injunction  is  a  mere  adjunct  of  the  re- 
ceivership, the  reversal  of  the  order  appointing  the  receiver 
will  also  operate  as  a  reversal  of  the  in j unction. ^^ 

§  744.  Neither  remedy  applicable  to  determine  disputed 
questions  of  title  to  public  offices.  Neither  of  the  remedies 
under  consideration  is  regarded  as  an  appropriate  means,  nor 
is  a  court  of  equity  the  proper  forum,  for  determining  dis- 
putes or  controversies  concerning  the  title  to  public  offices, 
all  such  questions  properly  pertaining  to  courts  of  law,  to  be 
determined  by  proceedings  in  quo  warranto,  or  other  appro- 
priate remedies  prescribed  by  law  for  that  purpose.  And 
while  there  are  cases  where  both  receivers  and  injunctions  have 
been  allowed  in  aid  of  litigation  to  determine  the  right  to  the 
fees  or  emoluments  of  public  offices,  considered  merely  as 
property  and  when  only  contract  rights  have  been  involved,^* 
equity  will  refuse  to  lend  its  extraordinary  aid,  either  by  an 
injunction  or  by  a  receiver,  for  determining  controversies  con- 
cerning the  title  to  public  offices,  and  will  leave  all  such  ques- 
tions to  the  decision  of  courts  of  law,  to  which  forum  alone 
they  properly  pertain. ^5 

20  Rawnsley  v.  Trenton  Mutual  23  Merrell  v.  Pemberton,  62  Ga., 
Life  &  Fire  Insurance  Co.,  1  Stockt.,      29. 

347;    Oakley  v.    Paterson    Bank,    1  24  palmer  v.  Vaughan,  3  Swans., 

Green  Ch.,  173.    And  see,  ante,  %  16.       173;  Cheek  v.  Tilley,  31  Ind.,  121. 

21  Empire  Hotel  Co.  v.  Main,  98  25  Tappan  v.  Gray,  9  Paige,  507. 
Ga.,  176,  25  S.  E.,  413;  Tarvin  v.  And  see  People  v.  Draper,  24  Earb., 
Walker's  Creek  C.  &  C.  Co.,  109  265;  Stone  v.  Wetmore,  42  Ga.,  601, 
Ky..  579,  60  S.  W.,  185. 

22  Whitney  v.  Buckman,  26  Cal., 
447. 


CHAP,  XVII.]  INJUNCTIONS.  887 

§  745.  Either  may  be  granted  although  property  in  a 
foreign  country.  It  is  not  essential  to  the  exercise  of  either 
branch  of  the  extraordinary  jurisdiction  of  equity  under  con- 
sideration, that  the  property  constituting  the  subject-matter  of 
the  litigation  should  be  within  the  jurisdiction  of  the  court, 
provided  the  parties  are  within  its  control  and  amenable  to  its 
process.  And  there  are  frequent  cases  where  injunctions  have 
been  granted  against  parties  within  the  jurisdiction  of  the 
court,  although  the  subject-matter  in  controversy  was  beyond 
reach  of  its  process.^^  So  there  are  frequent  instances  where 
equity  has  appointed  receivers,  although  the  estate  or  property 
which  it  was  sought  to  protect  was  beyond  the  jurisdiction  of 
the  court,  being  situated  in  a  foreign  country,  the  parties  in 
interest,  however,  being  within  its  control  and  subject  to  its 
process. 27  And  it  would  seem  to  be  competent  for  a  court 
of  equity,  in  one  country,  to  grant  an  injunction  and  appoint 
a  receiver  in  aid  of  the  enforcement  of  a  decree  rendered  in  a 
foreign  country.28  g^t  the  exercise  of  such  a  power  is  re- 
garded as  improper  when  it  is  doubtful,  upon  the  record, 
whether  plaintiffs  will  be  ultimately  entitled  to  a  decree  in  the 
second  action. ^9 

§  746.  Conflict  of  jurisdiction  between  state  and  federal 
courts  a  ground  for  both  remedies.  The  existence  of  a 
conflict  of  jurisdiction  between  state  and  federal  courts  has 
been  made  the  foundation  for  relief  in  equity,  both  by  grant- 
ing an  injunction  and  by  appointing  a  receiver  over  the  prop- 
erty in  controversy.  Thus,  when  there  were  actions  pending 
in  both  tribunals  between  adverse  claimants  to  certain  prop- 

26  Bunbnry  v.  Bunbury,  1   Beav.,  27  Davis  v.  Barrett,  13  L.  J.,  N.  S. 

320;    Beckford   v.   Kemble,    1    Sim.  Ch.,  304;  Langford  v.  Langford,  5 

&  Stu.,  7.     See,  also,  Cranstown  v.  L.  J.,   N.   S.   Ch.,  60;   Sheppard  v. 

Johnston,  3  Ves.,   182;   Porlarling-      Oxenford,  1  Kay  &  J.,  491;  v. 

ton  V.   Soiilby,   3   Myl.  &  K..   104;  Lindsey,  15  Ves.,  91. 

Dehon  V.  Foster,  4  Allen,  545;  Vail  28  Ronlditch  v.  Lord  Donegal,  8 

V.   Knapp,  49  Barb.,  299;  Vermont  Bligh  (N.  S.),  301. 

&  Canada  R.  Co.  v.  Vermont  Cen-  29  Houlditch    v.    Lord    Donegal, 

tral  R.  Co.,  46  Vt.,  792.  Beat.,  146. 


888  RECEIVERS.  [chap.  XVII. 

erty  of  a  perishable  nature,  and  there  was  a  probabihty  of  a 
bitter  and  long-continued  litigation,  as  well  as  imminent  dan- 
ger of  collision  between  the  executive  officers  of  the  two  courts 
in  the  enforcement  of  the  process  of  their  respective  courts, 
the  case  was  regarded  as  an  appropriate  one  for  an  injunction 
and  a  receiver,  the  property  being  liable  to  become  entirely 
valueless  unless  taken  possession  of  and  sold.^^ 

§  747.  Injunctions  to  protect  receiver's  possession.  The 
aid  of  an  injunction  is  sometimes  a  necessary  adjunct  to  a 
receivership  for  the  purpose  of  protecting  the  receiver's  pos- 
session, and  to  prevent  any  unauthorized  interference,  by  suit 
or  otherwise,  with  the  property  or  fund  intrusted  to  his  care. 
Indeed,  so  jealous  are  courts  of  equity  of  any  unauthorized 
interference  with  the  possession  of  their  receivers,  that  they 
usually  require  all  adverse  claimants  to  come  in  and  assert 
their  rights  in  the  action  in  which  the  receiver  was  appointed. 
And  when  parties  asserting  a  right  to  property  which  is  sub- 
ject to  a  receivership  attempt  any  unauthorized  interference 
therewith,  or  institute  actions  for  its  recovery  against  the  re- 
ceiver, without  first  obtaining  leave  of  the  court  by  which  he 
was  appointed,  that  court  may  enjoin  them  from  proceeding", 
and  thus  compel  them  to  assert  their  rights  in  the  same  forum 
in  which  the  receiver  was  appointed. ^^  And  this  may  be  done, 
even  though  the  claimant  has  an  apparently  clear  right  to  the 
property,  since  he  can  not  be  permitted  to  disturb  the  receiver's 
possession  until  he  has  established  his  right  by  appropriate 

30  Crane  v.  McCoy,  1  Bond  C.  C.  of  the  receiver  of  the  corporation  to 
422.  resort  to  an  ancillary  bill  and  the 

31  Tink  V.  Rundle,  10  Beav.,  318;  aid  of  an  injunction  for  the  purpose 
Attorney-General  v.  St.  Cross  Hos-  of  protecting  his  possession,  see, 
pital,  18  Beav.,  601 ;  Johnes  v.  ante,  §  342a.  As  to  the  right  of  a 
Ciaughton,  Jac,  573 ;  Evelyn  v.  receiver  of  an  insolvent  corporation 
Lewis,  3  Hare,  472;  Woodburn  v.  to  enjoin  the  enforcement  of  a  judg- 
.■^mith,  96  Ga.,  241,  22  S.  E.,  964;  ment  against  the  corporation  where 
Virginia,  T.  &  C.  S.  &  I.  Co.  v.  he  has  no  remedy  by  certiorari  or 
Bristol  Land  Co.,  88  Fed.,  134.  And  by  motion  to  vacate,  see  Rogers  v. 
see.   ante,   §    140.     As  to  the   right  Haines,  114  Ala.,  50,  21  So.,  411. 


CHAP.  XVII.]  INJUNCTIONS.  889 

proceedings  for  that  purpose. ^2  Sq  ^  receiver's  possession 
may  be  protected  by  injunction,  although  the  party  enjoined 
is  proceeding  in  the  exercise  of  a  statutory  right,  as  in  the 
case  of  a  railway  company  attempting  to  condemn  land  in 
accordance  with  statute  for  the  use  of  its  road,  but  without 
obtaining  leave  of  the  court  by  which  a  receiver  has  been 
appointed  over  the  land.^s  So  a  person  asserting  a  right  of 
common,  in  real  estate  in  a  receiver's  possession,  was  enjoined 
from  trespassing  upon  the  property  when  the  alleged  right 
of  common  had  been  abandoned  for  several  years,  although 
leave  was  given  to  be  examined  before  a  master,  pro  interessc 
siw,  as  to  the  right  claimed. ^^  So,  too,  a  receiver  who  was  en- 
titled to  possession  of  and  to  collect  wharfage  from  a  wharf 
or  landing  upon  a  river,  connected  with  the  property  intrusted 
to  his  care,  was  allowed  to  maintain  a  bill  for  an  injunction 
against  the  authorities  of  a  municipal  corporation,  who  were 
interfering  with  his  possession  and  attempting  to  collect  the 
wharfage.^s  And  when  tenants  of  premises  subject  to  a  re- 
ceivership have,  without  leave  of  court,  instituted  actions  of 
trespass  or  of  replevin  against  the  receiver,  who  has  dis- 
trained for  rent  due  from  such  tenants,  they  may  be  enjoined 
from  proceeding  with  such  actions. ^^  It  is  held,  however, 
that  an  action  against  a  receiver  in  his  official  capacity  will 
not  be  enjoined,  on  the  receiver's  application,  upon  the  ground 
that  the  matters  in  controversy  have  been  determined  by  the 
court  in  other  proceedings,  since  this  would  be  a  complete  de- 
fense to  the  action  which  the  receiver  seeks  to  enjoin,  and  he 
should  avail  himself  of  it  in  that  action. ^"^ 

§  748.  When  receiver  enjoined  from  litigation.  It  has 
been  shown  in  the  preceding  section,  that  courts  of  equity 
frequently  interfere  by  injunction  to  prevent  the  prosecution 

32  Evelyn  v.  Lewis,  3  Hare,  472.  36 /„  re   Persse,  8  Ir.   Eq.,    Ill; 

33  Tink  V.  Rundle,  10  Beav,  .318.  Parr  v.  Bell,  9  Ir.  Eq.,  55. 

34  Johnes  v.  Claiighton,  Jac,  573.  •"'"  Jay's  Case,  6  Ab.  Pr.,  293. 
3-">  Grant  v.  City  of  Davenport,  18 

Iowa,  179. 


890  RECEIVERS.  [chap.  XVII. 

of  unauthorized  suits  against  their  receivers,  such  rehef  being 
necessary  for  the  protection  of  the  receiver's  possession,  which 
is,  in  fact,  the  possession  of  the  court  itself.  It  is  also  to  be 
observed,  that  the  receiver  himself  may  be  enjoined  from  pros- 
ecuting unauthorized  suits  against  third  persons,  under  pre- 
tense of  authority  derived  from  the  court.  And  when  a  re- 
ceiver brings  an  action  in  the  name  of  a  third  person,  without 
his  authority  and  without  the  sanction  of  the  court,  the  par- 
ties to  such  suit  are  entitled  to  the  aid  of  the  court  by  an  in- 
junction to  restrain  such  unauthorized  proceedings.^^  If,  how- 
ever, the  receiver  has  been  duly  authorized  by  the  court  to 
bring  a  particular  action,  it  will  not  permit  him  to  be  enjoined 
from  proceeding,  the  proper  course  for  persons  who  may  be 
dissatisfied  being  to  apply  to  the  court  appointing  him  for  re- 
lief, instead  of  seeking  to  enjoin  him  in  another  suit.^^ 

38  In  re  Merritt,  5  Paige,  125.       39  Winfield  v.  Bacon,  24  Barb.,  154. 


CHAP.  XVII.]  INJUNCTIONS.  891 


II.  The  Remedies  as  Applied  to  Corporations. 

§  749.     Tendency  of  legislation;   receiver  over  corporation  does  not 
necessarily  follow^  injunction. 

750.  Injunction  may  be  granted  as  an  adjunct  of  a  receivership. 

751.  Application   of  the  remedies   to  proceedings  in  quo  warranto 

in  New  York. 

752.  Injunctions  in  actions  by  receivers  to  recover  unpaid  subscrip- 

tions and  illegal  dividends. 

753.  Injunctions  in  aid  of  receivers  over  railways;  mortgagees  of 

tolls  of  turnpike;  injunction  on  behalf  of  receiver  of  national 
bank  against  illegal  taxes;  receiver  may  enjoin  unfair  compe- 
tition. 

754.  Receiver  over  railway  entitled  to  injunction  against  diversion 

of  earnings. 

§  749.  Tendency  of  legislation;  receiver  over  corpora- 
tion does  not  necessarily  follow  injunction.  Questions  of 
considerable  interest  have  sometimes  arisen  as  to  the  extent 
to  which  the  remedies  of  an  injunction  and  a  receiver  may  be 
appHed,  in  connection  with  each  other,  in  cases  affecting  civil 
corporations  and  the  rights  of  shareholders  and  creditors.  It 
frequently  happens  that  the  extraordinary  aid  of  equity  is  in- 
voked against  corporate  bodies,  under  circumstances  such  as 
to  warrant  an  injunction  against  the  corporation  or  its  officers, 
while  the  court  is  not  justified  in  extending  the  aid  of  a  receiv- 
er. Indeed,  the  general  jurisdiction  exercised  by  courts  of 
equity  over  corporations,  independent  of  statute,  does  not  ex- 
tend to  the  power  of  dissolving  the  corporation  and  destroying 
its  franchise,  or  of  sequestrating  the  corporate  property  for 
the  benefit  of  creditors  and  shareholders.  The  tendency  of 
modern  legislation,  however,  has  been  toward  an  enlargement 
of  the  powers  of  courts  of  equity  in  this  regard,  and  in  many  of 
the  states  the  power  of  appointing  receivers  over  corporations 
has  been  expressly  conferred  by  legislative  enactment.  But, 
in  the  absence  of  statutory  authority,  the  courts  frequently 
decline  to  assume  control  by  a  receiver  over  the  affairs  of  a 
corporation,  upon  a  bill  by  a  shareholder  alleging  fraud  and 
mismanagement  on  the  part  of  its  officers,  and  limit  the  relief 


892  RECEIVERS.  [chap.  XVII. 

to  the  granting  of  an  injunction.'*^^  Even  though  the  jurisdic- 
tion of  tlie  court,  as  enlarged  by  statute,  extends  to  appointing 
a  receiver  over  a  corporation  in  a  proper  case,  it  by  no  means 
follows,  because  an  injunction  has  been  granted  against  the 
corporation,  that  a  receiver  should  be  allowed;  since  the  cir- 
cumstances of  the  case  may  be  such  as  to  justify  a  suspension 
of  the  business  of  the  corporation,  while  its  officers  are  not  in 
fault  and  are  the  most  proper  persons  to  wind  up  its  affairs. 
And  if  it  is  apparent  to  the  court  that  a  receiver  is  not  required 
to  protect  the  interests  either  of  shareholders  or  of  creditors, 
and  that  a  stranger  to  the  corporate  business  and  affairs  can  not 
wind  them  up  as  satisfactorily  as  the  directors,  a  receiver  will 
not  be  appointed  and  the  management  will  be  left  in  the  hands 
of  the  directors. ^1 

§  750.  Injunction  may  be  granted  as  an  adjunct  of  a 
receivership.  While,  as  is  thus  seen,  courts  of  equity  are 
generally  more  reluctant  to  interfere  with  the  management  of 
a  corporation  by  a  receiver  than  by  an  injunction,  j^et  when  a 
receiver  has  been  appointed,  an  injunction  may  follow  as  a  nec- 
essary adjunct  to  the  relief  already  granted.  And  upon  ap- 
pointing a  receiver  of  all  the  assets  and  effects  of  a  corporation, 
in  a  proceeding  to  sequestrate  its  property  and  wind  up  its 
affairs,  the  court  may,  in  connection  with  such  receivership 
and  as  a  part  of  its  order,  enjoin  the  officers  and  directors 
from  disposing  of  or  incumbering  any  of  the  property,  and  from 
collecting  any  demands  due  to  the  corporation,  such  an  injunc- 
tion being  treated  as  a  necessary  adjunct  or  incident  of  the 
receivership.42     Indeed,  the  appointment  of  a  receiver  over  a 

40  Waterbury  v.  Merchants  Union  Perry  Patent  Arm  Co.,  3  Stockt., 
Express  Co.,  50  Barb.,  157;  Neall  126.  As  to  the  power  of  the  court 
V.  Hill,  16  Cal,  145 ;  Howe  v.  Deuel,  to  appoint  a  receiver  for  the  pur- 
43  Barb.,  504;  Belmont  v.  Erie  R.  pose  of  compelling  obedience  to  its 
Co.,  52  Barb.,  637.  injunctions,  see  Stockton  v.  Central 

41  Rawnsley  v.  Trenton  Mutual  R.  R.  Co.,  50  N.  J.  Eq.,  489,  25  Atl., 
Life    and    Fire    Insurance    Co.,    1  942. 

Stockt.,    347 ;    Oakley    v.    Paterson  42  Morgan  v.  New  York  &  Alba- 

Bank.  1  Green  Ch.,  173 ;  Nichols  v.      ny  R.  Co.,  10  Paige,  290. 


CHAP.  XVII.]  INJUNCTIONS.  893 

corporation  is  frequently  equivalent  to  a  suspension  of  its 
corporate  functions,  and  to  an  injunction  against  its  agents  and 
officers,  restraining  them  from  intermeddling  with  the  property 
or  with  its  management.^^ 

§  751.  Application  of  the  remedies  to  proceedings  in 
quo  warranto  in  New  York.  Under  the  code  of  procedure 
in  New  York,  in  proceedings  by  the  attorney-general  of  the 
state  in  the  nature  of  a  quo  ivarranto,  having  for  their  object 
the  dissolution  of  a  corporation  and  the  forfeiture  of  its  fran- 
chises, while  the  court  may  properl}  grant  an  injunction  to 
restrain  the  corporation  from  disposing  of  its  funds,  or  from 
doing  any  illegal  act,  it  will  not  appoint  a  receiver  before  judg- 
ment of  forfeiture.^* 

§  752.  Injunctions  in  actions  by  receivers  to  recover 
unpaid  subscriptions  and  illegal  dividends.  Under  the 
statutes  of  some  of  the  states,  receivers  appointed  to  wind  up 
the  affairs  of  insolvent  corporations  are  empowered  to  collect 
from  delinquent  shareholders  the  amounts  due  for  unpaid  sub- 
scriptions to  capital  stock.  When  a  receiver,  in  the  discharge 
of  this  duty,  has  obtained  a  decree  against  a  shareholder  for 
the  payment  of  a  balance  due  on  account  of  his  subscription, 
such  shareholder  is  not  entitled  to  an  injunction  against  the 
receiver  to  restrain  him  from  collecting  the  amount  until  all 
the  debts  can  be  ascertained,  and  the  amount  due  from  each 
shareholder  be  determined,  since  such  objection  should  have 
been  urged  in  defense  of  the  action  brought  by  the  receiver, 
and  will  not  avail  after  a  decree  in  that  action.'*^  But  when  a 
receiver  of  a  corporation,  occupying  for  the  purposes  of  such 
suit  the  position  of  a  trustee  for  all  its  creditors,  institutes  an 
action  to  recover  back  from  the  shareholders  illegal  dividends, 
which  they  have  received  from  the  corporation  while  it  was  in 
a  state  of  insolvency,  such  shareholders  are  entitled  to  the  pro- 

43  Gravenstine's    Appeal,    49    Pa.  4.5  Pentz  v.  Hawley,  1  Barb.  Ch., 
St.,  310.                                                         122. 

44  People  v.  Washington  Ice  Co., 
18  Ab.  Pr..  382. 


894  RECEIVERS.  [chap.  XVII. 

tection  of  an  injunction  against  individual  creditors  of  the  cor- 
poration, to  restrain  them  from  prosecuting  Hke  actions. "^^  So 
a  receiver  of  a  corporation,  who  is  invested  with  a  right  of  ac- 
tion against  dehnquent  shareholders  for  the  recovery  of  their 
unpaid  subscriptions  to  the  capital  stock  may  enjoin  the  credi- 
tors of  the  company  from  proceeding  with  separate  actions  of 
the  same  nature  for  satisfaction  of  their  individual  demands. '^'^ 
And  when  the  receiver  of  an  insolvent  bank  is  proceeding  in 
equity  concurrently  and  in  the  same  action  with  some  of  its 
creditors  to  enforce  an  additional  liability  of  the  stockholders 
under  the  charter  of  the  bank  for  the  benefit  of  all  creditors 
entitled  thereto,  the  court  may  enjoin  individual  creditors 
from  pursuing  separate  actions  at  law  to  enforce  such  liability 
for  their  own  benefit. ^^ 

§  753.  Injunctions  in  aid  of  receivers  over  railways; 
mortgagees  of  tolls  of  turnpike;  injunction  on  behalf  of 
receiver  of  national  bank  against  illegal  taxes;  receiver 
may  enjoin  unfair  competition.  The  aid  of  an  injunction 
is  sometimes  necessary  in  behalf  of  a  receiver,  as  an  adjunct 
to  the  original  action  in  which  he  was  appointed,  and  for  the 
purpose  of  more  effectually  preserving  the  subject-matter  over 
which  his  appointment  extends.  For  example,  when  a  receiver 
is  appointed  over  a  railway  company,  and  is  empowered  by 
the  order  of  court  to  secure  and  protect  the  assets,  franchises 
and  rights  of  the  company,  and  a  land  grant  to  which  it  is 
entitled  from  the  state,  he  may  maintain  a  bill  in  equity  to  en- 
join the  state  officers  from  granting  the  same  lands  to  other 
persons.  Such  an  action  is  regarded  as  an  adjunct  of  the 
original  suit,  and  is  analogous  to  a  petition  by  the  receiver  to 
the  court,  asking  that  it  protect  his  possession  and  the  property 
under  his  control. ^^     So  when  a  receiver  is  appointed  over  a 

46  Osgood  V.  Laytin,  3  Keyes,  521.  48  Eames  v.  Doris,  102  111.,  350. 
affirming  S.  C,  48  Barb.,  464.  40  Davis  v.  Gray,  16  Wal.,  203,  af- 

47  Calkins  v.   Atkinson,   2   Lans.,  firming  S.  C,  1  Woods,  420. 
12;    Rankine  v.   Elliott,    16   N.   Y., 

377. 


CHAP.  XVII.]  INJUNCTIONS.  895 

railway  company  in  behalf  of  its  mortgage  bondholders,  in 
proceedings  for  foreclosure  when  the  security  is  inadequate  to 
the  payment  of  the  mortgage  indebtedness  and  the  corporation 
is  shown  to  be  insolvent,  it  is  proper  to  accompany  the  receiv- 
ership with  an  injunction  against  the  railway  company  and  its 
agents,  to  prevent  any  interference  with  the  receiver,  or  with 
the  property  intrusted  to  him.^^  And  as  between  different 
mortgagees  of  the  tolls  of  a  turnpike  company,  all  of  whom 
are  entitled  to  payment  out  of  the  tolls  pari  passu,  and  without 
priority,  a  mortgagee  who  receives  the  entire  tolls,  and  applies 
them  in  discharge  of  his  own  demand,  may  be  enjoined  and  a 
receiver  of  the  tolls  may  be  appointed  on  the  application  of  an- 
other mortgagee.^l  And  a  receiver  of  a  national  bank  appoint- 
ed by  the  comptroller  of  the  currency  may  maintain  a  bill  to 
enjoin  the  collection  of  taxes  illegally  assessed  against  the  bank 
where  the  case  is  one  which  otherwise  justifies  the  interposition 
of  equity  by  injunction.^2  go  a  receiver  of  an  insolvent  cor- 
poration may  have  an  injunction  to  protect  the  business  under 
his  control  against  injuries  resulting  from  unfair  competi- 
tion.^2 

§  754.  Receiver  over  railway  entitled  to  injunction 
against  diversion  of  earnings.  A  receiver  of  a  railway 
company,  who  is  directed  to  operate  and  manage  the  road  sub- 
ject to  the  orders  and  direction  of  the  court,  is  entitled  to  an 
injunction  to  prevent  an  improper  diversion  of  the  earnings 
or  an  attempt  to  divest  the  receiver's  control  over  them,  since 
his  successful  management  of  the  road  depends  upon  his  con- 
trol over  its  income  and  earnings.  And  the  injunction  may  be 
granted,  although  the  attempt  to  divert  the  earnings  is  made 

50  Ruggles  V.  Southern  Minnesota  corporation  to  resort  to  an  ancil- 
Railroad,  U.  S.  Circuit  Court,  Dis-  lary  bill  and  the  aid  of  an  injunc- 
trict  of  Minnesota,  5  Chicago  Legal  tion  for  the  purpose  of  protecting 
News,  110.  his  possession  from  the  assertion  of 

51  Dumville  z/.Ashbrooke,  3  Russ.,  hostile  and  conflicting  claims,  see, 
99.  note  c.  ante.  §  342(j. 

52  Brown  :;.  French,  80  Fed.,  166.  53  Brookficld  v.  licckcr,  118  Fed., 
As  to  the  right  of  the  receiver  of  a  942. 


896  RECEIVERS.  [chap.  XVII. 

by  suit  in  another  state,  the  parties,  however,  being-  within  the 
jurisdiction  of  the  court  by  which  the  receiver  was  appointed, 
and  whose  aid  he  seeks  by  injunction.  The  court,  under  such 
circumstances,  does  not  attempt  by  its  injunction  to  operate 
upon  the  court  in  the  other  state,  but  only  acts  in  personam 
upon  the  parties  within  its  own  jurisdiction,  in  accordance  with 
well-estabhshed  principles  of  equity,  and  restrains  them  from 
interfering  with  or  diverting  the  earnings  to  which  the  receiv- 
er is  entitled. 5^ 

64  Vermont  &  Canada  R.  Co.  v.  Vermont  Central  R.  Co.,  46  Vt.,  792. 


CHAP.  XVII.]  INJUNCTIONS.  897 


III.  Creditors'  Suits. 

•§  755.     Creditors  without  judgment  not  entitled  either  to  injunction 
or  receiver. 

756.  Exception  to  the  rule  in  partnership  cases. 

757.  Lien  upon  vessel;  action  by  creditors  of  married  woman  to 

charge  her  individual  property. 

758.  Judgment  creditors  entitled  to  both  remedies;  former  practice 

under  New  York  chancery  system. 

759.  When  receiver  denied  injunction  and  receiver  in  action  to  set 

aside  assignment  by  debtor. 

§  755.  Creditors  without  judgment  not  entitled  either 
to  injunction  or  receiver.  Courts  of  equity  are  frequently 
called  upon  to  interfere,  both  by  a  receiver  and  an  injunction, 
for  the  protection  of  judgment  creditors  seeking  the  enforce- 
ment of  their  judgments  out  of  the  property  and  equitable  as- 
sets of  the  debtor.  Neither  remedy,  however,  will  be  adminis- 
tered in  behalf  of  mere  general  creditors,  without  lien  upon  the 
debtor's  property,  and  whose  rights  have  not  been  judicially 
established  by  a  judgment.  Any  interference  with  the  prop- 
erty of  the  citizen,  or  with  his  right  to  manage  and  dispose  of 
it,  before  judgment  recovered  against  him,  is  beyond  the  ju- 
dicial power,  and  courts  of  equity  will  not  enlarge  or  extend 
their  extraordinary  jurisdiction  beyond  the  well-defined  limits 
iixed  by  law.  And  whatever  hardships  or  embarrassments 
may  result  to  creditors  from  the  enforcement  of  the  doctrine, 
by  reason  of  the  slow  procedure  in  courts  of  law  or  otherwise, 
are  regarded  as  evils  which  should  properly  be  redressed  by 
legislative  rather  than  by  judicial  authority.^^  And  the  rule 
is  applied  even  where  the  bill  alleges  gross  fraud  upon  the 

55Uhl    V.    Dillon,    10    Md.,    500;  Stockt.,  465;    Phelps  v.   Foster,    18 

Blondheim  v.  Moore,  11  Md.,  365;  111.,  309;   Bigelow     v.  Andress,  31 

Nusbaum    v.    Stein,    12    Md.,    315;  111.,  322.     See  contra,  Haggarty  v. 

Hubbard  v.  Hubbard,  14  Md.,  356;  Pittman,    1    Paige,    298;    Cohen   v. 

Bayaud  v.   Fellows,  28  Barb.,  451;  Meyers,  42   Ga.,  46;   Thompsen   v. 

Wiggins    V.    Armstrong,    2    Johns.  Diffcnderfer,  1  Md.  Ch.,  489;  Ros- 

Ch.,    144;    Holdrege   v.    Gwynne,   3  enberg  z/.  Moore,  11  Md.,  376. 
C  E.  Green,  26;  Young  v.  Frier,  1 

Receivers — 57. 


898  .        RECEIVERS.  [chap.  XVII. 

part  of  the  debtor,  and  that  he  has  transferred  his  effects  to 
defrand  his  creditors,  and  that  plaintiff  has  bronght  suit  upon 
his  demand,  but  can  not  obtain  judgment  and  execution  before 
defendant's  assets  are  wasted. ^^ 

§  756.  Exception  to  the  rule  in  partnership  cases.  Un- 
der the  New  Ygrk  code  of  procedure,  however,  a  departure 
from  the  rule  is  allowed  in  proceedings  for  the  enforcement 
of  demands  due  from  partnership  debtors.  And  it  is  held,  in 
such  cases,  when  the  insolvency  of  the  firm  and  of  its  individual 
members  is  conceded,  and  the  indebtedness  is  admitted  to  be 
justly  due,  that  a  creditor  of  the  firm,  even  before  judgment, 
may  have  an  injunction  and  a  receiver,  as  against  the  partners 
and  third  persons  to  whom  they  have  attempted  to  assign  their 
property  for  the  purpose  of  hindering  their  creditors.  In  such 
cases,  there  being  no  advantage  to  be  derived  from  a  prelimi- 
nary judgment  and  execution,  the  courts  extend  all  the  relief 
sought  in  one  and  the  same  action,  without  compelling  the 
creditor  to  submit  to  the  delay  of  obtaining  judgment  by  a 
separate  suit.^'^ 

§  757.  Lien  upon  vessel;  action  by  creditors  of  married 
woman  to  charge  her  individual  property.  So  a  creditor 
may  have  such  a  special  or  equitable  lien  upon  the  debtor's 
property  as  to  entitle  him  both  to  a  receiver  and  an  injunction, 
although  his  demand  is  not  yet  reduced  to  judgment.  Thus, 
persons  advancing  money  for  supplies  and  repairs  of  a  vessel, 
and  receiving  from  the  master  an  assignment  of  all  the  earn- 
ings of  the  vessel  upon  her  voyage,  and  of  all  lien  or  interest 
which  he  as  master  has  therein,  are  entitled  to  an  injunction 
against  any  interference  with  the  collection  of  the  earnings, 
as  well  as  a  receiver  to  collect  them,  upon  showing  the  insolv- 
ency of  the  owners  and  that  such  relief  is  necessary  to  protect 
their  lien.^^     So  in  an  equitable  action  by  creditors  of  a  mar- 

56  Rich  V.  Levy,  16  Md.  74.  How.  Pr.,  461;  Jackson  v.  Sheldon, 

57  Mott   V.    Dunn,    10   How.    Pr.,      9  Ab.  Pr.,  127. 

225.    And  see  Levy  v.  Ely.  15  How.  58  Sorley  v.  Brewer,  18  How.  Pr., 

Pr..    395;    La    Cliaise    v.    Lord,    10      276. 


CHAP.  XVII.]  INJUNCTIONS.  899 

ried  woman  who  is  doing  business  as  a  trader,  the  creditors 
seeking  to  charge  her  individual  property  with  the  payment  of 
her  debts,  it  has  been  held  proper  to  appoint  a  receiver  and 
grant  an  injunction,  when  it  is  apparent  that  there  is  danger  of 
the  assets  being  wasted  or  placed  beyond  reach  of  the  creditors, 
the  relief,  in  such  cases,  being  based  upon  the  same  grounds  as 
in  ordinary  cases  of  creditors'  bills  for  the  enforcement  of 
judgments. ^^ 

§  758.  Judgment  creditors  entitled  to  both  remedies; 
former  practice  under  New  York  chancery  system.  After 
creditors  have  established  their  demands  against  a  debtor  by 
judgment,  and  have  thus  acquired  a  lien  upon  his  property, 
they  may  properly  invoke  the  aid  of  equity  both  by  a  receiver 
and  an  injunction,  as  a  necessary  means  of  enforcing  payment 
of  their  judgments,  and  preventing  the  debtor  from  Avasting 
or  disposing  of  his  assets  until  their  judgments  are  satisfied. 
For  example,  creditors  who  have  obtained  judgment  and  levied 
upon  a  stock  of  goods  in  their  debtor's  possession  may  have  an 
injunction  and  a  receiver,  as  against  the  debtor  and  a  third  per- 
son claiming  the  goods  as  mortgagee,  upon  a  bill  alleging  that 
the  goods  are  more  than  sufficient  to  pay  the  mortgage  indebt- 
edness ;  that  a  portion  of  the  stock  is  not  covered  by  the  mort- 
gage; that  the  debtor  has  no  other  property  out  of  which  to 
satisfy  the  judgment,  and  that  the  mortgagee  has  permitted 
the  debtor  to  use  and  dispose  of  the  goods  covered  by  the  mort- 
gaged^ And  under  the  former  chancery  practice  in  New  York, 
receivers  and  injunctions  were  allowed  almost  as  of  course 
upon  creditors'  bills,  after  return  of  execution  against  the 
debtor  nulla  bona.  And  it  was  held  to  be  the  duty  of  the  judg- 
ment creditor,  after  filing  his  bill  and  obtaining  an  injunction 
to  restrain  the  debtor  from  interfering  with  his  assets,  to 
apply  to  the  court  within  a  reasonable  time  for  a  receiver  over 
the  assets,  to  prevent  them  from  being  wasted  or  destroyed, 
and  to  secure  the  collection  of  debts  due  the  defendant.^l     In 

59  Todd  V.  Lee,  15  Wis.,  365.  '"'l  Bank  of  Monroe  v.  .Schcrmer- 

60  Rose  V.  Bevan,  10  Md.,  466.  horn,    Clarke    Ch.,   214;    Osborn   v. 


900  RECEIVERS.  [chap,  XVII. 

such  cases,  the  courts  proceed  upon  the  theory  that  the  defend- 
ant debtor,  after  being  enjoined  from  interfering  with  or  dis- 
posing of  his  property,  can  have  no  honest  motive  in  resisting 
the  appointment  of  a  receiver;  and  that  if  he  has  property  it 
is  for  his  own  interest  that  it  should  be  preserved  pendente  lite, 
while  if  he  has  none,  no  harm  can  result  from  the  appointment, 
and  plaintiff  proceeds  at  the  risk  of  his  costs.^^ 

§  759.  When  receiver  denied  injunction  and  receiver  in 
action  to  set  aside  assignment  by  debtor.  When  a  receiv- 
er in  a  creditor's  suit  institutes  an  action  to  recover  property 
transferred  by  the  debtor,  under  a  voluntary  assignment  for 
the  benefit  of  his  creditors,  he  is  not  entitled  to  an  injunction 
and  a  receiver  as  to  the  property  assigned,  if  he  fails  to  show 
that  the  transfer  was  made  to  hinder  or  defraud  creditors.^s 

Heyer,    2    Paige,    342.     And    see  63  Bostwick   v.    Elton,    25    How. 

Bloodgood  V.  Clark,  4  Paige,  574.         Pr.,  362. 

62  Fitzburgh    v.    Everingham,    6 
Paige,  29. 


CHAP.  XVII.]  INJUNCTIONS.  '  901 


IV.  Partnerships. 

§  760.     The   remedies   dependent  upon  the  same  conditions;  case   as 
presented  must  warrant  a  dissolution. 

761.  Actual  partnership  must  be  shown;  when  defendant  allowed  to 

give  security  in   lieu  of  injunction   and   receiver. 

762.  Grounds  for  injunction  and  receiver  in  partnership  cases;  want 

of   confidence;   irreconcilable   disagreement;    defendant's   in- 
solvency and  fraud. 

763.  Injunction  and  receiver  do  not  necessarily  follow  dissolution; 

defendant's  insolvency  after  dissolution. 

764.  Violation  of  articles  ground  for  relief;  lumber  business;  courts 

averse  to  appointing  receiver  ex  parte. 

765.  Partnership  in  farm;  mining  business  in  foreign  country. 

766.  Receiver    does    not    necessarily    follow    injunction;    when    in- 

junction dependent  on  fate  of  receivership. 

767.  Denial  by  answer  a  bar  to  relief. 

768.  Assignment  by  insolvent  partners  after  dissolution  ground  for 

relief. 

769.  Receiver  and  injunction  on  death  of  partner. 

770.  Receiver   allowed   when    defendants   enjoined   from   collecting 

debts;  receiver  not  enjoined  from  managing  fund. 

771.  Sale    of    good-will    by    receiver    and    injunction    against    con- 

tinuing business  in  same  locality. 

§  760.  The  remedies  dependent  upon  the  same  condi- 
tions; case  as  presented  must  warrant  a  dissolution.     In 

actions  for  the  dissolution  of  partnerships  and  for  an  account- 
ing between  partners,  courts  of  equity  are  frequently  called 
upon  to  administer  relief  both  by  granting  an  injunction  and 
appointing  a  receiver,  in  one  and  the  same  action.  Substan- 
tially the  same  conditions  are  necessary,  in  this  class  of  cases, 
to  justify  the  interposition  of  a  receiver,  as  are  requisite  to 
warrant  an  injunction.  The  relief  will  not  be  granted  merely 
because  of  a  quarrel  between  partners,  but  there  must  be  some 
actual  abuse  of  partnership  property,  or  of  the  rights  of  a 
member  of  the  firm,  and  a  mere  temptation  to  such  abuse  will 
not  suffice.  And  to  warrant  a  court  in  granting  either  of  these 
remedies,  the  case  as  presented  must  appear  to  be  such  as  to 
justify  a  decree  for  a  dissolution  of  the  firm,  since,  in  interpos- 
ing its  extraordinary  aid,  equity  generally  looks  to  the  winding 


902  RECEIVERS.  [chap.  XVII. 

up  of  the  business,  and  not  to  its  continuation  or  management 
by  the  court.  If,  therefore,  a  dissokition  has  actually  taken 
place,  or  if  it  is  apparent  that  it  will  be  decreed  because  of  a 
breach  of  contract  or  of  duty  by  one  partner,  equity  may  proper- 
ly interfere.^"^  And  when,  upon  the  dissolution  of  a  partner- 
ship, the  partners  are  unable  to  agree  upon  the  adjustment  of 
its  affairs,  the  courts  will  usually  appoint  a  receiver,  with  a 
view  to  protecting  the  rights  of  all  parties  in  interest,  and  will 
grant  an  injunction  as  a  necessary  adjunct  of  the  receivership.^^ 
But  when  the  allegations  of  the  bill  on  which  a  preliminary  in- 
junction has  been  granted  are  fully  and  positively  denied  by  the 
answer  of  the  defendant  partner,  the  injunction  will  be  dis- 
solved and  a  motion  for  a  receiver  will  be  denied. ^^ 

§  761.  Actual  partnership  must  be  shown ;  when  defend- 
ant allowed  to  give  security  in  lieu  of  injunction  and  re- 
ceiver. It  is  also  to  be  borne  in  mind,  that  it  is  indispens- 
able to  the  granting  either  of  an  injunction  or  of  a  receiver  in 
partnership  cases,  that  there  should  actually  be  an  existing  part- 
nership between  the  parties,  since,  otherwise,  the  individual 
property  of  a  defendant  might  be  interfered  with,  and  it  might 
appear  in  the  end  that  plaintiff  had  no  right.  When,  therefore, 
the  partnership  is  merely  nominal,  the  parties  acting  under  an 
agreement  that  one  shall  be  employed  by  the  other,  his  com- 
pensation to  be  paid  by  a  share  of  profits  either  with  or  without 
additional  salary,  the  contract  expressly  stating  that  they  are 
not  partners,  although  using  a  firm  name,  the  person  thus  em- 
ployed has  no  such  lien  upon  the  assets  as  to  warrant  a  court  of 
equity  in  entertaining  a  bill  in  his  behalf  for  an  injunction  and 
a  receiver, 6'^  even  though  the  conduct  of  the  parties  has  been 
such  as  to  render  them  liable  as  partners  to  third  persons, 
the  rights  of  third  persons  or  of  creditors  not  being  involved 


64Henn  v.   Walsh,   2  Edw.   Ch.,  6G  Rhodes    v.    Lee,    32    Ga.,    470; 

129.  Henn  v.  Walsh,  2  Edw.  Ch.,  129. 

65  Van    Rensselaer    v.  Emery,    9  67  Kerr    v.    Potter,    6    Gill.    404; 

How.  Pr.,  135.  Nutting  v.  Colt.  3  Halst.  Ch.,  539. 


CHAP.  XVII.]  INJUNCTIONS.  903 

in  the  litigation. ^^  And  when  the  plaintiff  partner,  in  an  action 
for  the  dissolution  of  a  firm,  has  obtained  a  receiver  and  an  in- 
junction, but  defendants  deny  the  existence  of  a  partnersliip, 
and  it  is  apparent  to  the  court  that  plaintiff's  interest  in  the 
firm,  if  any,  is  very  small,  and  that  the  business  will  be  greatly 
endangered,  if  not  ruined,  by  continuing  the  receiver,  it  is  prop- 
er to  permit  defendants,  in  lieu  of  the  injunction  and  receiver, 
to  give  plaintiff  security  for  any  sum  to  which  he  may  ulti- 
mately be  found  entitled. ^^ 

§  762.  Grounds  for  injunction  and  receiver  in  partner- 
ship cases;  want  of  confidence;  irreconcilable  disagree- 
ment; defendant's  insolvency  and  fraud.  It  has  already 
been  shown  that  equity  will  not  extend  the  aid  of  an  injunction 
and  a  receiver  in  partnership  cases  because  of  a  mere  quarrel 
between  the  partners,  but  that  some  actual  abuse  or  injury  must 
be  shown. '^'^  But  the  fact  that  a  partner's  conduct  has  been 
such  as  to  destroy  that  feeling  of  mutual  confidence  which 
should  exist  between  co-partners  may  properly  be  taken  into 
consideration  by  the  court,  and  is  an  important  element  in  de- 
termining whether  plaintiff  is  entitled  to  an  injunction  and  a 
receiver.'^^l  And  when,  by  reason  of  the  improper  conduct  of 
one  of  two  partners,  such  a  want  of  confidence  exists  between 
them  as  to  justify  the  court  in  dissolving  the  firm,  a  receiver 
may  be  appointed  and  an  injunction  granted,  the  injimction 
following  the  receiver  almost  as  of  course,  under  such  circum- 
stances.'^2  /^^d  when  the  case,  as  presented  upon  the  pleadings, 
discloses  a  serious  and  apparently  irreconcilable  disagreement 
between  the  partners  as  regards  the  control  and  disposition  of 
their  assets  and  their  respective  claims  against  each  other,  a 
court  of  equity  may  properly  grant  an  injunction  and  a  receiver, 

68  Kerr  v.  Potter,  6  Gil!,  404.  Green,  388;  Williamson  v.  Wilson, 

69  Popper  V.  Sclieider,  7  Ab.  Pr.,  1    Bland,   418;    Boyce  v.   Burchard, 
N.  S.,  56.  21  Ga..  74. 

70  See  §  760,  anlc.  "-  Sieghorfncr  v.  Weissenborn,  5 

71  Smith   V.   Jeyes,  4   Bcav.,   50."?.  C.  E.  Green,  172. 
See,  also.  Sutro  v.  Wagner,  8  C.  E. 


904  RECEIVERS.  [CIIAP.  XVII. 

the  relief,  in  such  a  case,  being  regarded  as  a  provident  exer- 
cise of  the  extraordinary  jurisdiction  of  equity 7^  So  when 
plaintiff  shows  that  the  defendant  partner  is  insolvent  and  has 
disposed  of  part  of  the  property  with  intent  to  defraud  credit- 
ors, an  injunction  and  a  receiver  may  be  allowed,  although 
there  is  a  dispute  as  to  wiiether  property  in  defendant's  posses- 
sion is  firm  property,  if  it  appears  that  it  was  received  as  part 
payment  upon  a  sale  of  property  belonging  to  the  firm.'^*  So, 
too,  a  failure  by  one  partner  to  contribute  his  portion  of  the 
capital  stock  as  agreed  upon  by  the  partnership  articles,  cou- 
pled with  his  insolvency  and  refusal  to  pay  any  portion  of  the 
firm  debts,  and  the  sale  of  his  interest  to  a  third  person  with- 
out the  knowledge  or  consent  of  his  partner,  afford  sufficient 
grounds  for  an  injunction  and  a  receiver,  when  such  purchaser 
has  taken  possession  of  the  firm  property  and  threatens  to  ex- 
clude the  other  partner  therefrom. '^^ 

§  763.  Injunction  and  receiver  do  not  necessarily  follow^ 
dissolution;  defendant's  insolvency  after  dissolution.  As 
has  already  been  shown,  equity  will  seldom  lend  its  aid  by  a 
receiver  and  an  injunction  in  partnership  matters,  unless  such 
a  case  is  presented  as  to  justify  a  dissolution  of  the  firm.  But 
it  is  not  to  be  inferred  from  this  general  doctrine,  that  be- 
cause a  firm  has  been  dissolved  and  plaintiff  is  entitled  to  an 
accounting,  he  is  necessarily  entitled  to  an  injunction  and  a 
receiver ;  and  there  must,  in  all  cases,  be  some  actual  abuse  of 
partnership  rights,  or  of  partnership  property,  to  warrant  a 
court  of  equity  in  interfering.'^^  when,  however,  in  an  action 
between  partners  for  a  settlement  of  their  firm  affairs  after 
dissolution,  defendant  is  shown  to  be  insolvent,  the  court  may 
properly  grant  an  injunction  and  a  receiver  for  the  protection 
of  plaintiff's  rights,  the  insecurity  of  the  partnership  assets, 

73  Whitman  v.  Robinson,  21  Md.,  "^5  Heathcot     v.     Ravenscroft,     2 

30.  Halst.  Ch.,  113. 

'4  Saylor    v.    Mockbie,    9    Iowa,  "6  Renton  v.  Chaplain,  1  Stockt, 

209.  62. 


CHAP.  XVII.]  INJUNCTIONS.        _  905 

if  left  to  the  control  of  an  insolvent  defendant,  affording  strong 
ground  for  relief  in  equity.'^'^ 

§  764.  Violation  of  articles  ground  for  relief;  lumber 
business;  courts  averse  to  appointing  receiver  ex  parte. 
Violations  of  the  copartnership  articles  are  sometimes  made 
the  foundation  for  an  injunction  and  a  receiver  in  controver- 
sies between  partners.  Thus,  when  a  partnership  is  formed* 
for  the  purpose  of  sawing  lumber,  and  by  the  articles  of  agree- 
ment the  partner  intrusted  with  the  management  of  the  busi- 
ness is  to  take  the  necessary  timber  for  use  in  the  business  from 
land  belonging  to  his  copartner,  a  violation  of  this  part  of  the 
contract  has  been  held  to  constitute  sufficient  ground  for  a  re- 
ceiver and  an  injunction,  the  firm  being  shown  to  be  in  a  de- 
clining condition  and  its  indebtedness  increasing. '^^  But  when 
an  injunction  has  already  been  granted  in  a  controversy  be- 
tween partners,  which  affords  ample  protection  from  loss  until 
a  motion  for  a  receiver  can  be  regularly  heard,  the  court  will 
decline  to  appoint  a  receiver  without  notice  to  defendant  and 
before  service  of  process. "^^ 

§  765.  Partnership  in  farm;  mining  business  in  foreign 
country.  Where  plaintiffs,  who  were  the  owners  of  a  farm, 
had  entered  into  an  agreement  with  defendant  in  the  nature 
of  a  partnership  for  working  the  farm  and  for  a  division  of  the 
profits,  plaintiffs  reserving  the  right  to  terminate  the  partner- 
ship on  six  months*  notice  if  the  profits  should  not  reach  a  speci- 
fied amount,  they  were  allowed  an  injunction  and  a  receiver, 
upon  showing  that  the  profits  had  not  reached  the  prescribed 
amount.80  And  when  an  association  in  the  nature  of  a  partner- 
ship was  organized  in  England,  to  conduct  the  business  of 
mining  in  a  foreign  country,  and  the  property  of  the  associa- 
tion in  the  foreign  country  was  vested  in  a  trustee  for  manage- 
ment, a  member  of  the  association  in  England,  upon  a  bill  in 
behalf  of  himself  and  all  others  for  an  accounting  and  a  dis- 

77  Randall    v.    Morrell,    2    C.    E.  7ft  McCarthy  v.    Peake.   18  How. 

Green   343.  ^''■-  ^■^^• 

78  New  V.  Wright,  44  Miss.,  202.  80  Dunn  v.  McNaught,  38  Ga.,  179. 


906  RECEIVERS.  [chap.  XVII. 

tribution  of  the  profits,  was  allowed  a  receiver  and  an  injunc- 
tion to  restrain  the  trustee  from  selling,  the  trustee  having  ab- 
sconded and  having  threatened  to  sell  the  property.^l 

§  766.  Receiver  does  not  necessarily  follow  injunction; 
when  injunction  dependent  on  fate  of  receivership.  Al- 
though a  preliminary  injunction  is  granted  upon  an  ex  parte 
►application,  on  a  bill  by  one  partner  seeking  a  dissolution  of  the 
tirm,  it  does  not  necessarily  follow  that  a  receiver  must  be 
appointed.  And  if  the  court  is  satisfied,  upon  the  case  as  pre- 
sented, that  plaintiff  is  not  entitled  to  a  dissolution,  it  will  re- 
fuse to  appoint  a  receiver  and  will  leave  the  injunction  to  be 
dissolved  upon  motion  for  that  purpose.^^  g^^t  the  continuance 
of  an  injunction  which  has  been  granted  to  preserve  partner- 
ship property  from  waste  pending  an  application  for  the  ap- 
pointment of  a  receiver,  is  dependent  upon  the  fate  of  such 
application,  and  if  the  receiver  is  denied  the  injunction  must 
be  dissolved.8^  If,  however,  the  court  has  appointed  a  re- 
ceiver, and  has  also  allowed  an  injunction  as  a  necessary  ad- 
junct to  the  receivership,  under  the  circumstances  of  the  case, 
upon  overruling  a  motion  to  rescind  the  appointment  of  the 
receiver  it  will  continue  the  injunction  until  the  hearing,  or 
until  the  further  order  of  the  court. ^"^ 

§  767.  Denial  by  answer  a  bar  to  relief.  A  full  denial 
by  defendant's  answ^er  of  all  the  equities  of  plaintiff's  bill 
will  usually  operate  as  a  bar  to  relief  by  an  injunction  and  a 
receiver,  in  partnership  as  in  other  cases.  And  w^hen  the  plain- 
tiff partner  seeks  a  dissolution,  upon  the  ground  that  de- 
fendant has  drawn  from  the  business  more  than  the  sum  to 
which  he  w^as  entitled  under  the  partnership  articles,  but  the 
answ^er  denies  this  and  denies  all  the  allegations  of  the  bill, 
the  court  will  not  grant  either  an  injunction  or  a  receiver.^^ 

81  Sheppard  v.   Oxen  ford,   1   Kay  84  Williamson  v.  Wilson,  1  Bland, 
&  J.,  491.  428. 

82  Garretson  v.   Weaver,  3   Edw.  8.5  Henn   v.    Walsh,   2   Edw.   Ch., 
Ch.,  385.  129. 

83  Walker  v.   House,  4  Md.  Ch., 
39. 


CHAP.  XVII.]  INJUNCTIONS.  907 

§  768.  Assignment  by  insolvent  partners  after  dissolu- 
tion ground  for  relief.  When  a  partnership  is  dissolvable 
at  the  will  of  either  partner,  and  does,  in  fact,  become  dissolved 
by  the  insolvency  of  some  members  of  the  firm,  an  assignment 
of  the  firm  assets  by  the  insolvent  members  for  the  payment 
of  their  private  debts,  is  sufficient  ground  for  a  receiver  and 
an  injunction,  which  should  extend  to  all  the  firm  assets  in 
the  hands  of  the  defendants  and  of  their  assignee. ^^ 

§  769.  Receiver  and  injunction  on  death  of  partner.  In 
case  of  the  deatl]_  of  one  partner,  there  being  no  partnership 
articles,  and  no  provision  for  continuing  the  business  by  repre- 
sentatives of  the  deceased  partner,  if  the  survivor  refuses  to 
close  up  the  business  within  a  reasonable  time,  but  continues  to 
manage  it  for  his  own  benefit  and  in  his  own  name,  the  court 
\vill  enjoin  him  from  continuing  and  will  appoint  a  receiver, 
upon  a  bill  by  the  administrator  of  the  deceased  partner,  equity, 
under  such  circumstances,  regarding  the  survivor  as  a  trustee 
for  the  creditors  and  representatives  of  the  deceased.^"  And 
upon  appointing  a  receiver,  upon  a  bill  by  the  administrator  of 
a  deceased  partner  against  the  survivors,  the  court  will  require 
them  to  deliver  to  the  receiver  all  unexpended  money  in  their 
hands,  with  all  personal  property,  evidences  of  debt,  and  choses 
in  action,  and  will  enjoin  them  from  collecting  any  debts  due 
to  the  firm.^^ 

§  770.  Receiver  allowed  when  defendants  enjoined  from 
collecting  debts;  receiver  not  enjoined  from  managing 
fund.  Upon  a  bill  by  a  partner  for  a  dissolution  of  the 
firm,  when  the  defendant  partners  have  been  enjoined  from 
collecting  debts,  the  court  should  appoint  a  receiver  to  collect 
the  debts.89  And  when  a  receiver  is  appointed  over  partrier- 
ship  effects,  in  proceedings  under  judgments  against  the  firm. 
it  is  improper  to  enjoin  him   from  the  management   of  the 

86  Davis   V.    Grove,    2    Rob.    (N.  88  Miller  z'.  Jones,  39  111..  54. 
Y.),   134;    Same  v.   Same,   id.,  635.  89  Mahcr  v.  Bull,  44  111.,  97. 

87  Holden's      .Administrators      V. 
McMakin,  Par.  Eq.  Cas..  270. 


908  RECEIVERS.  [CHAr.  XVII. 

fund  or  property,  since  this  would  be  equivalent  to  enjoining 
the  court  itself  from  disposing  of  the  funds  which  may  come 
into  the  hands  of  its  officer,  the  receiver.^^ 

§  771.  Sale  of  good-will  by  receiver  and  injunction 
against  continuing  business  in  same  locality.  When  the 
business  of  a  partnership  is  of  such  a  nature  that  it  is  impos- 
sible for  a  receiver  to  conduct  it,  and  the  court,  therefore,  di- 
rects a  sale  of  the  lease  and  good-will  of  the  firm,  it  is  proper, 
for  the  purpose  of  giving  efficacy  to  the  sale  of  the  good-will, 
to  permit  either  party  to  purchase,  and  to  enjoin  the  others 
from  conducting  the  same  business  in  the  same  locality.^^ 

90  Van    Rensselaer   v.    Emery,   9  ^i  Williams  v.   Wilson,  4  Sandf. 

How.  Pr.,  135.  Ch.,  379. 


CHAP.  XVII.]  INJUNCTIONS.  909 


V.  Real  Property. 

§  772.     Equity  averse  to  interfering  by  injunction  and  receiver  with 
possession  of  real  property  under  claim  of  title. 
nZ.     Long  acquiescence  in  possession  may  bar  relief. 

774.  Injunction  and   receiver  refused   in  proceeding  by  lessor  against 

lessee. 

775.  Refused  heir-at-law  and  devisee  on  bill  to  determine  widow's 

dower. 

116.     Purchaser  at  judicial  sale  allowed  both  remedies. 

111.  Receiver  my  enjoin  waste;  may  enjoin  breach  of  covenant  by 
tenant. 

778.  When  receiver  and  injunction  granted  in  equitable  action  to 
recover  realty;  tenant  for  life  permitting  taxes  to  be  in  ar- 
rears; contract  between  owner  and  tenant. 

119.  Remainder-man  and  tenants  not  allowed  to  enjoin  receiver 
from  dispossessing  them. 

780.     The  relief  as  between  tenants  in  common. 

§  772.  Equity  averse  to  interfering  by  injunction  and 
receiver  with  possession  of  real  property  under  claim  of 
title.  In  considering  the  appHcation  of  the  extraordinary 
remedies  under  consideration  in  cases  affecting  real  property, 
the  most  noticeable  feature  to  be  observed  is  the  extreme  aver- 
sion manifested  by  courts  of  equity  to  any  interference  in 
limine  with  the  possession  of  real  estate,  as  against  a  defendant 
in  possession  and  claiming  under  a  legal  title.  Indeed,  it  may 
be  asserted  as  a  general  proposition,  sustained  by  both  the 
English  and  American  authorities,  that  in  a  controversy  con- 
cerning the  title  to  real  property,  in  which  plaintiff  asserts  a 
legal  title  in  himself,  against  a  defendant  who  is  in  possession 
under  claim  of  legal  title,  and  in  receipt  of  the  rents,  courts  of 
equity  decline  to  lend  their  extraordinary  aid  either  by  a  re- 
ceiver or  by  an  injunction  in  limine,  and  leave  the  rights  of  the 
parties  to  be  determined  by  a  court  of  law.  And  while  there 
may  be  special  circumstances  of  fraud  or  of  imminent  danger, 
sufficient  in  extreme  cases  to  warrant  a  departure  from  the 
rule,  the  general  doctrine  as  here  stated  remains  unquestioned, 
and  equity  will  decline  to  interfere  by  the  exercise  of  either 
branch  of  its  extraordinary  jurisdiction,  before  plaintiff  has  es- 


910  RECEIVERS.  [chap.  XVII. 

tablished  his  title  at  law.^-  Indeed,  the  rule  as  stated  necessa- 
rily follows  from  the  established  doctrine  that  equity  will  not 
interfere  when  adequate  relief  may  be  had  at  law.  Hence 
courts  of  equity  will  refuse  to  grant  an  injunction  and  to  ap- 
point a  receiver,  in  a  contest  concerning  the  possession  of  real 
property,  when  redress  may  be  had  at  law  by  the  usual  methods 
of  procedure,  and  will  leave  the  parties  aggrieved  to  pursue 
their  legal  remedy.  For  example,  a  devisee  of  realty,  claiming 
by  his  bill  the  title  and  right  of  possession,  and  that  defendant 
has  unlawfully  usurped  possession  and  continues  to  hold  with- 
out right,  receiving  income  and  depriving  plaintiff  of  his  means 
of  support,  can  not  have  the  aid  of  an  injunction  and  a  re- 
ceiver in  liininc,  even  though  he  alleges  the  insolvency  of  de- 
fendant in  possession,  but  will  be  left  to  assert  his  title  by  pro- 
ceedings at  law.^^ 

§  773.  Long  acquiescence  in  possession  may  bar  relief. 
It  may  also  be  a  sufficient  objection  to  disturbing  the  posses- 
sion of  real  property  by  an  injunction  and  a  receiver,  that  such 
possession  has  been  long  acquiesced  in  and  has  remained  undis- 
turbed for  many  years.  And  when  the  property  in  controversy 
has  been  held  and  managed  and  its  proceeds  have  been  applied 
by  a  corporation  in  a  particular  manner  for  a  long  term  of 
years,  the  possession  will  not  be  disturbed  by  an  injunction 
and  a  receiver  upon  the  ground  that  such  application  of  the 
proceeds  is  a  breach  of  trust,  unless  the  court  is  satisfied  that 
defendant  is  a  mere  naked  trustee,  without  right  or  discretion 
as  to  the  management  of  the  property.^^ 


92  Lloyd  V.  Passin-ham,  16  Ves.,  93  pfdtz   v.   Pfeltz,   14   Md.,  376. 

59;  S.  C,  3  Meriv.,  697;  Schlecht's  94  Skinners  Company  v.  Irish  So- 

Appeal,  60   Pa.    St.,   172;    Pfeltz  v.  ciety,  1  Alyl.  &  Cr.,  162.     See,  also, 

Pfeltz,  14  Md.,  376.    See,  also,  Clark  Municipal    Commissioners    of    Car- 

V.  Ridgely,  1  Md.  Ch.,  70;  Willis  v.  rickfergus  v.  Lockhart,  Ir.  Rep.,  3 

Corlies,  2  Edw.  Ch.,  281 ;  Owen  v.  Eq.,  515. 
Homan,  3  Mac.  &  G.,  378,  affirmed 
on  appeal  to  the  House  of  Lords, 
4  H.  L.  Rep.,  997. 


CHAP.  XVII.]  INJUNCTIONS.  911 

§  774.  Injunction  and  receiver  refused  in  proceeding  by 
lessor  against  lessee.  The  general  rule  already  stated,  de- 
nying the  aid  of  a  receiver  and  an  injunction  as  against  a  de- 
fendant in  possession  under  claim  of  title,  is  applicable  as  be- 
tween a  lessor  and  his  lessee,  the  latter  being  clothed  with  a  le- 
gal title  and  a  right  to  possession  thereunder.  And  when  the 
-owner  of  premises  executes  a  lease  thereof,  under  which  the 
lessee  is  authorized  to  bore  for  and  take  oil  from  the  premises, 
returning  one-fourth  of  the  product  as  rental,  equity  will  re- 
fuse an  injunction  and  a  receiver  in  a  proceeding  by  the  lessor 
in  aid  of  an  action  at  law  for  a  forfeiture  of  the  lease.^^ 

§  775.  Refused  heir-at-law  and  devisee  on  bill  to  deter- 
mine widow's  dower.  When  an  heir-at-law^  and  devisee 
under  a  will  files  a  bill  to  determine  a  widow's  dower  in  the 
estate,  and  prays  an  injunction  to  prevent  a  transfer  of  the 
property  and  a  receiver  of  the  rents  and  profits,  the  court  will 
not  interfere  merely  upon  an  allegation  that  the  rents  are  in 
jeopardy,  but  it  must  appear  how  they  are  endangered.  And 
when  the  bill  does  not  allege  that  the  rents  and  profits  will  be 
lost  by  reason  of  insolvency  of  the  persons  who  are  receiving 
them,  or  that  plaintiff  has  not  an  adequate  remedy  at  law  for 
whatever  portion  of  the  rents  he  may  be  entitled  to,  the  relief 
will  be  refused. ^^ 

§  776.  Purchaser  at  judicial  sale  allowed  both  remedies. 
A  purchaser  of  lands  at  a  judicial  sale,  who  has  obtained  a 
sheriff's  deed  of  the  premises  upon  the  expiration  of  the 
statutory  period  of  redemption,  has  been  allow'ed  a  receiver 
and  an  injunction  in  aid  of  an  action  to  obtain  possession. 
And  when,  in  such  an  action,  it  was  alleged  that  defendants 
were  insolvent  and  were  endeavoring  to  defraud  plaintiff 
of  his  rights,  the  court  granted  an  injunction  and  appoint- 
ed a  receiver  to  take  charge  of  the  growing  crops,  in  order 

«^>  Chicago    &    Allegheny    Oil    &  "« Knighton   v.    Young,    22    Md., 

Mining   Co.   v.    The   United    States      359. 
Petroleum  Co.,  57  Pa.  St.,  83 ;  S.  C, 
6  Phila.,  521. 


912  RECEIVERS.  [chap.  XVII. 

that  they  might  be  harvested  and  prepared  for  market,  and 
tlie  proceeds  held  subject  to  the  final  order  of  the  court. ^"^ 

§  777.  Receiver  may  enjoin  waste;  may  enjoin  breach 
of  covenant  by  tenant.  A  receiver  may  be  allowed  the  aid 
of  an  injunction,  in  a  proper  case,  to  restrain  the  commission  of 
■.vaste  on  premises  subject  to  his  control.  And  it  is  held  under 
the  Irish  practice,  that  the  receiver  may,  in  a  pressing  case,  file 
his  bill  to  enjoin  the  waste,  and  that  at  the  same  time  with 
moving  for  the  injunction  he  may  move  a  reference  to  a  master 
to  report  as  to  the  necessity  of  such  proceeding  and  whether  it 
shall  be  continued. ^^  So  it  has  been  held  proper  for  the  court, 
upon  motion  of  the  receiver,  to  grant  a  conditional  restraining 
order  against  the  commission  of  waste  by  tenants,  without  any 
bill  being  filed  for  that  purpose,  leaving  the  question  to  be 
determined  by  the  court  when  cause  is  shown  against  the  re- 
straining order.^^  So  when  premises  subject  to  a  receivership 
are  held  by  tenants  under  a  lease,  with  a  covenant  against  their 
use  for  a  particular  purpose,  as  for  a  shop,  on  pain  of  forfeiture, 
in  case  of  a  breach  of  the  covenant,  the  receiver  may  have  the 
aid  of  an  injunction  to  restrain  a  tenant  from  using  the  prem- 
ises for  the  purposes  prohibited  by  the  covenant.^ 

§  778.  When  receiver  and  injunction  granted  in  equit- 
able action  to  recover  realty;  tenant  for  life  permitting 
taxes  to  be  in  arrears ;  contract  between  owner  and  tenant. 
In  an  equitable  action  for  the  recovery  of  real  property,  upon 
the  ground  that  the  proceedings  by  which  plaintiff's  ancestor 
had  been  divested  were  void  by  reason  of  fraud  and  mistake, 
and  also  for  want  of  jurisdiction  in  the  court  in  which  such 
proceedings  were  had,  it  is  proper  to  allow  a  receiver  and  an 
injunction,  when  it  appears  that  defendants  in  possession  and 
collecting  the  rents  are  irresponsible,  and  that  the  premises  are 
in  a  ruinous  condition  and  will  continue  to  deteriorate  if  left 

97  Corcoran  v.  Doll,  35  Cal.,  476.  1  Mason  v.    Mason,    Flan.   &   K., 

98  Mangle     v.     Lord     Fingall,     1      429. 
Hog.,  142. 

99Cronin   v.    McCarthy,    Flan.   & 
K.,  49. 


CHAP.  XVII.]  INJUNCTIONS.  913 

in  defendant's  possession  during  the  litigation. ^  And  on  a 
bill  against  tenant  for  life,  seeking  an  injunction  to  restrain 
him  from  disposing  of  the  property,  if  the  tenant  for  life  in 
possession  has  permitted  the  taxes  to  be  in  arrears,  the  court 
may  appoint  a  temporary  receiver  of  so  much  of  the  rents  and 
income  as  will  suffice  to  pay  the  taxes  due  and  in  arrear,  un- 
less defendant  shall  pay  them  within  a  specified  time.^  But 
a  mere  contract  between  the  owner  of  land  and  a  tenant,  pro- 
viding for  the  working  of  the  land  by  the  tenant  for  a  given 
time,  the  owner  to  receive  compensation  out  of  the  crops 
grown  thereon,  does  not  entitle  the  owner  to  an  injunction 
to  restrain  the  tenant  from  removing  the  crops,  or  to  a  re- 
ceiver to  manage  the  land  and  take  possession  of  the  ungath- 
ered  crop.* 

§  779.  Remainder-man  and  tenants  not  allowed  to  en- 
join receiver  from  dispossessing  them.  When  property 
has  been  placed  in  the  hands  of  a  receiver,  a  remainder-man 
and  tenants  of  the  premises  have  been  refused  an  injunction 
to  restrain  the  receiver  from  turning  them  out  of  possession, 
the  court  holding  that  their  interest  was  insufficient  to  sustain 
such  an  application.^ 

§  780.  The  relief  as  between  tenants  in  common.  While 
courts  of  equity  are  usually  averse  to  the  exercise  of  their  ex- 
traordinary jurisdiction  as  against  tenants  in  common  of  real- 
ty, there  are  cases  where  the  relief  is  proper  upon  the  ground 
of  exclusion  of  his  co-tenant  by  a  tenant  in  possession,  who 
is  in  insolvent  circumstances.^  And  a  plaintiff,  claiming  a 
moiety  of  an  estate  as  tenant  in  common  with  defendant  who 
was  in  possession  of  the  whole,  has  been  allowed  a  receiver  of 
the  rents  and  profits  of  such  moiety,  and  an  injunction  to  re- 
strain defendant  from  collecting  the  rents  thereof.'^ 

2  Rogers  v.  Marshall,  6  Ab.  Pr.,  6  See  Wiljiams  v.  Jenkins,  11  Ga., 
Isf_  s.,  457.  595;  Street  v.  Anderton,  4  Bro.  C. 

3  Cairns  v.  Cliahert,  3  Edw.  Ch.,  C,  414;  Sandford  v.  Ballard.  .30 
312.  Beav.,  109. 

4  Williams  v.   Green,  37  Ga..   Z7.  "^  Hargrave  v.  Hargravc,  9  Beav., 

5  Wynne  v.  Lord  Newborough,  1  549. 
Ves.  Jun.,  164. 

Receivers — 58. 


CHAPTER  XVIII. 

OF  THE  RFXEIVER'S  COMPENSATION. 

§  781.     Compensation  regulated  by  court  in  the  absence  of  legislation; 
court  may  act  on  own  knowledge. 

782.  English  practice;  no  settled  rule;  reference  to  master  to  deter- 

mine. 

783.  No    fixed    rule    in    this    country;    compensation    dependent    upon 

circumstances  of  case;  no  compensation  after  reversal  of  ap- 
pointment; court  may  hear  evidence;  final  compensation; 
practice  as  to  partial  compensation ;  compensation  after  removal. 

784.  The  rule  in  Massachusetts;  reasonable  pay  for  person  of  ordi- 

nary ability  allowed;  rule  in  Maryland. 

785.  Receivers  sometimes  allowed  same  rates  as  guardians,  execu- 

tors or  administrators;  commissions  on  receipts  and  disburse- 
ments;  New  York  doctrine. 

786.  Receivers  in  lieu  of  executors  allowed  same  compensation. 
787.'  Receiver  over  railway  allowed  more  liberal  compensation  than 

in  ordinary  cases. 

788.  Entitled    to    compensation    for    work    performed    by    others; 

farms  managed  by  overseers;  commission  on  receipts  and 
disbursements. 

789.  When  receiver  allowed  to  make  rests. 

790.  Extra  compensation;  receiver's  mismanagement  ground  for  re- 

fusal of  compensation. 

791.  When  receiver  of  insurance  company  allowed  commissions  on 

premium  notes  surrendered. 

792.  Payment  into  court  to  avoid  receiver's  compensation. 

793.  Receiver  over  minor  denied  extra  compensation  for  attending 

survey  of  estate. 

794.  Doctrine  of  the  Irish  Chancery;  receiver  appointed  bv  consent. 

795.  Partner  appointed   receiver  not  allowed   compensation. 

796.  Receiver  can  not  have  judgment  against  the  parties  on  motion; 

practice  in  fixing  compensation;  part  of  compensation  taxed 
as  costs  against  plaintiff;  chargeable  on  fund;  compensation 
should  not  be  allowed  without  notice;  where  compensation  not 
subject  to  set-off. 

796a.  Appeals  from  allowance  or  refusal  of  compensation. 

796b.  Right  of  receiver  to  retain  compensation  out  of  fund  before 
surrendering  it  to  trustee  in  bankruptcy. 

914 


CHAP.   XVIII.] 


COMPENSATION. 


915 


§  796c.  Agreement  by  party  to  pay  receiver's  compensation  against 
public  policy;  agreement  by  receiver  to  serve  without  com- 
pensation. 

§  781.  Compensation  regulated  by  court  in  the  absence 
of  legislation;  court  may  act  on  own  knowledge.     The 

power  of  courts  of  equity  to  fix  the  compensation  of  their 
own  receivers  is  well  established,  and  results  necessarily  from 
the  relation  which  the  receiver  sustains  to  the  court,  he  being 
its  officer  or  agent,  deriving  his  functions  only  from  that 
source.  In  the  absence,  therefore,  of  any  legislation  regu- 
lating the  receiver's  salary  or  compensation,  the  matter  is 
left  entirely  to  the  determination  of  the  court  from  which  he 
derives  his  appointment.^  And  in  making  an  allowance,  the 
court  is  not  confined  to  evidence  formally  introduced  but  may 


1  Gardiner  v.  Tyler,  3  Keyes,  505 ; 
S.  C,  2  Ab.  Ct.  Ap.  Dec,  247; 
Baldwin  v.  Eazler,  34  N.  Y.  Supr. 
Ct,  275 ;  Magee  v.  Cowper- 
thwaite,  10  Ala.,  966;  Stretch  v. 
Govvdey,  3  Tenn.  Ch.,  565;  Martin 
V.  Martin,  14  Ore,  165,  12  Pac, 
234;  Union  National  Bank  v.  Mills, 
103  Wis,  39,  79  N.  W,  20;  Crum- 
lish's  Adm'r  v.  Shenandoah  V.  R. 
Co.,  40  West  Va,  627,  22  S.  E., 
90;  Kilpatrick  v.  Horton,  15  Wyo, 
501,  89  Pac,  1035.  See,  also,  Unit- 
ed States  V.  Church,  6  Utah,  72; 
Preston  National  Bank  v.  Smith  M. 
P.  Co.,  102  Mich.,  462,  60  N.  W., 
981 ;  Simmons  v.  Allison,  119  N.  C, 
556.  26  S.  E.,  171 ;  Strain  v.  Palmer, 
86  C.  C.  A.,  618,  159  Fed.,  628.  As 
to  the  allowance  of  compensation 
to  a  surviving  receiver  after  the 
death  of  his  co-receiver,  see  Bur- 
roughs V.  Bunnell,  70  Md.,  18,  16 
Atl.,  447.  As  to  the  allowance  to 
a  receiver  of  an  insolvent  bank  for 
his  own  compensation,  for  clerk 
hire,  expenses  of  receivership  and 
on  account  of  moneys  collected  and 


misappropriated  by  an  attorney,  see 
Union  Bank  Case,  37  N.  J.  Eq.,  420, 
affirmed  on  appeal  sub  nom.  Sand- 
ford  V.  Clarke,  38  N.  J.  Eq.,  265. 
As  to  the  commissions  allowed  to 
receivers  of  insolvent  life  and  fire 
insurance  companies  under  the  laws 
of  New  York,  the  basis  upon  which 
such  commissions  are  computed, 
and  the  liability  of  such  receivers 
to  pa3'ment  of  interest  upon  their 
balances,  see  Attorney-General  v. 
North  America  Life  Insurance  Co., 
26  Hun,  294.  See,  also,  Attorney- 
General  V.  Continental  Life  Insur- 
ance Co,  27  Hun,  524;  In  re  Se- 
curity Life  Insurance  &  Annuity 
Co.,  31  Hun.  36;  In  re  Common- 
wealth Fire  Insurance  Co,  32  Hun, 
78.  As  to  the  allowance  to  a  re- 
ceiver for  carrying  on  a  hotel  busi- 
ness, see  Cake  v.  Mohun,  164  U. 
S,  311,  17  Sup.  Ct.  Rep,  100.  af- 
firming Cake  V.  Woodbury,  3  App. 
D.  C.  60,  and  distinguished  in  In- 
ternational Trust  Co.  V.  Llnited 
Coal  Co.,  27  Colo,  246.  60  Pac, 
621.     .\s  to  the  lia1)ility  of  defend- 


916 


RECEIVERS. 


[chap.    XVIII. 


act  on  its  own  knowledge  and  judgment  as  to  the  reasonable- 
ness of  the  charge  in  connection  with  what  has  been  done  by 
the  receiver  in  the  discharge  of  his  duties. ^  And  in  passing 
upon  the  compensation  of  a  receiver,  an  appellate  court  will 
ordinarily  defer  much  to  the  judgment  of  the  court  below  by 
which  the  receiver  was  appointed,  that  court  having  had  the 
supervision  of  his  conduct.^ 


ants  for  a  receiver's  compensation 
and  that  of  his  counsel  in  an  ac- 
tion brought  by  the  receiver  against 
the  shareholders  of  a  corporation 
to  recover  their  unpaid  stock  sub- 
scriptions, see  Berry  v.  Rood,  209 
Mo.,  662,  22  S.  W.,  108.  As  to 
facts  held  to  constitute  a  waiver 
of  the  right  to  object  to  a  receiv- 
er's compensation,  see  Dillingham 
V.  Moran,  26  C.  C.  A.,  596,  81  Fed., 
759,  52  U.  S.  App.,  425.  The  de- 
cree of  the  court  of  appeals  in  the 
case  last  cited  was  afterward  set 
aside  by  the  supreme  court  of  the 
United  States  upon  the  ground 
that  one  of  the  judges  before  whom 
the  case  was  heard  in  the  court  of 
appeals  was  not  qualified  to  sit  in 
the  case.  Moran  v.  Dillingham.  174 
U.  S.,  153,  19  Sup.  Ct.  Rep.,  620.  43 
L.  Ed.,  930.  As  to  the  right  of  a 
leceiver  to  compensation  under  a 
void  order  of  appointment,  see 
Tabor  v.  Bank  of  Leadville,  35 
Colo.,  1,  83  Pac,  1060.  In  Davy  v. 
Scarth,  (1906)  1  Ch.,  55,  it  was 
held  that  a  partner  who  was  ap- 
pointed receiver  of  the  firm  assets 
was  entitled  to  his  compensation 
and  expenses  out  of  the  funds  in 
his  hands  although  he  was  indebted 
to  the  estate  and  unable  to  pay  <:ucH 
obligation.  In  Campau  v.  Detroit 
Driving  Club,  144  Mich.,  80,  107  N. 
W.,  1063,  it  was  held  that  a  receiver 
appointed  on  a  creditors'  bill  should 


be  denied  compensation  where  he 
discovered  no  property  or  assets  of 
the  debtor  which  could  not  have 
been  reached  by  execution.  Where 
a  receiver  has  recovered  a  judgment 
for  the  amount  due  him  as  compen- 
sation and  also  for  an  indebtedness 
for  which  he  has  incurred  individ- 
ual liability,  upon  his  death  such 
judgment  passes  to  his  personal 
representative  and  may  be  enforced 
by  the  latter.  Cake  v.  Mohun, 
164  U.  S.,  311,  17  Sup.  Ct.  Rep.,  100, 
affirming  Cake  v.  Woodbury,  3  App. 
D.  C,  60,  and  distinguished  in  In- 
ternational Trust  Co.  V.  United 
Coal  Co.,  27  Colo.,  246,  60  Pac, 
621. 

2  State  V.  Nebraska  S.  &  E.  Bank, 
61  Neb.,  496,  85  N.  W.,  391 ;  In  re 
State  Bank,  57  Minn.,  361,  59  N. 
W.,  315. 

3  Morgan  v.  Hardee,  71  Ga.,  736; 
Hinckley  v.  Railroad  Co.,  100  U. 
S.,  153;  Cake  v.  Mohun,  164  U.  S., 
311,  17  Sup.  Ct.  Rep.,  100,  affirm- 
ing Cake  V.  Woodbury,  3  App.  D. 
C,  60,  and  distinguished  in  Inter- 
national Trust  Co.  V.  United  Coal 
Co.,  27  Colo.,  246,  60  Pac,  621; 
Northern  Alabama  Ry.  Co.  v.  Hop- 
kins. 31  C.  C.  A.,  94,  87  Fed.,  505, 
59  U.  S.  App.,  74;  Wilkinson  v. 
Washington  Trust  Co.,  42  C.  C.  A., 
140,  102  Fed.,  28;  Braman  v.  Farm- 
ers' L.  &  T.  Co.,  51  C.  C.  A.  644, 
114  Fed.,   18;   Heffron  v.  Rice,  149 


CHAP.    XVIII.] 


COMPENSATION. 


917 


§  782.  English  practice;  no  settled  rule;  reference  to 
master  to  determine.  Under  the  practice  of  the  English 
Court  of  Chancery,  there  seems  to  have  been  no  settled  or 
established  rule  as  to  the  amount  of  compensation  to  be  allowed 
receivers  for  their  services.  In  an  early  case  in  that  court, 
it  was  ordered  by  the  terms  of  the  decree  appointing  the  re- 
ceiver, that  he  should  be  allowed  a  reasonable  salary  for  his 
care  and  trouble  in  the  management  of  the  estate,  such  salary 
to  be  determined  by  the  master  in  chancery.'*  And  the  usual 
practice  seems  to  have  been  to  leave  the  matter  to  the  deter- 
mination of  a  master,  and  these  officers  were  governed  in 
their  allowance  by  the  degree  of  difficulty  or  labor  involved 
in  the  case,  increasing  the  compensation  when  there  was  ex- 
traordinary difficulty  in  collecting  the  funds,  or  diminishing 
it  if  there  was  any  extraordinary  facility  in  their  collection. ^ 


111.,  216,  36  N.  E.,  562,  41  Am.  St. 

Rep.,  271 ;  Culver  v.  Allen  Medical 

Assn.,   206   111.,  40,  69   N.   E.,   53; 

Baxter  v.  Hewes,  45  La.  An.,  1065, 

13  So.,  864 ;  State  v.  People's  U.  S. 

Bank,  197  Mo.,  605,  95  S.  W.,  867 ; 

First     National     Bank    v.     Oregon 

Paper  Co.,  42  Ore.,  398,  71  Pac, 
144,  971 ;  State  v.  Nebraska  S.  &  E. 

Bank,  61  Neb.,  496,  85  N.  W.,  391 ; 

Union  National  Bank  v.  Mills,  103 
Wis.,  39,  79  N.  W.,  20.  And  see 
Graham  v.  Cnrr,  133  N.  C,  449,  45 
S.  E.,  847. 

4  Carlisle  v.  Berkley,  Amb.,  599; 
Special  Bank  Commissioners  v. 
Franklin  Institution,  11  R.  I..  557. 
And  when  a  receiver  was  appointed 
for  the  management  of  real  estate, 
and  to  collect  the  rents  during  the 
minority  of  an  infant  tenant  for 
life,  and  the  rental  was  stated  to  be 
about  £2,000  per  year,  the  receiver's 
compensation  was  fixed  by  the  court 
at  a  salary  of  i60  per  year.  New- 
port V.  Bury,  23  Beav.,  30. 


5  Day  V.  Croft,  2  Beav.,  488.  The 
considerations  involved  in  deter- 
mining the  amount  of  compensa- 
tion to  be  allowed  receivers,  under 
the  English  practice,  are  very  clear- 
ly stated  in  this  case  by  Lord  Lang- 
dale,  Master  of  the  Rolls,  as  fol- 
lows, p.  491 :  "Various  representa- 
tions having  been  made  at  the  bar, 
as  to  the  principle  and  the  practice 
adopted  in  the  offices  of  the  differ- 
ent masters  in  respect  of  receiver's 
allowances,  I  thought  it  right,  be- 
fore disposing  of  the  case,  to  in- 
quire of  the  masters  what  were  the 
principles  upon  which  they  acted, 
and  the  practice  adopted  on  this 
point  in  their  several  offices.  The 
masters  have  each  of  them  been 
good  enough  to  furnish  me  with  a 
certificate,  and  I  find  that  there  is 
no  general  rule,  which  universally 
prevails,  as  to  the  allowance  of  a 
receiver.  Where  the  receipts  consist 
of  rents  of  freehold  and  leasehold 
estates,     5/.     per     cent,     upon     the 


918 


RECEIVERS. 


[ClIAl'.    XVllI. 


But  it  is  competent  for  the  court  at  any  time  to  summarily 
order  all  proceedings  before  the  master  or  referee  to  cease, 
although  unfinished,  and  to  order  a  report  to  be  made  forth- 
with and  to  conclude  the  entire  matter  itself  in  a  summary 
way.^ 

§  783.  No  fixed  rule  in  this  country;  compensation  de- 
pendent upon  circumstances  of  case ;  no  compensation  aft- 
er reversal  of  appointment;  court  may  hear  evidence; 
final  compensation;  practice  as  to  partial  compensation; 
compensation  after  removal.  In  this  country,  as  in  Eng- 
land, no  established  rule  has  been  fixed  for  determining  the 
amount  of  compensation  to  be  allowed  receivers,  and  it  is 
from  the  nature  of  the  case  quite  impracticable  to  establish 
an  inflexible  rule.  The  compensation  is,  therefore,  usually  de- 
termined according  to  the  circumstances  of  the  particular  case, 
rather  than  by  any  fixed  principles  or  established  rate  of  per- 


amount  received  is  most  frequently 
allowed.  If  there  be  any  special 
difficulty  in  collecting  the  rents,  on 
account  of  the  sums  being  extreme- 
ly small,  or  of  the  payments  being 
very  frequent,  as  weekly  payments, 
then  the  allowance  is  increased ;  on 
the  other  hand,  if  there  should  be 
very  great  facility  in  receiving  the 
rents,  then  less  than  5/.  per  cent,  is 
allowed.  One  of  the  masters  has 
certified  to  me  a  case,  where,  after 
consideration,  he  allowed  only  41. 
per  cent,  for  the  receipts  of  rents 
and  profits  of  freehold  and  lease- 
hold estates.  Another  master  has 
certified  to  me  a  case  in  which  the 
sum  paid  to  the  receiver  amounted 
to  300/.  a  year  for  the  first  year; 
the  receiver  was  afterward  allowed 
150/.  only  for  a  succession  of  years, 
which  was  afterwards  reduced  to 
50/.  a  year,  for  the  receipt  of  the 
same  rents.  It  can  not,  therefore, 
be  considered  as  an  universal  or  gen- 


eral rule,  that  5/.  per  cent,  should  be 
allowed  even  upon  the  receipts  of 
rents  and  profits.  It  may  be  in- 
creased if  there  be  any  extraordi- 
nary difficulty,  or  diminished  if 
there  be  any  extraordinary  facility 
in  the  collection.  With  respect  to 
other  receipts,  each  master  consid- 
ers himself  bound  to  have  regard  to 
the  degree  of  facility  or  difficulty 
there  may  be  in  receiving  them. 
They  have  sometimes  allowed  two 
and  one  fourth  per  cent.,  but  for 
gross  sums  of  money  this  has  been 
very  much  reduced,  and  one  and ' 
one-fourth  per  cent,  has  been  al- 
lowed upon  many  occasions.  It  ap- 
pears, therefore,  that  the  masters, 
as  they  ought,  consider  upon  each 
occasion,  what  is  fit  or  proper  to  be 
allowed,  having  regard  to  the  de- 
gree of  difficulty  or  facility  experi- 
enced by  the  receiver." 

6  Harrigan  v.  Gilchrist,  121  Wis., 
127,  414,  99  N.  W.,  909,  1000. 


CHAP.    XVIII.] 


COMPENSATION. 


919 


centage."^  It  may  be  said  in  general  terms,  that  a  receiver's 
compensation  should  correspond  with  the  degree  of  business 
capacity,  integrity  and  responsibihty  required  in  the  man- 
agement of  the  affairs  intrusted  to  him,  and  that  a  reasonable 
and  fair  compensation  should  be  allowed  according  to  the 
•circumstances  of  the  particular  case.^     And  when  a  statute 


"^  Abbott  V.  Baltimore  &  Rappa- 
hannock Steam  Packet  Co.,  4  Md., 
Ch.,  310;  Schwartz  v.  Keystone  Oil 
■Co.,  153  Pa.  St.,  283,  25  Atl.,  1018; 
Lichtenstein  v.  Dial,  68  Miss.,  54, 
■8  So.,  272 ;  Tompson  v.  Huron  L. 
Co.,  5  Wash.,  527,  32  Pac,  536;  In 
re  Sheets  Lumber  Co.,  52  La.  An., 
1337,  27  So.,  809 ;  Hickey  v.  Parrott 
S.  &  C.  Co.,  32  Mont,  143,  79  Pac, 
698;  Crumlish's  Adm'r  v.  Shenan- 
doah V.  R.  Co.,  40  West  Va.,  627, 
22  S.  E.,  90;  Harrigan  v.  Gilchrist, 
121  Wis.,  127,  435,  99  N.  W.,  909, 
1007;  Boston  Safe-Deposit  &  T. 
Co.  V.  Chamberlain,  14  C.  C.  A., 
363,  66  Fed.,  847,  25  U.  S.  App., 
251 ;  Montgomery  v.  Petersburg  S. 
&  I.  Co.,  17  C.  C.  A.,  360,  70  Fed., 
746,  30  U.  S.  App.,  511.  And  see 
French  v.  Gifford,  31  Iowa,  428; 
Cowdrey  v.  The  Railroad  Co.,  1 
Woods,  331 ;  Martin  v.  Martin,  14 
Ore.,  165,  12  Pac,  234;  In  re  An- 
gell,  131  Mich.,  345,  91  N.  W.  611; 
Berry  v.  Rood,  209  Mo.,  662,  22  S. 
W.,  108.  See  Davis  v.  Atkinson, 
75  Ark.,  300,  87  S.  W.,  432,  where, 
upon  the  particular  facts  of  the  case, 
the  court  refused  to  allow  a  re- 
ceiver any  compensation.  See  Drey 
V.  Watson,  71  C.  C.  A.,  158,  138 
Fed.,  792,  where  the  compensation 
of  a  receiver  and  of  his  counsel 
were  held  excessive. 

8  French  v.  Gifford,  31  Iowa, 
428;  Jones  v.  Keen,  115  Mass.,  170; 
Stuart  V.   Bouhvare,   133  U.   S.,  78, 


10  Sup.  Ct.  Rep.,  242;  Tompson  v. 
Huron  L.  Co.,  5  Wash.,  527,  32 
Pac,  536;  Central  Trust  Co.  v. 
Wabash,  St.  L.  &  P.  R.  Co.,  32 
Fed.,  187 ;  Heflfron  v.  Rice,  149  111., 
216,  36  N.  E..  562,  41  Am.  St.  Rep., 
271 ;  Culver  v.  Allen  Medical  Assn., 
206  111.,  40,  69  N.  E.,  53 ;  Union  Na- 
tional Bank  v.  Mills,  103  Wis., 
39,  79  N.  W.,  20.  In  French  v.  Gif- 
ford, 31  Iowa,  428,  supra,  the  case 
came  up  on  exceptions  to  the  re- 
port of  a  referee  fixing  the  amount 
of  compensation  to  be  allowed  the 
receiver  of  a  banking  institution. 
Mr.  Justice  Miller,  delivering  the 
opinion,  says :  "While  we  concede 
that  the  receiver  should  receive  a 
compensation  corresponding  to  the 
high  degree  of  business  capacity, 
integrity  and  responsibility  required 
in  cases  of  this  character,  and  which 
was  secured  in  the  person  of  the 
receiver  in  this  case,  yet  we  feel  it 
our  duty  to  allow  only  such  sum  as 
will  be  such  reasonable  compensa- 
tion. There  can  be  no  reasonable 
grounds  to  doubt  that  the  receiver 
in  this  case,  or  some  other  person 
possessing  equal  qualifications, 
could  have  been  employed  by  pri- 
vate contract  to  perform  the  serv- 
ices rendered  in  this  case  for  half 
the  amount  allowed  by  the  referee. 
This,  it  seems  to  us,  is  the  fair  and 
reasonable  test  by  which  the  amount 
of  compensation  to  be  allowed 
should    be    determined.      While    it 


920  RECEIVERS.  [chap.    XVIII. 

under  which  a  receiver  is  appointed  authorizes  the  payment 
of  a  reasonable  compensation,  it  is  held  that  such  compensa- 
tion may  be  best  determined,  not  by  a  percentage  upon  his  re- 
ceipts, but  by  considering  the  responsibility  assumed,  the  skill 
and  labor  expended,  and  the  amounts  usually  paid  for  similar 
services.  It  is  also  proper  to  allow  the  receiver  compensation 
from  time  to  time  before^  the  close  of  his  receivership,  without 
requiring  him  to  wait  until  its  determination.  But  the  allow- 
ance for  one  year's  services  is  not  necessarily  a  precedent  for 
a  subsequent  year,  and  in  proportion  as  his  responsibility  is 
lightened  and  the  degree  of  skill  and  labor  required  of  him  is 
diminished,  should  his  compensation  be  decreased.^  Upon  the 
other  hand,  although  his  compensation  may  have  been  fixed 
by  a  salary,  yet  if  his  duties  prove  to  be  more  arduous  and 
onerous  than  originally  expected  either  by  the  receiver  or  by 
the  court,  it  is  proper  to  grant  him  an  allowance  in  addition 
to  his  salary.lO  The  controlling  considerations  in  fixing  a 
receiver's  compensation  are  the  fair  value  of  the  time  and  labor 
required  in  the  perfDrmance  of  his  duties,  as  measured  by  or- 
dinary business  standards,  and  the  degree  of  activity,  integ- 
rity and  dispatch  with  which  the  work  has  been  performed.^! 

may  be  true  that  an  individual  of  of  the  litigation  was  settled  by  an 
the  required  qualifications,  if  en-  agreement  of  the  parties  by  which 
gaged  in  a  lucrative  private  busi-  each  was  to  pay  one-half  of  the 
ness,  could  not  be  induced  to  fees,  costs  and  expenses  of  the  re- 
abandon  such  business  for  a  tern-  ceivership,  the  defendant  would  not 
porary  appointment  of  this  char-  be  heard  to  say  that  the  receiver 
acter  without  extraordinary  com-  was  not  entitled  to  compensation 
pensation,  yet  one  of  wealth  and  because  his  original  appointment 
leisure  may  readily  be  found   (as  in  was   improper. 

this    case),    who    would    undertake  9  Special   Bank  Commissioners  v. 

the  trust  for  a  reasonable  and  ordi-  Franklin  Institution,  11  R.  I.,  557. 

nary  compensation.     We  would  not  10  Farmers'  Loan  &  Trust  Co.  v. 

be  warranted  in  allowing  extraordi-  Central  Railroad,  8  Fed.,  60. 

nary  compensation,  unless  in  a  case  H  Schwartz  v.  Keystone  Oil  Co., 

of  imperative  necessity."     In  Kim-  153    Pa.    St.,    283,    25    Atl.,    lOlS; 

merle    v.    Dowagiac    Mfg.    Co.,    105  Hickey  v.   Parrott   S.  &  C.   Co.,  32 

Mich..  640,  63   N.   W.,   529,   it  was  Mont.,  143,  79  Pac,  698. 
held  that  where  the  subject-matter 


CHAP.    XVIII.]  COMPENSATION.  921 

If  there  has  been  delay  in  closing  his  accounts,  inattention  to 
his  duties,  and  the  use  of  funds  of  the  receivership  in  his 
personal  business,  his  compensation  may  be  reduced  accord- 
ingly.l2  And  a  receiver  should  not  be  allowed  compensation 
for  work  performed  by  him  after  the  reversal  of  the  order  of 
appointment  and  the  filing  of  the  mandate  in  the  lower  court, 
since  it  is  his  duty  in  such  case  to  immediately  present  his 
final  account  and  ask  for  his  discharge. ^^  And  in  fixing  his 
compensation,  the  court  should  consider  the  responsibilities 
assumed  by  the  receiver  and  the  labor  actually  involved,  due 
regard  being  had  to  the  prices  usually  paid  for  similar  serv- 
ices.l^  And  in  determining  the  amount  of  his  compensation, 
the  court  should  consider  not  the  value  of  his  services  in 
larger  and  more  important  affairs  but  their  value  in  connec- 
tion with  the  particular  business  of  which  he  has  charge. ^^ 
And  it  has  been  held  that  in  the  matter  of  compensation,  the 
standard  to  be  followed  should  be  that  of  public  and  not  of 
private  service,  and  that  all  doubts  should  be  resolved  in  favor 
of  the  trust.l^  And  if  the  court  is  in  doubt  as  to  what  will 
be  a  reasonable  allowance,  he  should  take  the  testimony  of 
persons  of  experience  in  such  matters  and  from  their  own 
testimony  and  his  own  knowledge  of  the  situation,  should  fix 
the  proper  amount  of  compensation. ^'^  Final  compensation 
should  be  allowed  only  at  the  termination  of  the  receivership, 
and  it  is  improper  before  such  final  determination  to  set  aside 
a  sum  to  cover  all  past  and  future  services  of  the  receiver. 
And  where  a  receiver  has  been  appointed  to  wind  up  the  af- 
fairs of  an  insolvent  corporation  with  all  reasonable  and  con- 

12  Schwartz  v.  Keystone  Oil  Co.,  1^  Speiser     v.      Mcrcliants'      Ex- 

153  Pa.  St.,  283,  25  Atl.,  1018.  change  Bank,  110  Wis.,  506,  86  N. 

13Hickey  v.  Parrott  S.  &  C.  Co.,  W.,  243;  Harrigan  v.  Gilchrist,  121 

32  Mont.,  143,  79  Pac,  698.  Wis.,  127,  436,  99  N.  W.,  909,  1007. 

14  Tompson  v.    Huron   L.    Co.,   5  l"  Union  National  Bank  v.  Mills, 
Wash.,  527,  32  Pac,  536.  103  Wis.,  39,  79  N.  W..  20. 

15  Stearns  Paint  Mfg.  Co.  v. 
Comstock,  121  Iowa,  430,  96  N.  W., 
869. 


922  RECEIVERS.  [CIFAP.    XVIII. 

venient  speed,  a  partial  or  intermediate  allowance  for  his  serv- 
ices should  be  considerably  less  than  the  value  of  the  services 
rendered  up  to  the  time  of  the  allowance,  and,  upon  the  hnal 
allowance,  the  matter  should  be  so  adjusted  that  the  receiver 
will  receive  a  fair  and  just  allowance,  although  the  partial  al- 
lowance was  inadequate  considered  by  itself. ^^  And  since  a 
receiver's  compensation  is  regarded  as  part  of  the  costs  of  the 
proceeding,  it  is  proper  to  give  it  a  preference  over  prior  liens, 
and  this  is  so,  although  the  appointment  was  made  without 
prejudice  to  prior  liens.l^  When  the  court  has  fixed  the  com- 
pensation after  the  hearing  of  testimony  and  the  allowance 
made  is  warranted  by  such  testimony  and  appears  to  be  reason- 
able, the  exercise  of  the  discretion  of  the  court  will  not  be  in- 
terfered with  on  appeal. 20  Especially  will  the  action  of  the 
lower  court  in  making  an  allowance  not  be  disturbed  upon 
appeal  where  the  evidence  upon  which  the  court  acted  is  not 
presented  to  the  reviewing  court.^i  And  a  receiver  may  pre- 
sent his  claim  for  compensation  and  for  the  settlement  of  his 
accounts  although  he  has  been  previously  removed  by  the 
court.22 

§  784.  The  rule  in  Massachusetts;  reasonable  pay  for 
person  of  ordinary  ability  allowed ;  rule  in  Maryland.  It  is 
held  in  Massachusetts,  that  the  governing  principle  in  fixing 
the  compensation  to  be  allowed  receivers  for  services  rendered 
by  them  in  the  management  of  their  trust  is  to  allow  them  such 
a  sum  as  would  be  a  reasonable  compensation  for  the  services 
of  a  person  of  ordinary  ability,  and  competent  to  perform  the 
duties  of  the  receivership.  And  in  fixing  this  amount  the  court 
is  not  governed  by  the  special  qualifications  and  standing  of 
the  person  who  may  be  appointed,  but  will  only  allow  what 

18  Maxwell  v.  Wilmington  D.  M.  dent  Savings  Bank,  103  Mo.,  212,  15 
Co.,  82  Fed.,  214.  S.  W.,  429. 

19  Gallagher     v.      Gingrich,      105  21  Van  Brocklin  v.  Queen  City  P. 
Iowa,  237,  74  N.  W.,  763.                      Co.,  21  Wash.,  447,  58  Pac.,  575. 

^0  Lichtenstein  v.   Dial,  68   Miss.,  22  Young    v.     Irish,     104     Minn., 

54,   8   So.,   272;    Greeley  v.    Provi-       367,  116  N.  W.,  656. 


CHAP.   XVIII.] 


COMPENSATION". 


923 


would  be  a  reasonable  amount  for  a  person  of  ordinary  abil- 
ity performing  the  work,  and  this  amount  will  not  be  fixed  upon 
the  basis  of  a  percentage  or  fixed  commission  on  the  amount 
of  funds  collected  by  the  receiver.23  And  when  a  master  in 
chancery,  to  whom  the  receiver's  accounts  have  been  referred, 
has  fixed  the  amount  to  be  allowed  the  receiver  for  his  own 
compensation,  as  well  as  for  counsel  fees,  and  the  testimony  is 
not  preserved,  the  court  will  not  pass  upon  the  question  upon 
exceptions  to  the  master's  report.24  But  in  Maryland,  it  is 
regarded  as  proper  to  allow  the  same  rates  of  compensation 
which  are  fixed  by  rule  of  court  on  sales  made  by  trustees, 
under  decrees  and  orders  of  the  court. 25 


-3  Grant  v.  Bryant,  101  Mass., 
567.  See,  also,  Jones  v.  Keen,  115 
Mass.,  170.  And  see  Battery  Park 
Bank  v.  Western  C.  Bank,  126  N. 
C,  531,  36  S.  E.,  39.  But  see  Lich- 
tenstein  v.  Dial,  68  Miss.,  54,  8  So., 
272.  Grant  v.  Bryant,  101  Mass., 
567,  was  the  case  of  a  receiver  upon 
a  bill  in  equity  to  wind  up  a  part- 
nership which  had  been  dissolved. 
The  receiver,  in  submitting  his  ac- 
counts, charged  as  compensation 
for  his  services  a  commission  of  two 
and  a  half  per  cent,  upon  the  gross 
amount  of  assets  coming  into  his 
hands  by  the  sale  of  stock,  collec- 
tions of  notes  and  accounts,  and 
otherwise.  In  support  of  this 
charge  testimony  was  introduced  as 
to  the  usual  rates  of  charge  upon 
commercial  transactions  by  commis- 
sion merchants  and  others,  and  as 
to  the  experience,  capacity  and  mer- 
cantile standing  of  the  receiver. 
The  court  held  that  the  compensa- 
tion should  be  limited  to  a  reason- 
able amount  for  the  services  re- 
quired and  rendered  by  a  person  of 
ordinary  standing  and  ability  com- 
petent  for   such  duties,  and   that   it 


should  not  be  based  upon  the  usages 
or  rates  of  profit  in  any  branch  of 
commercial  or  other  business,  or  up- 
on the  special  qualifications  and 
standing  of  the  person  who  may 
happen  to  perform  the  services.  The 
question  of  compensation  being  re- 
served for  the  full  court,  it  was  held 
that  this  rule  was  the  correct  one. 
The  court,  Ames,  J.,  say,  p.  570: 
"The  rule  adopted  as  to  the  com- 
pensation of  the  receiver  was  en- 
tirely correct.  The  court  does  not 
regulate  the  compensation  of  its 
officers  upon  the  basis  of  a  fixed 
commission  upon  the  amount  of 
money  passing  through  their  hands, 
but  allows  them  such  an  amount 
as  would  be  reasonable  for  the 
services  required  of  and  rendered 
by  a  person  of  ordinary  ability,  and 
competent  for  such  duties  and  serv- 
ices." But  see  Cowdrey  v.  The 
Railroad  Co.,  1  Woods,  331. 

24  Jones  V.  Keen,  115  Mass.,  170. 

25  Abbott  V.  Baltimore  &  Rappa- 
hannock Steam  Packet  Co.,  4  Md. 
Ch.,  310;  Tome  v.  King,  64  Md., 
166,  21  Atl.,  279. 


924  RECEIVERS.  [chap.    XVIII. 

§  785.  Receivers  sometimes  allowed  same  rates  as 
guardians,  executors  or  administrators;  commissions  on 
receipts  and  disbursements;  New  York  doctrine.  In  some 
instances,  the  courts  have  seen  fit  to  fix  the  compensation  of 
receivers  by  analogy  to  the  cases  of  guardians,  executors,  or 
other  persons  occupying  fiduciary  relations.  Thus,  in  Ala- 
bama, it  has  been  held  to  be  the  more  appropriate  method  of 
determining  the  compensation  to  allow  a  percentage  upon  re- 
ceipts and  disbursements,  as  in  the  case  of  guardians,  although 
such  allowance  is  not  considered  as  fixing  an  imperative  rule.^^ 
And  in  New  York,  it  has  been  held  that  in  the  absence  of  proof 
as  to  the  amount  of  labor  performed  by  a  receiver  in  the  dis- 
charge of  his  trust,  it  was  reasonable  and  proper  to  fix  his 
compensation  in  accordance  with  the  rates  or  commissions  pre- 
scribed by  law  for  the  payment  of  executors  or  administra- 
tors, and  that  this  course  might  be  pursued  when  it  did  not 
appear  that  there  was  any  peculiar  difficulty  in  the  duties  per- 
formed.^"^  And  it  has  been  held,  when  this  method  was  adopt- 
ed, that  the  receiver  was  entitled  to  commissions  upon  the  value 
of  all  the  assets  taken  out  of  his  hands  and  delivered  to  the 
parties  by  an  order  of  court  settling  the  suit  by  consent  of  the 
parties,28  and  also  entitled  to  commissions  upon  both  his  re- 
ceipts and  disbursements.29  The  courts  of  New  York,  how- 
ever, although  sometimes  following  the  method  above  indicat- 
ed, do  not  consider  themselves  bound  by  the  rates  fixed  by 
law  for  executors  and  administrators,  and  still  regard  the 
question  as  one  to  be  determined  by  the  court,  in  the  absence 
of  any  legislation  regulating  the  subject.^^ 

26  Magee    v.    Cowperthwaite,    10  28  Bennett    v.    Chapin,    3    Sandf., 

Ala.,  966;   First  National   Bank  v.  673. 

Oregon  Paper  Co.,  42  Ore.,  398,  71  29  Howes  v.  Davis,  4  Ab.  Pr.,  71. 

Pac,   144,  971.  so  Gardiner    v.    Tyler,    3    Keyes, 

27'Muller  V.  Pondir,  6  Lans.,  481.  505;  S.  C,  2  Ab.  Ct.  Ap.  Dec,  247; 

See,    also,    Bennett    v.    Chapin,    3  Baldwin  v.  Eazler,  34  N.  Y.  Supr. 

Sandf.,  673;  Howes  v.  Davis,  4  Ab.  Ct.  R.,  275.     See  Bennett  v.  Chap- 

Pr.,  71.  in,  3  Sandf.,  673. 


CHAP.    XVIII.]  COMPENSATION.  925 

§  786.  Receivers  in  lieu  of  executors  allowed  same  com- 
pensation. Where  receivers  have  been  appointed  in  place 
of  executors  of  the  estate  of  a  deceased,  and  have  acted  in 
conjunction  with  a  remaining  executor  appointed  under  the 
will  of  the  deceased,  it  has  been  regarded  as  a  fair  and  equit- 
able mode  of  making  compensation  for  their  services  to  deal 
with  them  as  trustees  or  executors  under  the  will,  having  real 
and  personal  estate  in  charge,  and  to  allow  them  the  same 
rate  of  compensation  or  the  same  commissions  upon  their  dis- 
bursements as  are  paid  to  such  executors.^^  And  when  a 
trustee  under  a  will  is  made  receiver  of  the  estate,  it  rests 
wholly  in  the  discretion  of  the  court  whether  to  allow  him 
compensation  as  receiver,  and  a  reasonable  allowance  having 
been  made  by  the  court,  its  discretion  will  not  be  interfered 
with  upon  appeal.^2 

§  787.  Receiver  over  railway  allowed  more  liberal  com- 
pensation than  in  ordinary  cases.  In  the  case  of  a  receiver 
over  a  railway  company,  intrusted  with  the  management  and 
operation  of  the  road,  since  his  duties  and  responsibilities  are 
much  greater  than  those  of  an  ordinary  receiver  appointed 
merely  to  take  and  hold  money,  a  more  liberal  rate  of  com- 
pensation would  seem  to  be  permissible  than  in  ordinary  cases. 
And  it  is  not  regarded  as  a  proper  test,  in  such  case,  to  inquire 
what  another  competent  person  would  have  been  willing  to  do 
the  work  for,  since  the  office  is  not  put  up  at  auction.  The 
amount  of  such  a  receiver's  compensation  will,  therefore,  be 
graduated  according  to  the  peculiar  duties  and  responsibil- 
ities resting  upon  him  in  the  control  and  management  of  the 
road.32     And  in  determining  the  compensation  to  be  paid  to 

31  Holcombe      v.      Executors     of  case,  to  inquire  what  another  even 

Holcombe,  2  Beas.,  417.  competent  person  would  have  been 

32 /„  re  Bignell,   (1892)1  Ch.,  59.  willing   to   do   the   work    for.     The 

33Cowdrey  v.  The  Railroad  Co.,  receiver's    office    is    not    put    up    at 

1  Woods,  331.    Mr.  Justice  Bradley,  auction.     His  compensation   is   not 

in  his  learned  opinion  in  this  case,  fixed  on  that  principle  at  all.     The 

says,  p.  345:     "It   would  hardly  be  chancellor    selects    a    person    wlmm 

a    proper    rule    for    governing    this  he    regards    competent    and     trust- 


926 


RECEIVERS. 


[CIIAP.    XVIII. 


receivers  of  railways  for  their  services,  it  is  proper  to  con- 
sider tlieir  titness  for  their  duties,  their  business  and  financial 
experience,  the  time  devoted  to  their  trust,  and  the  diHgence 


worthy,  and  the  amount  of  com- 
pensation is  graduated  somewhat 
by  the  duties  and  somewhat  by  the 
responsibilities  of  the  situation. 
Where  a  receiver  is  a  manager  as 
well  as  a  mere  receiver,  his  duties 
and  responsibilities  are  largely  in- 
creased; and  the  management  of  a 
business  like  that  of  a  railroad  is 
one  of  the  most  difficult  and  re- 
sponsible duties  that  a  receiver  is 
charged  with.  It  requires  a  man 
of  first  rate  qualities  and  attain- 
ments. Now,  w-e  have  it  in  proof 
that  the  railroad  presidents  of  the 
country  receive  various  sums  from 
$3,000  to  $20,000  a  year,  many  of 
$5,000.  some  of  $10,000,  a  few  above 
$10,000.  Most  of  the  defendant's 
witnesses  think  that  $5,000  a  year 
would  be  ample  compensation  to 
the  receiver  for  his  services,  whilst 
most  of  the  witnesses  called  for  the 
receiver  think  that  $15,000,  coin,  is 
not  any  too  much ;  that  he  saved 
much  more  than  that  to  the  road, 
etc.  The  receiver's  income  before 
his  appointment  was,  by  the  esti- 
mation of  one  witness,  about  $7,000 
a  year,  said  to  be  of  a  permanent 
character;  all  of  which  he  was 
obliged  to  give  up  when  he  assumed 
the  duties  of  the  receivership;  and 
he  himself  says,  that  he  would  not 
have  consented  to  take  the  office 
for  less  than  $15,000  a  year.  The 
previous  salaries  given  by  the  de- 
fendant railroad  company  have  been 
referred  to  as  being  only  $5,000; 
?.nd  sometimes  not  so  much  as 
that.     In  view  of  all  this  evidence, 


of  the  assistance  which  the  receiver 
had  around  him,  and  of  the  princi- 
ples which  the  law  lays  down  with 
regard  to  the  compensation  of  a  re- 
ceiver, I  am  inclined  to  think  that 
$10,000  in  coin  per  annum  would  be 
a  fair  rate  of  compensation  in  this 
case.  It  seems  to  me  that  $15,000 
is  large,  larger  than  what  any  (ex- 
cept two  or  three)  of  the  presidents 
of  our  most  important  railroads  in 
the  country  receive.  It  also  seems 
to  me  that  the  peculiar  duties,  re- 
.sponsibilities  and  accountability  of 
a  receiver  entitle  him  to  a  larger 
amount  than  would  be  demanded  by 
the  head  officer  of  an  ordinary  rail- 
road of  this  size  and  business.  Ait 
allowance  of  $10,000  coin  per  annum 
will,  therefore,  be  made  for  the  re- 
ceiver Walker's  compensation  dur- 
ing the  time  he  was  such  receiver." 
But  see  Central  Trust  Co.  v.  Wa- 
bash, St.  L.  &  P.  R.  Co.,  32  Fed.. 
187,  where  for  three  and  one- 
half  years'  services  as  receivers  over 
a  large  railway  system,  extending 
through  several  states,  Mr.  Justice 
Brewer  allowed  $70,000  to  each  of 
two  receivers  in  full  for  service?  to 
the  date  of  the  order.  See,  further, 
as  to  allowance  of  compensation  to 
receivers  of  railways  and  to  their 
counsel,  and  to  counsel  for  mort- 
gage bondholders  in  railway  fore- 
closures and  receiverships.  Easton  v. 
Houston  &  T.  C.  R.  Co..  40  Fed., 
189.  And  see  Braman  v.  Farmers' 
L.  &  T.  Co.,  51  C.  C.  A.,  644,  114 
Fed.,   18. 


CHAP.    XVIII.]  COMPENSATION.  927 

and  thoroughness  displayed  in  the  discharge  of  their  duties.^"* 
So  it  is  proper  to  allow  a  railway  receiver  additional  compen- 
sation for  services  rendered  by  him  as  superintendent  and  as 
attorney,  when  he  has  performed  such  services  in  addition  to 
those  of  receiver,  thereby  saving  the  expense  of  employing 
such  additional  services.^^  And  in  general  it  may  be  said, 
that  the  courts  are  inclined  to  treat  the  compensation  of  a  re- 
ceiver over  a  railway  as  resting  largely  in  the  discretion  of 
the  court  appointing  him,  and  when  the  testimony  is  conflict- 
ing as  to  the  value  of  his  services,  an  appellate  court  is  not  in- 
clined to  interfere  with  the  exercise  of  such  discretion. ^^  If, 
however,  the  receiver  resides  in  another  state  and  does  not  as- 
sume the  active  excutive  management  of  the  railway,  which  is 
intrusted  to  others,  he  will  not  be  allowed  the  compensation 
which  is  usually  paid  to  receivers  having  charge  of  the  active 
management  of  such  property  and  who  devote  their  entire 
time  to  such  management.^'^  And  when  the  same  person  is  ap- 
pointed receiver  over  a  railway  in  two  different  suits  brought 
by  different  parties  in  a  state  court,  one  of  which  is  removed  to 
the  federal  court,  which  court  fixes  the  amount  of  the  receiv- 
er's compensation  in  that  case  and  finds  a  balance  due  from 
him,  which  he  is  ordered  to  pay  into  court,  he  is  not  entitled 
to  have  such  amount  refunded  to  him  in  payment  of  his  com- 
pensation afterward  fixed  in  the  suit  in  the  state  court,  the 
parties  to  the  former  suit  not  having  been  heard  as  to  the 
amount  of  sucli  compensation  in  the  latter  suit."^ 

§  788.  Entitled  to  compensation  for  v^^ork  performed 
by  others;  farms  managed  by  overseers;  commission  on 
receipts  and  disbursements.  A  receiver  is  entitled  to  com- 
pensation for  his  services,  although  the  actual  work  of  mana- 

34  McArthur  v.  Montclair  R.  Co.,  ■"  Central    Trust    Co.   v.    Cincin- 

27  N.  J.  Eq.,  77.  nati.  J.  &  M.  R.  Co.,  58  Fed..  500. 

33  Farmers'  Loan  &  Trust  Co.  v.  38  /„  re  Hinckley,  3  Fed.,  556. 

Central  Railroad,  8  Fed..  60. 

36  Hinckley  v.   Railroad  Co.,   100 
V.  S..  153. 


928  RECEIVERS.  [chap.    XVIII. 

g-ing  the  property  intrusted  to  him  is  performed  by  others,  as 
in  the  case  of  farms  or  plantations  in  the  receiver's  custody, 
which  he  manages  by  overseers  appointed  and  employed  by 
himself,  and  for  whose  management  he  is  responsible.^^  But 
if  his  compensation  is  limited  by  statute  to  a  commission  upon 
his  receipts  and  disbursements,  such  commission  will  be  com- 
puted only  upon  the  amount  actually  received  and  disbursed 
by  him.  And  if,  under  the  order  of  the  court,  he  has  per- 
mitted the  business  to  be  principally  conducted  by  the  parties 
in  interest,  who  have  transacted  the  business  as  before  the  re- 
ceivership, making  purchases  and  sales  and  receiving  and  dis- 
bursing moneys,  the  receiver  will  not  be  allowed  commissiofis 
upon  their  receipts  and  disbursements.^^  So  when  the  com- 
pensation is  fixed  by  statute  by  a  commission  upon  receipts  and 
disbursements,  a  second  receiver,  appointed  upon  the  death 
of  a  former  one,  who  succeeds  to  his  duties  and  receives  the 
funds  which  were  in  his  hands  at  the  time  of  his  death,  is  not 
entitled  to  a  commission  thereon  when  such  commission  had 
been  paid  to  the  former  receiver.  In  such  case,  it  is  the  service 
or  duty  of  collecting  the  fund  which  entitles  the  receiver  to  a 
commission,  and  not  the  mere  receipt  of  money  from  his  prede- 
cessor who  had  already  received  a  commission  for  its  collec- 
tion.'*^ So  when  a  receiver,  by  virtue  of  his  office,  holds 
stock  in  a  corporation  and  acts  as  its  nominal  president  by 
reason  of  such  holding,  the  actual  duties  of  the  office  being- 
performed  by  a  vice-president,  when  he  has  been  fully  com- 
pensated for  his  services  as  receiver  he  will  not  be  permitted 
to  recover  for  services  as  president  of  the  corporation.^^  Aj^^j 
where  a  corporation  is  appointed  receiver  and  for  its  own  con- 

39  Price  v.  White,  Bail.  Eq.,  240.  40  /„  re  Woven  Tape   Skirt  Co., 

And  it  was  held  that,  in  such  a  case,  85  N.  Y.,  506. 

receivers    being    paid    by    commis-  41  Attorney-General  v.   Continen- 

sions,  the   receiver  was   entitled  to  tal  Life  Insurance  Co.,  32  Hun,  223. 

the     usual     commissions,     although  42'phompson  v.  Willamette  S.  M. 

they  might  seem  to  be  more  than  a  L.  &  M.  Co.,  15  Ore.,  604,  16  Pac, 

reasonable     compensation     for     the  647.             ^ 
services  rendered. 


CHAP.    XVIII.]  COMPENSATION.  929 

venience  employs  an  agent  to  perform  the  duties  which  would 
ordinarily  fall  upon  the  receiver  himself,  no  extraordinary 
compensation  should  be  allowed  such  agent.'^^ 

§  789.  When  receiver  allowed  to  make  rests.  While  the 
courts,  in  cases  where  receivers  have  been  paid  by  a  commis- 
sion or  percentage  upon  the  funds  received,  have  sometimes 
allowed  them  to  make  annual  rests,  and  to  charge  their  com- 
missions upon  the  amounts  as  thus  ascertained,  a  receiver  will 
not  be  allowed  to  make  a  new  rest  every  time  he  makes  a  de- 
posit in  bank,  or  to  begin  with  full  commissions  from  the 
date  of  such  rest,'^'* 

§  790.  Extra  compensation;  receiver's  mismanagement 
ground  for  refusal  of  compensation.  A  receiver  will  not 
be  allowed  extra  compensation  for  his  services  and  for  ex- 
penses incurred  by  him  in  making  journeys  to  a  foreign  coun- 
try, for  the  purpose  of  prosecuting  legal  proceedings  to  re- 
cover money  due  to  the  estate,  when  such  journeys  have  not 
been  expressly  authorized  by  the  court,  even  though  author- 
ized and  approved  by  many  of  the  parties  interested  in  the 
estate.  And  in  passing  upon  the  question  of  compensation 
in  such  a  case,  the  court  will  not  consider  any  agreements  made 
by  the  parties  in  interest  with  the  receiver,  with  regard  to  his 
undertaking  such  journeys,  or  his  compensation  therefor.^^ 
And  where  the  order  of  appointment  specifically  defines  the 
powers  and  duties  of  the  receiver  and  prescribes  the  amount 
of  compensation  to  be  paid  him,  he  will  not  be  allowed  extra 
compensation  unless  he  can  show  that  extraordinary  labor  has 
been  required  which  was  entirely  unforeseen  at  the  time  of 
his  appointment. "i^  And  extra  allowances  should  not  be  made 
to  a  receiver  in  the  absence  of  extraordinary  services  render- 
ing such  allowances  just  and  reasonable.^'^     But  where  a  re- 

43  Kimmerle    v.    Dowagiac    Mfg.  46  Henry  v.  Henry,  103  Ma.,  582, 
Co.,  105  Mich.,  640,  63  N.  W.,  529.  15  So.,  916. 

44  Bennett   V.    Chapin,    3    Sandf.,  47  Weigand    v.    Alliance    S.    Co., 
673.  44   West   Va.,    133.   28   S.   E.,   803. 

45  Malcolm     v.     O'Callaghan,     3  And  see,  post,  §  805. 
Myl.  &  Cr.,  52. 

Receivers — 59. 


930  RECEIVERS.  [chap.    XVIII. 

ceiver,  in  addition  to  rendering  his  services  as  such,  has  vol- 
untarily performed  extra  work  outside  of  his  duties  as  re- 
ceiver which  he  was  not  bound  to  do  and  which  has  resulted 
in  the  benetit  of  the  estate  in  his  possession,  he  is  entitled  to 
extra  compensation  for  the  work  thus  performed  by  him.^s 
But  where  a  receiver  has  been  guilty  of  gross  negligence  and 
has  greatly  mismanaged  the  estate  in  his  hands,  the  court  may 
properly  refuse  him  compensation  altogether.^^ 

§  791.  When  receiver  of  insurance  company  allowed 
commissions  on  premium  notes  surrendered.  When,  un- 
der the  laws  of  a  state,  the  compensation  of  receivers  is  fixed 
at  a  certain  percentage  upon  their  receipts  and  disbursements, 
and  the  receiver  of  an  insolvent  insurance  company  holds 
premium  notes  due  to  the  company  from  its  stockholders,  in 
trust  for  the  double  purpose  of  paying  the  creditors  of  the  cor- 
poration and  of  distributing  the  surplus  among  the  stockhold- 
ers, if  he  surrenders  a  portion  of  the  notes  to  the  sharehold- 
ers by  order  of  the  court,  it  may  be  regarded  as  so  much  money 
received  and  paid  over  for  the  purposes  of  the  trust,  and  he 
will  be  allowed  his  commission  thereon.  In  such  case,  how- 
ever, the  commission  will  be  allowed  only  upon  the  actual 
value  of  the  notes  and  not  upon  such  notes  as  were  not  collect- 
ible.50 

§  792.  Payment  into  court  to  avoid  receiver's  compen- 
sation. It  would  seem  that  a  receiver  has  no  vested  right, 
by  virtue  of  his  appointment,  to  collect  the  entire  estate  over 
which  he  is  appointed,  when  persons  indebted  are  willing  and 
offer  to  pay  money  due  into  court,  thereby  avoiding  a  large 

■iS  Harris  v.  Sleep,   (1897)  2  Ch.,  651;   United   States   National   Bank 

80.  V.    National    Bank    of    Guthrie,    6 

49Speiser     v.      Merchants'     Ex-  Okla.,  163,  51  Pac,  124;  Nowell  v. 

change  Bank,  110  Wis.,  506,  86  N.  International  Trust  Co.,  —  C.  C.  A., 

W.,   243;   Dalliba  v.   Winschell,    11  — ,    169  Fed.,  497.     And   see,   post, 

Idaho,  364,   82   Pac,   107,   114  Am.  §  805. 

St.   Rep.,  267 ;   Pangburn  v.   Amer-  ^0  Van  Buren  v.  Chenango  Couu- 

ican  v.,   S.  &  L.  Co.,  205  Pa.   St.,  ty  Mutual  Insurance  Co.,  12  Barb., 

93.  54  Atl.,  508;  State  v.  Germania  671. 
Bank,   103   Minn.,   129,   114  N.  W.. 


CHAP.   XVIII.]  COMPENSATION.  931 

compensation  or  poundage  to  which  the  receiver  would  be  en- 
titled if  the  money  passed  through  his  hands. ^^ 

§  793.  Receiver  over  minor  denied  extra  compensation 
for  attending  survey  of  estate.  When  a  receiver  over  the 
estate  of  a  minor  voluntarily  and  without  an  order  of  court  at- 
tended a  survey  of  the  estate,  the  expenses  of  which  were  paid 
out  of  the  estate,  it  was  held  that  he  was  not  entitled  to  any 
extra  remuneration  for  his  own  services  in  the  matter.^^ 

§  794.  Doctrine  of  the  Irish  Chancery ;  receiver  appoint- 
ed by  consent.  Under  the  practice  of  the  Irish  Court  of 
Chancery,  it  is  held  that  if  the  court,  in  appointing  a  receiver, 
does  not  intend  that  he  shall  receive  any  compensation  or 
poundage,  it  should  be  so  expressly  provided  in  the  order  of 
appointment,  and  if  not  thus  provided,  he  is  entitled  to  his 
compensation  ex  dcbito  justitice.^^  But  when,  as  is  frequently 
the  practice  in  that  court,  a  receiver  is  appointed  by  consent 
of  the  parties,  the  consent  should  fix  the  amount  of  salary 
which  he  shall  receive,  since  otherwise  the  court  will  not  al- 
low him  any  compensation. ^^ 

§  795.  Partner  appointed  receiver  not  allowed  compen- 
sation. While  there  are  some  cases  to  be  met  with  in  the 
reports  in  which  the  plaintiff  partner,  in  an  action  for  a  dis- 
solution of  a  partnership  and  for  a  receiver,  has  been  him- 
self appointed  receiver,  the  practice  may  be  regarded  as  an 
unusual  one,  and  only  to  be  upheld  on  the  implied  condition 
that  he  will  discharge  the  duties  of  the  office  free  of  charge 
to  the  fund  or  estate.  Such  a  receiver  will  not,  therefore,  in 
passing  his  accounts,  be  allowed  any  compensation  for  his 
services.55  And  when  a  surviving  partner  is  made  a  receiver 
of  the  firm  at  his  own  request,  he  is  not  entitled  to  compen- 
sation for  his  services  in  the  absence  of  any  stipulation  to 
that  effect,  since  his  duties  as  receiver,  in  such  case,  are  no 
more  than  would  have  been  his   duties   as   surviving   part- 

51  Haigh  V.  Grattan,  1  Beav.,  201.  ^4  Burke  v.  Burke,  Flan.  &  K.,  89. 

52  /„  re  Ormsby,  1  Ball  &  B.,  189.  55  Brien    v.    Harriman,    1    Tenn. 

53  Bevan  v.  White,  8  In  Eq.,  675. 


932  RECEIVERS.  [chap.   XVIII. 

ner,  for  which  he  would  have  been  entitled  to  no  compensation, 
in  the  absence  of  any  contract  to  that  effect.^^  And  when  one 
of  the  parties  to  the  cause,  who  claims  a  lien  upon  the  prop- 
erty in  controversy,  is  by  consent  of  all  parties  made  receiver, 
with  the  understanding  that  he  shall  make  no  charge  for  his 
services,  and  he  continues  to  act  as  receiver  without  claiming 
compensation  until  he  is  removed  from  the  receivership,  an 
order  of  the  court  refusing  him  compensation  for  his  serv- 
ices will  not  be  disturbed  upon  appeal.^''' 

§  796.  Receiver  can  not  have  judgment  against  the  par- 
ties on  motion;  practice  in  fixing  compensation;  part  of 
compensation  taxed  as  costs  against  plaintiff;  chargeable 
on  fund ;  compensation  should  not  be  allowed  without  no- 
tice ;  when  compensation  not  subject  to  set-off.  A  receiv- 
er can  not  recover  judgment  for  his  services  against  the  parties 
to  the  original  suit  in  which  he  was  appointed,  by  a  motion 
made  in  that  suit,  and  it  is  error  to  so  enter  judgment  against 
them,  there  being  no  action  pending  in  which  such  a  judgment 
is  proper.  The  appropriate  method  of  procedure  is  to  have 
his  compensation  fixed  by  the  court,  to  be  allowed  out  of  the 
assets  in  his  hands,  and  the  amount  thus  determined  to  be 
due  him  may  be  taxed  as  costs  in  the  action. ^^  But,  while 
the  receiver's  compensation  is  usually  paid  out  of  the  fund 
placed  in  his  hands,  a  different  course  may  be  adopted  when 
the  order  appointing  him  is  revoked,  and  when  he  is  directed 
to  return  the  property  to  the  persons  entitled  thereto.  And  it 
is  proper,  under  such  circumstances,  for  the  court,  in  its  dis- 
cretion, to  require  the  payment  of  part  of  the  compensation 
out  of  the  fund  in  the  receiver's  hands,  and  to  tax  the  bal- 
ance as  costs  against  the  plaintiff,  the  unsuccessful  party  in 
the  cause.^^    The  court  is  governed,  in  such  case,  by  the  con- 

Ch.,  467.     See,  also,  Todd  v.  Rich,  58  Hutchinson     v.     Hampton,     1 

2  Tenn.  Ch.,  107.  Mont.,  39. 

56  Berry  v.  Jones,  11  Heisk.,  206.  59  French    v.    GifiFord,    31    Iowa, 

57  Steel  V.  HoUaday,  19  Ore.,  517,  428;   State  v.  People's  U.  S.  Bank, 
25  Pac,  n.  197  Mo.,  605,  95  S.  W.,  867;  Ogden 


CHAP.   XVIII.] 


COMPENSATION. 


933 


sideration  of  the  injustice  of  allowing  a  receiver  his  compen- 
sation, in  all  cases,  from  the  funds  in  his  hands,  regardless 
of  the  legality  of  his  appointment;  since,  if  such  a  rule  were 
to  be  rigorously  applied,  innocent  persons  might  frequently 
sustain  great  loss.^*^  Thus,  where  a  receiver  has  been  ap- 
pointed at  the  instance  of  an  attaching  creditor  to  take  pos- 


City  V.  Irrigation  Co.,  18  Utah, 
279,  55  Pac,  385;  Brundage  v. 
Home  S.  &  L.  Assn.,  11  Wash.,  288, 
39  Pac,  669.  And  see,  post,  §  809a. 
And  see  Crumlish's  Adm'r  v.  Shen- 
andoah V.  R.  Co.,  40  West  Va., 
627,  22  S.  K,  90;  Tobin  v.  Portland 
Flourhig  Co.,  42  Ore.,  117,  68  Pac, 
749;  Ford  v.  Gilbert,  42  Ore.,  528, 
71  Pac,  971.  French  v.  Gifford,  31 
Iowa,  428,  supra,  was  the  case  of  a 
receiver  of  a  savings  bank,  whose 
appointment  had  been  revoked  and 
who  had  been  ordered  to  deliver 
back  the  money  and  assets  received. 
The  court.  Miller,  J.,  say:  "It  is 
insisted  by  plaintifif's  counsel  that 
the  compensation  of  the  receiver 
should  be  paid  out  of  the  fund  of 
which  he  had  the  custody  and 
charge,  and  that  he  should  be  per- 
mitted to  retain  the  same  therefrom. 
Numerous  cases  have  been  cited  to 
show  that  such  is  the  uniform  prac- 
tice. Upon  an  examination  of  these 
cases  it  will  be  found  that,  in  every 
case,  there  was  no  question  made  as 
to  the  legality  or  propriety  of  the 
appointment  of  the  receiver ;  that,  in 
each  case,  the  receiver  closed  up  the 
business  and  settled  his  accounts  in 
pursuance  of  his  appointment.  The 
receivership,  in  each  case,  was  for 
the  benefit  of  those  interested  in  the 
fund,  and  he  was  paid  therefrom, 
which  is  only  another  method  of 
apportioning  the  costs  upon  those 
entitled  to  the  fund.    The  only  case 


which  has  been  brought  to  our  at- 
tention, in  which  the  order  appoint- 
ing the  receiver  was  set  aside,  is 
the  case  of  Verplanck  v.  The  Mer- 
cantile Insurance  Co.,  2  Paige,  438, 
and  in  that  case  the  chancellor  or- 
dered the  receiver  to  turn  over  all 
the  property,  without  allowing  him 
any  commissions  therefrom.  We 
think  it  would  be  an  unjust  and  in- 
equitable rule  if,  in  all  cases,  the  re- 
ceiver should  be  entitled  to  his  com- 
pensation from  the  fund  in  his 
hands,  without  reference  to  the  le- 
gality of  his  appointment.  Under 
the  operation  of  such  a  rule,  inno- 
cent persons  might  be  made  to  suf- 
fer great  loss.  The  general  rule  as 
to  costs,  both  at  law  and  in  equity, 
is  that  they  shall  be  adjudged  to  the 
successful,  and  against  the  unsuc- 
cessful, party.  Rev.,  §  3449.  And 
they  will  be  so  adjudged,  unless 
there  exists  some  equitable  consid- 
eration to  justify  a  different  dispo- 
sition, or  the  case  is  otherwise  pro- 
vided for  by  law.  In  cases  like  the 
one  under  consideration,  we  may  ad- 
judge  the  costs  to  one  or  either  of 
the  parties,  or  apportion  them." 
The  court  accordingly  directed  that 
the  fund  be  charged  with  one-third 
of  the  receiver's  compensation,  and 
the  plaintiff  with  the  remaining  two- 
thirds. 

60  French  v.  Gifford,  31  Iowa,  428. 
And  see,  post,  §  809, 


934  RECEIVERS.  [chap.   XVIII. 

session  of  property  which  is  subject  to  the  lien  of  a  prior 
mortgage,  which  is  finally  held  to  be  superior  to  the  lien  of  the 
attachment,  the  compensation  of  the  receiver  should  not  come 
out  of  the  proceeds  of  the  sale  of  the  property  but  he  must 
look  to  the  plaintiff  for  his  payment.^^  So  where  the  appoint- 
ment of  a  receiver  is  upon  an  application  which  is  adverse  to 
the  defendant  and  it  subsequently  turns  out  that  such  appoint- 
ment was  unwarranted  and  without  authority  of  law,  the  re- 
ceiver will  be  required  to  turn  back  to  the  defendant  all  funds 
in  his  possession  unimpaired  by  deductions  for  the  receiver's 
compensation  and  that  of  his  counsel,  the  receiver  being  re- 
quired in  such  case  to  look  to  the  plaintiff  upon  whose  applica- 
tion he  was  appointed. ^^  And  as  against  third  persons  assert- 
ing valid  liens  upon  the  property,  who  were  not  parties  to  the 
receivership  proceeding  and  who  never  consented  to  the  ap- 
pointment, the  compensation  of  the  receiver  and  the  expenses 
of  the  receivership  which  have  in  no  way  inured  to  their  ben- 
efit should  not  be  allowed  as  a  proper  charge  upon  the  fund.^^ 
And  where  a  receiver  is  authorized  to  carry  on  a  business  and 
to  sell  property  of  an  insolvent,  he  will  not  be  allowed  to  di- 
minish the  fund  due  to  the  creditors  who  are  secured  by  prior 
liens  by  retaining  an  allowance  for  his  compensation  and  that 
of  his  counsel;  and  in  such  case,  he  must  look  to  the  other 
property  of  the  insolvent.64  If,  however,  the  appointment  of 
the  receiver  was  proper  in  the  first  instance,  even  though  plain- 
tiffs do  not  ultimately  prevail  in  the  suit,  it  is  within  the  dis- 
cretion of  the  court  to  allow  the  receiver  payment  for  his 
services  and  expenses  out  of  the  proceeds  of  the  litigation,  and 
an  appellate  court  will  not  not  interfere  with  the  exercise  of 
such  discretion  when  it  has  not  been  abused. ^^     And  since  a 

61  Frick  V.  Fritz,  124  Iowa,  529,  64  Lane  v.  Washington  Hotel  Co., 
100  N.  W.,  513.  190  Pa.  St.,  230,  42  Atl.,  697 ;  Moore 

62  McAnrow  v.  Martin,  183  111.,  v.  Lincoln  P.  &  S.  C.  Co.,  196  Pa. 
467,  56  N.  K,  168.  St.,  519,  46  Atl.,  857. 

63  First  National  Bank  v.  Cook,  6.5  Hembree  v.  Dawson,  18  Ore., 
12  Wyo.,  492,  76  Pac,  674,  78  Pac,  474,  23  Pac,  264 ;  Clark  v.  Brown, 
1083.  57  C.  C.  A.,  76,  119  Fed.,  130. 


CHAP.   XVIII.]  COMPENSATION. 


935 


receiver  is  the  officer  of  the  court  which  appoints  him,  it  is 
for  that  court  to  fix  his  compensation,  and  accordingly  a  re- 
viewing court  will  not  entertain  an  application  to  make  him 
an  additional  allowance  pending  the  time  of  the  appeal.^^  And 
when  a  receiver  obtains  possession  of  money  under  an  order 
which  is  afterward  reversed  upon  appeal,  he  may  be  required 
to  restore  the  money  to  the  person  entitled  thereto,  undimin- 
ished by  any  claim  for  his  own  compensation  or  for  counsel 
fees.67  When  no  question  is  made  as  to  the  legality  or  pro- 
priety of  appointing  the  receiver,  and  he  closes  up  his  receiv- 
ership in  pursuance  of  the  order  appointing  him,  his  compensa- 
tion should  be  paid  from  the  funds  in  his  hands,  and  no  part 
of  it  should  be  taxed  as  costs  against  the  plaintiff.^s  So  when 
a  court  of  equity  takes  property  under  its  charge  by  appoint- 
ing a  receiver,  the  property  itself  is  chargeable  with  the  neces- 
sary expenses  of  the  receivership,  including  the  compensation 
of  the  receiver.  And,  in  such  case,  the  person  who,  under 
the  final  decree  of  the  court,  acquires  the  property  or  its  pro- 
ceeds, acquires  it  cum  oncre  and  chargeable  with  the  amounts 
due  to  the  receiver  for  services  and  advances.69  But  if  the 
appointment  of  the  receiver  is  for  the  equal  benefit  of  both 
parties  to  the  action,  as  in  a  suit  for  the  settlement  of  partner- 
ship affairs,  the  receiver's  compensation  should  be  borne  by 
both  parties  equally.'^^  And  while  his  compensation  is  usu- 
ally allowed  out  of  the  fund  or  property  in  the  receiver's  pos- 
session, yet  when  he  has  been  appointed  over  mortgaged  prem- 
ises, but  not  at  the  suit  nor  with  the  consent  of  the  mort- 
gagee, he  may  be  refused  compensation  out  of  the  proceeds 
of  a  foreclosure  sale  of  the  premises.'^i     And  in  such  case  it 

66McKenzie  v.   Coslett,  28  Nev.,  276,  7  N.  W.,  604;  Jaffray  v.  Raab, 

220,  80  Pac,  1070.  72  Iowa,  335,  33  N.  W.,  337. 

67  Pittsfield  National  Bank  v.  69  Beckwith  v.  Carroll,  56  Ala.,  12. 
Bayne,  140  N.  Y.,  321,  35  N.  E.,  70  Johnson  v.  Garrett,  23  Minn., 
630;   McAnrow  v.   Martin,  183  III,  565. 

467,  56  N.  E.,  168.  '^^  Lammon    v.     Giles,    3    Wash. 

68  Radford   I/.   Folsom,   55   Iowa,      Terr.,   117,   13   Pac,  417;   Ephraim 


936  RECEIVERS.  [chap.   XVIII. 

is  error  to  make  the  charge  for  the  receiver's  compensation 
and  expenses  a  lien  upon  the  mortgaged  premises  but 
they  should  be  made  a  lien  only  upon  the  equity  of  re- 
demption,'^2  jf  there  are  no  assets  in  his  hands  applicable 
to  the  payment  of  his  compensation,  it  is  proper  to  discharge 
him  without  making  payment  of  his  charges  by  the  persons 
procuring  his  appointment  a  condition  precedent  to  his  dis- 
charge, leaving  the  matter  for  subsequent  determination  in 
the  cause J^  And  an  order  allowing  compensation  to  a  re- 
ceiver should  be  entered  only  after  notice  and  a  hearing  at 
which  all  parties  interested  may  appear  and  contest  the  al- 
lowance.''^ And  where  an  order  allowing  the  compensation 
of  a  receiver  has  been  made  without  notice  to  the  parties  in 
interest  and  under  an  erroneous  impression  upon  the  part  of 
the  court  that  the  receiver  has  served  for  a  much  longer  time 
than  he  actually  has,  the  order  of  allowance  is  properly  set 
aside.''^  Where  the  proceeds  of  a  receiver's  sale  have  been  paid 
by  the  receiver  into  a  bank  and  the  court  afterward  enters  an 
order  allowing  the  receiver  compensation  for  his  services  in 
making  the  sale  and  authorizing  him  to  retain  from  the  proceeds 
the  amount  of  such  allowance,  a  debt  due  from  the  receiver  in 
his  individual  capacity  to  the  bank  can  not  be  set  off  against  the 
fee  of  the  receiver.'''^ 

§  796a.  Appeals  from  allowance  or  refusal  of  compensa- 
tion. While  an  order  which  merely  fixes  the  amount  of 
a  receiver's  compensation  is  not  appealable  because  no  one  can 
be  injuriously  affected  thereby,  yet  if,  in  addition  to  fixing  the 
amount,  the  court  directs  it  to  be  paid  out  of  the  fund  in  the 
receiver's  hands,  an  appeal  will  lie  from  such  an  order  upon 

V.    Pacific    Bank,    129   Cal.,    589,   62  74  Ruggles  v.  Patton,  74  C.  C.  A., 

Pac,  177.  450.  143  Fed.,  312. 

72Makeel   v.   Hotchkiss,   190  111.,  "5  joralmon  v.  McPhee,  31  Colo., 

311,  60  N.  E.,  524,  83  Am.  St.  Rep.,  40,  76  Pac,  922.                                   . 

131.  '6  Polk  V.  Carver  C.  &  M.  Co.,  91  ■ 

73Joslyn  v.  Athens  C.  &  C.  Co.,  Iowa,  570,  60  N.  W.,  111. 
43  Minn.,  534,  46  N.  W.,  77. 


CHAP.   XVIII.]  COMPENSATION.  937 

behalf  of  any  person  interested  in  the  fund.'^^  So  creditors 
and  others  interested  are  entitled  to  appeal  from  an  order  fix- 
ing the  compensation  of  a  receiver  when  it  is  claimed  the  al- 
lowance is  excessive^s  And  where  a  receiver  has  taken  pos- 
session of  the  property  of  an  insolvent  debtor,  the  latter  is 
entitled  to  appeal  from  an  order  fixing  his  compensation  and 
directing  its  payment  out  of  the  fund7^  So  an  insolvent  over 
whose  property  a  receiver  is  appointed  may  appeal  from  an  or- 
der allowing  the  receiver  compensation  in  excess  of  the  amount 
fixed  by  statute. ^^  Ai-,^  ^  defendant  out  of  whose  property 
a  receiver's  compensation  is  to  be  paid  is  entitled  to  appeal 
from  the  order  of  allowance.^l  So  an  order  authorizing  a 
receiver  to  withdraw  certain  funds  and  pay  himself  at  a  fixed 
rate  per  annum  is  a  final  order  and  appealable.^2  ^^d  if  the 
litigation  is  likely  to  be  long  protracted,  it  is  proper,  upon  pe- 
tition of  the  receiver,  to  fix  his  compensation  in  whole  or  in 
part,  and  such  an  order  is  a  final  one  from  which  an  appeal 
will  lie,  independent  of  the  main  cause. ^^  And  the  receiver 
himself  is  entitled  to  appeal  from  an  adverse  order  affecting 

77  Grant  v.  Superior  Court,  106  ment  in  the  cause  has  been  per- 
Cal.,  324,  39  Pac,  604;  Grant  v.  fected,  a  receiver  has  been  appoint- 
Los  Angeles  &  P.  R.  Co.,  116  Cal.,  ed  to  collect  the  rents  of  the  prop- 
71,  47  Pac,  872.  And  see  City  of  erty  involved  pending  the  appeal, 
Los  Angeles  v.  Los  Angeles  C.  W.  and  after  the  appeal  is  at  issue,  an 
Co.,  134  Cal.,  121,  66  Pac,  198.  order  is  entered  by  the  lower  court 

78  Battery  Park  Bank  v.  Western  allowing  the  receiver  compensation 
C.  Bank,  126  N.  C,  531,  36  S.  E.,  and  making  it  a  first  lien  upon  the 
39;  Ogden  City  v.  Irrigation  Co.,  property,  such  order  may  be  brought 
18  Utah,  279,  55  Pac,  385.  And  see  to  the  reviewing  court  by  supple- 
In  re  Burguieres  Planting  Co.,  122  mental  record  and  may  be  consid- 
La.,  602,  48  So.,  121.  ered  upon  the  appeal.     Joralmon  v. 

79  Polk  V.  Johnson,  167  Ind.,  548,  McPhee,  29  Colo.,  135,  66  Pac,  882. 
78  N.  E.,  652,  79  N.  E.,  491.  82  Ruggles  v.  Patton,  74  C.  C.  A., 

80  Reeves  v.  Hastings,  61   Minn.,  450,  143  Fed.,  312. 

254,  63  N.  W.,  633.  83  Tompson  v.   Huron   L.   Co.,   5 

81  Forrester  v.  B.  &  M.  C.  C.  &  Wash.,  527,  32  Pac,  536.  To  the 
S.  M.  Co.,  30  Mont.,  181,  76  Pac,  2.  same  effect,  see  Battery  Park  Bank 
Under  the  provisions  of  the  code  of  v.  Western  C.  Bank,  126  N.  C,  531, 
Colorado,    it    is    held    that    where,  36  S.  E.,  39. 

after  an  appeal  from  a  final  judg- 


938  RECEIVERS.  [chap.   XVIII. 

his  compensation  or  from  an  order  denying  him  compensa- 
tion altogether.^4 

§  796/?.  Right  of  receiver  to  retain  compensation  out  of 
fund   before   surrendering   it   to   trustee   in   bankruptcy. 

Where,  after  the  appointment  of  a  receiver  of  an  insolvent 
corporation  by  a  state  court,  bankruptcy  proceedings  are  in- 
stituted against  the  corporation  in  the  United  States  district 
court  and  a  trustee  in  bankruptcy  is  appointed,  the  receiver 
is  entitled  to  his  compensation  and  other  expenses  already  in- 
curred out  of  the  fund  in  his  possession  before  surrendering 
it  to  the  trustee  in  bankruptcy,  and  no  considerations  of  com- 
ity require  the  state  court  in  such  case  to  order  the  entire  fund 
surrendered  to  the  trustee  in  bankruptcy  and  to  send  its  re- 
ceiver to  that  court  for  his  compensation.^^ 

§  796c.  Agreement  by  party  to  pay  receiver's  compen- 
sation against  public  policy;  agreement  by  receiver  to 
serve  without  compensation.  Since  a  receiver  is  bound  to 
maintain  an  attitude  of  strict  impartiality  as  between  the  par- 
ties to  the  cause,  any  agreement  which  might  tempt  him  to 
sacrifice  or  jeopardize  the  interests  of  one  party  for  the  bene- 
fit of  another  is  contrary  to  public  policy  and  void.  Accord- 
ingly, an  agreement  between  the  receiver  and  a  purchaser  at 
the  receiver's  sale  by  which  the  latter  undertakes  to  pay  the 
receiver  his  fees  for  services  is  void  and  will  not  be  enforced 
by  the  courts.     The  receiver,  in  asking  for  his  compensation 

84  Bosworth  v.  St.  Louis  Tenni-  Hanson  v.  Stephens,  116  Ga.,  722, 
nal  R.  Assn.,  174  U.  S..  182,  19  Sup.  42  S.  K,  1028.  But  in  State  v. 
Ct.  Rep.,  625,  43  L.  Ed.,  941,  modi-  German  Exchange  Bank,  114 'Wis., 
fying  and  affirming  S.  C.,  26  C.  C.  436,  90  N.  W.,  570,  the  question 
A.,  279,  80  Fed.  969,  53  U.  S.  App.,  was  held  to  be  one  resting  largely 
302;  Herndon  v.  Hurter,  19  Fla.,  in  the  discretion  of  the  lower  court, 
397;  McAnrow  v.  Martin,  183  111.,  and  they  accordingly  affirmed  an 
467,  56  N.  E.,  168;  Union  National  order  directing  the  receiver  to  turn 
Bank  v.  Mills,  103  Wis.,  39,  79  N.  over  the  entire  fund  to  the  trustee 
W.,  20.  And  see  Kilpatrick  v.  in  bankruptcy  subject  to  whatever 
Horton,  15  Wyo.,  501,  89  Pac,  1035.  claims  he  might  have   for  services 

85  Mauran  v.  Crown  C.  L.  Co.,  23  and  expenses  incurred  in  the  re- 
R.  I.,  344,   50  Atl.,  387.     And   see  ceivership  proceeding. 


CHAP.   XVIII.]  COMPENSATION.  939 

should  look  to  the  court,  and  the  court  alone  may  determine  the 
amount  of  such  compensation  and  by  whom  it  shall  be  paid.^^ 
But  an  agreement  between  a  creditor  and  his  debtor  by  which 
the  former  agrees  to  serve  as  receiver  without  compensation 
provided  the  debtor  will  make  no  objection  to  his  appointment 
is  valid  and  enforcible.^'^ 

86  Hall  V.  Stulb,  126  Ga.,  521,  55  87  Polk  v.  Johnson,  160  Ind.,  292, 

S.  E.,  172.  66  N.  E.,  752,  98  Am.  St.  Rep.,  274. 


CHAPTER  XIX. 

OF  THE  RECEIVER'S  ACCOUNTS. 

§  191.  Duty  of  receiver  to  account  to  court;  held  to  great  strictness; 
consent  of  parties  to  delay;  required  to  account  without  proc- 
ess of  court;  not  entitled  to  jury;  bill  should  not  be  dis- 
missed without  settling  of  account;  degree  of  diligence  re- 
quired. 

798.  Not  allowed  to  make  expenditures  without  sanction  of  court; 

must  show  vouchers;  when  reimbursed;  reward  paid  to  re- 
cover assets;  unauthorized  payment  of  taxes;  watching 
property;  premium  of  surety  company  on  official  bond;  ref- 
erence to  master;  when  payments  allowed,  though  unauthor- 
ized. 

799.  Not  allowed  expenses  for  services  which  he  might  have  per- 

formed himself;  should  report  facts  to  court. 

800.  Master's  report  on  receiver's  account  and  exceptions  thereto; 

English  rule;  Irish  practice;  New  York  rule. 

801.  Distinction  between  master's  report  on  receiver's  account,  and 

on  account  taken  by  himself;  court  may  investigate  prin- 
ciple on  which  account  allowed,  but  not  details;  exceptions, 
when  taken. 

802.  Not  compelled   to  account  by  stranger;   nor  to  a  party,  but 

only  to  court;  party  may  move  for  account;  duty  to  account 
once  a  year;  allowance  should  be  to  receiver  and  not  to 
party;  when  otherwise. 

803.  Should  keep  funds  distinct  from  his  own;  liable  for  interest  on 

mingling  funds;  when  interest  not  allowed  on  claim  of 
creditor. 

804.  General  liability  of  receivers  for  interest  on  funds. 

805.  When  and  to  what  extent  allowed  for  counsel  fees. 

806.  When  allowed  counsel   fees  paid  to  counsel   of  the  parties. 

807.  Receiver  in  suit  against  administrator  not  allowed  for  services 

rendered  as  solicitor  for  the  administrator. 

808.  Not  allowed  counsel  fees  paid  to  himself;  receiver,  an  attorney, 

not  bound  to  render  legal  services. 

809.  What  costs   and   expenses   allowed    in    receiver's    accounts;   pref- 

ference  for  costs;  allowance  discretionary;  expense  of  taking 
care  of  property. 

940 


CHAP.  XIX.]  ACCOUNTS.  941 

§  809a.  When  costs  and  expenses  charged  against  plaintiff. 

810.  When  defendant  in  suit  by  receiver  entitled  to  costs;  motion 

for  receiver  to  pay  judgment  for  costs. 

811.  When  receiver  allowed  costs  of  unsuccessfu  llitigation. 

811a.  Taxes  on  property  in  receiver's  hands  payable  as  expenses  of 
administration. 

812.  English  practice  as  to  costs. 

813.  When  chargeable  for  hire  of  property;  not  allowed  for  pay- 

ment of  charges  against  predecessor  in  arrears. 

814.  May  account  pending  bill  of  interpleader;  plaintiff  can  not  have 

receiver  discharged  without  passing  accounts;  court  should 
not  render  final    judgment  without  passing  account. 

815.  Plaintiff  should  not  be  delayed  by  litigation  concerning  receiv- 

er's accounts. 

816.  Receiver  irregular  in  accounts  ordered  to  present  account  yea'-- 

ly  and  to  verify  by  affidavit. 

817.  Executors    of    receiver    not    compelled    to    pass    his    accounts; 

executor  denied  petition  for  account  of  payment  into  court; 
court  should  not  pass  account  of  deceased  receiver  without 
notice  to  personal  representative. 

818.  When  salary  forfeited  for  delay  in  payment  into  court;  when 

delay  excusable. 

819.  Receiver  of  minor  compelled  to  account  from  beginning,  on 

minor  coming  of  age. 
819a.  How  receiver's  accounts  may  be  questioned. 
Sl9b.  Right  of  appeal  from  order  settling  receiver's  accounts. 
819c.  Appeal   by   one   creditor   resulting    in   benefit   to   all;    entitled    to 

expenses  and  counsel  fees. 

§  797.  Duty  of  receiver  to  account  to  court;  held  to 
great  strictness;  consent  of  parties  to  delay;  required  to 
account  without  process  of  court ;  not  entitled  to  jury ;  bill 
should  not  be  dismissed  without  settling  of  account;  de- 
gree of  diligence  required.  Receivers  being  officers  of  the 
court  appointing  them,  they  are  required  to  account  to  the 
court  for  all  receipts  and  disbursements  in  the  course  of  their 
receivership.  And  it  is  the  duty  of  a  receiver  to  file  his  ac- 
counts when  required  by  the  court,  in  order  that  all  claims  for 
compensation  or  disbursements  out  of  the  fund  in  his  hands 
may  be  properly  considered  by  the  court. ^     Courts  of  equity 

1  Adams  ?/.Wood,  8  Cal.,  306.  .See,       286.     As  to  the  presumptions  to  be 
also,   Mabry  v.   Harrison,  44  Tex.,       indulged  in  favor  of  the  correctness 


942  RECEIVERS.  [chap.   XIX. 

are  disposed  to  hold  receivers  to  great  strictness  in  rendering 
their  accounts,  and  while  it  would  seem  to  be  competent  for 
a  receiver  to  delay  passing  his  accounts  at  the  required  time, 
by  consent  of  all  parties  in  interest,  when  they  are  capable  of 
giving  consent,  yet  if  some  of  the  parties  are  minors  he  will 
not  be  justified  in  delaying,  even  with  their  consent. 2  And  it 
is  held  to  be  the  receiver's  duty  to  come  in  and  account  to 
the  court  at  the  proper  times,  without  any  process  or  rule  upon 
him  for  that  purpose,  and  the  rules  regulating  proceedings 
between  litigant  parties  afford  no  analogy  to  the  case  of  a  re- 
ceiver, the  latter  being  an  officer  of  the  court  and  not  a  party 
litigant.^  So  a  receiver  being  an  ofiicer  of  the  court,  and 
the  fund  in  his  hands  being  regarded  as  in  the  custody  of  the 
court  itself,  he  is  not  entitled  to  a  jury  to  pass  upon  his  ac- 
counts.'* And  where  a  bill  is  held  to  be  without  equity,  it  is 
error  to  dismiss  the  bill  without  first  requiring  the  receiver  to 
report  and  settle  his  accounts.^  And  a  receiver  is  bound  to 
exercise  the  same  degree  of  diligence  in  keeping  down  ex- 
penses and  in  caring  for  the  estate  in  his  possession  that  a  pru- 
dent man  would  observe  in  connection  with  his  own  property 
under  similar  circumstances.^ 

of  a  receiver's  account,  see  State  v.  2  Dease  v.  Reilly,  2  Con.  &  Law., 
Nebraska  S.  &  E.  Bank,  61  Neb.,  441 ;  S.  C,  4  Dr.  &  War.,  284. 
496,  85  N.  W.,  391.  See  Kirker  v.  3  McBride  v.  Clarke,  1  Mol.,  233. 
Owings,  39  C.  C  A.,  132,  98  Fed.,  And  see  Felton  v.  Felton,  47  West 
499,  in  which  a  receiver  was  held  Va.,  27,  34  S.  E.,  753. 
personally  liable  for  certain  debts  4  Akers  t;.  Veal,  66  Ga.,  302;  Tin- 
incurred  by  him  as  receiver.  See  dall  v.  Nisbet,  113  Ga.,  1114,  39  S. 
Northern  Alabama  Ry.  Co.  v.  Hop-  E.,  450,  55  L.  R.  A.,  225. 
kins,  31  C.  C.  A.,  94,  87  Fed.,  505,  5  Simmons  v.  Shelton,  112  Ala., 
59  U.  S.  App.,  74,  as  to  an  allowance  284,  21  So.,  309,  57  Am.  St.  Rep.,  39. 
for  expenses  incurred  by  a  receiver  6  State  Central  Savings  Bank  v. 
in  a  trip  to  Europe  taken  at  the  Bail-Bearing  Chain  Co.,  118  Iowa, 
instigation  of  the  parties  to  a  suit  698,  92  N.  W.,  712;  Ripley  v.  Mc- 
and  other  expenses  incurred  while  Gavic,  120  Iowa,  52,  94  N.  W.,  452; 
traveling  about  in  the  interest  of  State  v.  Germania  Bank,  106. Minn., 
the  property  in  his  possession.  164,  118  N.  W.,  683. 


CHAP.   XIX.] 


ACCOUNTS. 


943 


§  798.  Not  allowed  to  make  expenditures  without  sanc- 
tion of  court ;  must  show  vouchers ;  when  reimbursed ;  re- 
ward paid  to  recover  assets;  unauthorized  payment  of 
taxes;  watching  property;  premium  of  surety  company  on 
official  bond;  reference  to  master;  when  payments  al- 
lowed, though  unauthorized.  A  receiver  will  not  ordi- 
narily be  permitted  to  make  any  expenditures  which  will 
seriously  diminish  the  fund  intrusted  to  his  charge,  with- 
out the  sanction  and  authority  of  the  court,  and  it  is 
his  duty  to  apply  to  the  court  for  instructions  as  to  the 
expenditures,  and  to  keep  regular  accounts  of  all  items 
of  receipts  and  expenditures.  He  can  not  in  these  mat- 
ters act  upon  his  own  discretion,  but  is  held  to  a  strict  account- 
ability to  the  court,  and  must  produce  satisfactory  vouchers 
and  proof  for  all  his  charges  against  the  fund  intrusted  to  his 
keeping."^    And  even  in  the  absence  of  objections  by  the  par- 


7  Hooper  v.  Winston,  24  111.,  353; 
Standish  v.  Musgrove,  223  111.,  500, 
79  N.  E.,  161 ;  Henry  v.  Henry,  103 
Ala.,  582,  15  So.,  916;  State  Central 
Savings  Bank  v.  Bali-Bearing  Chain 
Co.,  118  Iowa,  698,  92  N.  W.,  712. 
And  see  Schwartz  v.  Rosetta  G.  P. 
&  I.  Co.,  110  La.,  619,  34  So.,  709. 
Hooper  v.  Winston,  24  111.,  353, 
supra,  was  a  writ  of  error  to  re- 
verse a  decree  regulating  the  dis- 
tribution of  a  fund  in  the  hands  of 
a  receiver  over  certain  hotel  proper- 
ty. The  general  principles  regulating 
the  disbursements  of  receivers  are 
very  clearly  stated  by  Mr.  Justice 
Breese,  as  follows,  p.  365 :  "The 
other  claim  set  up  by  the  receiver, 
to  be  allowed  such  expenses  as  he 
has  chosen  to  set  down,  to  keep 
the  house  in  operation,  we  are  con- 
strained to  say  we  see  no  ground 
upon  which  to  base  it.  The  re- 
ceiver claims  that  in  this  matter  he 


was  vested  with  a  discretionary 
power,  and  therefore  the  court  had 
no  authority  to  examine  into  the 
mode  or  manner  of  its  exercise; 
that  he  was  merely  the  private 
agent  of  these  parties,  that  whole 
subject  being  left  to  his  own  judg- 
ment. We  do  not  deny  that  he 
had  some  discretion  in  this  matter, 
but  it  was  very  limited.  We  hold, 
being  an  officer  of  the  court,  he 
should  have  applied  to  the  court 
for  leave  to  make  these  expendi- 
tures, and  he  is  amenable  to  the 
court  for  the  exercise  of  all  his 
powers.  As  receiver  and  trustee 
for  parties  litigant,  it  was  his  mani- 
fest duty  to  have  kept  regular  ac- 
counts, item  by  item,  of  all  the 
expenses  of  the  house  and  of  the 
receipts  arising  from  it,  and  from 
all  other  sources  from  which  money 
might  have  come  into  his  posses- 
sion.    He  should  show  an  account 


944 


RECEIVERS. 


[chap.    XIX. 


ties  interested,  the  court  will  carefully  scrutinize  the  receiver's 
report.^  And  where  there  are  no  vouchers  and  no  evidence 
as  to  the  propriety  of  the  items,  the  report  should  not  be  al- 
lowed.^  It  does  not,  however,  follow  that  in  every  case  in 
which  he  neglects  to  obtain  an  order  of  court  authorizing  a 
particular  payment  out  of  the  fund  in  his  possession,  he  will 
be  denied  reimbursement.  And  when  a  receiver  of  the  effects 
of  a  partnership  is  authorized  by  the  court  to  prosecute  suits 
for  the  recovery  of  the  assets,  a  sum  paid  by  him  as  a  reward 
for  the  recovery  of  lost  books  of  the  partnership  has  been  re- 
garded as  a  necessary  and  appropriate  expenditure,  in  the 
prosecution  of  suits  for  the  protection  of  creditors,  and  has 
been  allowed  in  his  accounts.i^     So  when  a  receiver  finds  the 


current  of  the  house,  embracing 
therein  the  stock  he  found  on  hand, 
the  purchases  of  every  description 
for  the  house,  and  the  receipts  of 
the  house.  That  there  were  large 
receipts  is  unquestionable,  yet  no 
account  has  been  rendered  of  any. 
That  a  bar  furnished  with  more 
than  fifteen  hundred  dollars  worth 
of  liquors  should  not,  in  Chicago, 
produce  any  returns,  is  incompre- 
hensible. Failing  to  show  any  ac- 
count current,  every  presumption 
ought  to  be  against  him,  and  for  all 
his  charges  against  the  fund  in- 
trusted to  his  keeping,  he  should 
show  satisfactory  vouchers  and 
proofs.  He  has  shown  none  in  the 
several  reports  he  has  made  to  the 
court.  His  judgment  was  not 
the  limit  of  the  expenditures,  but 
the  court,  he  being  one  of  its  offi- 
cers, has  a  supervisory  power  over 
his  acts,  and  he  is  amenable  to  its 
judgment  as  to  the  necessity  of 
these  expenditures,  in  order  to  keep 
the  house  in  operation,  and  he  is 
certainly  accountable  for  the  re- 
ceipts.   ...     In  the  management 


of  the  McCardel  House,  although 
the  receiver  was  required  to  keep 
it  in  operation  until  the  sale,  he 
had,  as  an  officer  of  the  court,  but 
very  little  discretion  allowed  him, 
and  should  have  applied  to  the 
court,  by  a  brief  petition,  setting 
out  the  facts  and  asking  for  a  ref- 
erence, whether  such  and  such  ex- 
penditures would  be  for  the  benefit 
of  the  interested  parties,  and  neces- 
sary to  keep  the  house  in  operation, 
or  for  whatever  other  purpose  the 
expenditure  may  have  been  de- 
sired. No  single  act  calculated  to 
diminish  seriously  the  fund  could 
the  receiver  do  on  his  own  mere 
motion,  and  in  the  exercise  of  his 
discretion." 

8  Standish  v.  Musgrove,  223  111., 
500,  79  N.  E.,  161. 

9  Standish  v.  Musgrove,  223  111., 
500,  79  N.  E.,  161. 

10  Adams  v.  Woods,  15  Cal.,  206. 
In  Heflfron  v.  Rice,  149  111.,  216,  36 
N.  E.,  562,  41  Am.  St.  Rep.,  271, 
it  was  held  that  where  a  receiver 
had  been  appointed  to  take  posses- 
sion of,  and  run  a  hotel,  and,  in  so 


CHAP.  XIX.] 


ACCOUNTS. 


945 


property  insured  and  continues  such  insurance,  the  court,  in 
passing  his  accounts,  may  allow  such  insurance,  if  paid  in 
good  faith  and  if  necessary  for  the  protection  of  the  property, 
even  though  such  expenditure  has  not  been  authorized  by  any 
order  of  the  court.^^  So  the  unauthorized  payment  of  taxes 
upon  the  property  in  the  possession  of  a  receiver  will  be  rati- 
fied where  it  appears  that  the  claim  is  a  valid  one  against  the 
estate.i2  And  a  receiver  is  entitled  to  charge  in  his  account 
for  the  necessary  watching  of  the  property  in  his  custody.^^ 
So  a  receiver  is  entitled  to  a  credit  for  the  amount  paid  by 
him  in  procuring  a  surety  company  as  surety  upon  his  offi- 
cial bond.^'*  And  where  a  receiver,  upon  his  own  responsibil- 
ity, incurs  an  expense  in  the  discharge  of  his  duties  which 
he  shows  to  have  been  necessary  and  such  as  would  have  been 
authorized  by  the  court  had  application  been  previously  made, 
he  will  be  reimbursed  for  such  outlay  as  if  previous  authority 


doing,  had  cashed  a  check  for  twen- 
ty-five dollars  for  a  guest,  which 
had  proved  to  be  worthless,  and  it 
appeared  that  it  was  the  custom  of 
hotels  to  cash  such  checks  for  small 
amounts,  and  the  receiver  had  acted 
in  good  faith  in  the  matter,  the 
receiver  was  entitled  to  a  credit  for 
the  amount  lost  upon  the  check.  It 
was  further  held  that  while  a  re- 
ceiver ordinarily  has  no  power  to 
borrow  money,  yet  where  he  does 
so  for  the  purpose  of  paying  a  valid 
charge  against  the  property  in  his 
possession,  acting  in  good  faith,  and 
the  debtor  receives  the  benefit  of 
such  payment,  he  is  entitled  to  a 
credit  for  the  amount  of  the  pay- 
ment. And  it  was  further  held  that 
while  a  receiver  ordinarily  should 
immediately  file  an  inventory  of  the 
property  coming  into  his  possession, 
yet  where,  although  there  has  been 
a  delay  in  so  doing,  it  appears  that 
Receivers — 60. 


the  inventory  finally  filed  is  correct 
and  there  is  no  showing  that  the  re- 
ceiver has  converted  any  of  the 
property  to  his  own  use,  no  sub- 
stantial ground  for  complaint  is 
shown  by  such  delay. 

11  Brown  v.  Hazlehurst,  54  Md., 
26.  See,  also,  Thompson  v.  Phenix 
I.  Co.,  136  U.  S.,  287,  10  Sup.  Ct. 
Rep.,  1019;  Rochat  v.  Gee,  137  Cal, 
497,  70  Pac,  478. 

12  Hamacker  t;.  Commercial  Bank, 
95  Wis.,  359,  70  N.  W.,  295. 

13  Howes  V.  Davis,  4  Ab.  Pr.,  71. 

14  Hamacker  v.  Commercial  Bank, 
95  Wis.,  359,  70  N.  W.,  295.  See 
Grabbe  v.  Moffit,  133  Iowa,  54,  110 
N.  W.,  142,  as  to  the  compensation 
of  an  expert  accountant  employed 
by  a  receiver  under  the  authority 
of  the  court,  where  he  exceeds  the 
receiver's  instructions  as  to  the  na- 
ture of  the  report  to  be  submitted. 


946  RECEIVERS.  [CH^P.   XIX. 

had  been  given.15  Under  the  English  chancery  practice,  when 
a  receiver  had  laid  out  money  without  a  previous  order  of  court 
for  that  purpose,  the  matter  was  referred  to  a  master  to  ex- 
amine whether  the  transaction  was  beneficial  to  the  parties  in 
interest,  and  if  found  to  be  so,  the  receiver  was  allowed  the 
amount  thus  expended. ^^ 

§  799.  Not  allowed  expenses  for  services  which  he 
might  have  performed  himself;  should  report  facts  to 
court.  It  may  be  said  generally,  that  a  court,  in  passing 
upon  the  accounts  of  its  receiver,  will  not  ratify  any  expend- 
iture which  has  not  been  necessarily  incurred  for  the  benefit 
of  the  estate  committed  to  his  charge.  And  when  a  receiver 
has  stepped  outside  the  order  of  his  appointment  and  as- 
sumed the  role  of  actor,  and  has  incurred  large  and  unwar- 
ranted expenses  for  services  which  he  might  properly  have 
performed  himself,  and  has  done  this  without  the  consent  of 
or  notice  to  either  of  the  parties  to  the  action  or  to  the  court, 
he  will  not  be  allowed  such  expenses.!"^  So  when  he  has, 
without  authority  from  the  court,  appointed  a  deputy  receiver 
to  perform  duties  which  he  himself  might  and  should  have 
performed,  he  will  not,  in  passing  his  accounts,  be  allowed 
the  compensation  paid  to  such  deputy.i^  Sq  where  the  serv- 
ice in  question  was  to  aid  and  supplement  the  superintendence 
of  the  business  of  the  receivership  which  was  due  from  the  re- 
ceiver himself,  a  charge  for  such  service  should  not  be  al- 
lowed.19  So  where  a  receiver  of  the  property  of  a  mining 
company  has  incurred  large  expenses  in  the  operation  of  the 
mine  without  the  authority  or  permission  of  the  court,  such 
expenses  are  not  taxable  as  costs  in  the  suit,  nor  can  the  ques- 
tion of  the  liability  of  some  party  to  the  suit  therefor  be  liti- 
gated in  the  receivership  proceeding  over  the  receiver's  ob- 
is Henry  v.  Henry,  103  Ala.,  582,  18  Corey  v.  Long,  43  How.  Pr., 
15  So.,  916.                                                504. 

16  Tempest  v.  Ord,  2  Meriv.,  55.  19  Joost  v.  Bennett,  123  Cal.,  424, 

17  Corey  v.   Long,  43   How.   Pr.,      56  Pac,  43. 


504. 


CHAP.   XIX.] 


ACCOUNTS. 


947 


jection.20  When  the  receiver  has  paid  no  money  for  particular 
services,  but  has  arranged  with  the  person  performing  such 
services  that  he  shall  receive  such  compensation  as  the  court 
may  allow,  the  facts  should  be  so  reported  by  the  receiver  in 
his  account,  and  parties  in  interest  who  are  dissatisfied  with 
the  account,  in  whole  or  in  part,  may  appeal  from  the  final  or- 
der of  the  court  thereon. 21 

§  800.  Master's  report  on  receiver's  account  and  excep- 
tions thereto ;  English  rule ;  Irish  practice ;  New  York  rule. 
Under  the  practice  of  the  English  Court  of  Chancery,  a  mas- 
ter's report  upon  a  receiver's  account  did  not  require  con- 
firmation by  the  court,  and  did  not,  therefore,  admit  of  ex- 
ceptions. And  the  court  would  not  enter  into  a  consideration 
of  any  particular  items  of  the  account,  but  would,  upon  the 
petition  of  any  person  aggrieved,  examine  any  principle  upon 
which  the  master  had  proceeded  which  was  alleged  to  be  er- 


20  Hendrie  &  Bolthoff  Co.  v.  Par- 
ry, Z7  Colo.,  359,  86  Pac,  113. 

21  Adams  v.  Woods,  8  Cal.,  306. 
"It  is  the  duty  of  the  receiver,"  says 
Mr.  Justice  Burnett,  p.  316,  "to  file 
his  accounts  when  required  by  the 
court,  and  if  he  fail  in  this,  the 
court,  upon  application  of  a  party 
in  interest,  or  upon  its  own  motion, 
will  compel  him  to  do  so.  When 
his  account  is  filed,  all  claims 
against  the  fund  for  disbursements 
or  engagements  made  by  the  re- 
ceiver would  properly  come  before 
the  court  for  consideration.  When 
the  receiver  has  paid  no  money,  but 
has  made  an  arrangement  with  a 
party  to  receive  such  compensation 
as  the  court  may  allow,  he  should 
report  the  facts,  leaving  a  blank 
for  the  sum  that  may  be  allowed. 
If  any  of  the  parties  employed  by 
the  receiver  should  not  be  satisfied 
with  the  account,  in  whole  or  in 
part,   they   could   then    make   their 


objections.  And  if  any  one  or  more 
of  them  should  feel  aggrieved  by 
the  final  order  of  the  court,  they 
should  all  appeal,  and  all  the  ques- 
tions should  come  up  before  this 
court  in  one  case.  However  ex- 
tensive the  record  and  numerous 
the  parties  might  be,  the  labor  of 
this  court  and  expense  to  the  par- 
ties would  not  in  this  way  be  in- 
creased but  diminished.  But  if  a 
separate  reference  and  separate  ap- 
peal were  allowed  in  regard  to  each 
separate  claim  upon  the  fund,  then 
the  proceedings  would  be  greatly 
prolonged,  to  the  injury  of  all  par- 
ties. And  when  the  appeal  should 
be  taken,  it  would  only  be  necessary 
for  the  court  below  to  order  the  re- 
ceiver to  retain  so  much  of  the 
fund  in  his  hands  as  might  be  nec- 
essary to  pay  the  disputed  items,  if 
finally  allowed,  and  order  the  dis- 
tribution of  the  remainder." 


948  RECEIVERS.  [chap.    XIX. 

roneous.22  Under  the  Irish  chancery  practice,  however,  a 
more  Hberal  rule  prevails  and  the  court  will  investigate  the 
items  of  the  receiver's  account.23  fhe  English  rule  prevailed 
under  the  New  York  chancery  system,  and  when  a  reference 
was  had  to  a  master  for  the  purpose  of  settling  the  receiver's 
accounts,  no  order  of  confirmation  of  the  master's  report  was 
required,  nor  were  exceptions  allowed  to  such  report.  And 
if  a  party  in  interest  was  dissatisfied  with  the  allowance  made 
by  the  master,  his  proper  course  was  to  apply  to  the  court  to 
review  the  account  in  such  particulars  as  were  objectionable, 
and  the  court  would  then  consider  objections  as  to  the  general 
principles  on  which  the  master  had  proceeded  in  taking  the  re- 
ceiver's accounts,  but  would  not  take  cognizance  of  objections 
to  particular  items.^^ 

§  801.  Distinction  between  master's  report  on  receiver's 
account,  and  on  account  taken  by  himself;  court  may  in- 
vestigate principle  on  which  account  allowed,  but  not  de- 
tails; exceptions,  when  taken.  A  distinction  is  recognized 
between  a  master's  report  upon  a  receiver's  account,  and  his 
report  containing  an  account  taken  and  stated  by  himself,  or 
a  report  upon  a  matter  referred  to  him  for  investigation.  The 
distinction  is  based  upon  the  fact  that  the  receiver  is  himself 
an  officer  of  the  court,  as  well  as  the  master,  and  that  he  states 
his  own  account  and  submits  it  to  the  master  for  inspection 
under  order  of  the  court,  the  master  acting  in  place  of  the 

22  Shewell  v.  Jones,  2  Sim.  &  St.,  counts.  In  re  Browne's  Estate,  19 
170.  affirmed  3  Riiss.,  522.  L.  R.,  Ir.,   132;   S.  C,  ib.,  183,  af- 

23  Beytagh  v.   Concannon,   10  Ir.      firmed  on  appeal,  ib.,  423. 

Eq.,  351.  But  under  the  Irish  chan-  24  Brower  v.  Brower,  2  Edw.  Ch., 
eery  practice  a  receiver  was  held  to  621.  And  see,  as  to  the  practice  in 
a  strict  accountability  as  to  pay-  New  Jersey  in  regard  to  entertain- 
ments of  money  ordered  by  the  ing  exceptions  to  receiver's  ac- 
court.  And  when,  instead  of  pay-  counts,  and  the  time  and  manner 
ing  to  the  principal,  a  receiver  made  of  presenting  such  exceptions,  Me- 
payment  to  solicitors  who  were  not  chanics  Bank  of  Philadelphia  v. 
duly  authorized  to  receive  it,  the  Bank  of  New  Brunswick,  2  Green 
receiver  was  not  allowed  the  Ch.,  437;  Richards  v.  Morris  Canal 
amounts  so  paid,  in  passing  his  ac-  &  Banking  Co.,  3  Green  Ch.,  428. 


CHAP.  XIX.]  ACCOUNTS. 


949 


court,  and  in  a  judicial  rather  than  a  ministerial  capacity.     If 
the  master  adopts  any  erroneous  principle  in  allowing  the  re- 
ceiver's accounts,  the  court,  on  petition  of  the  proper  par- 
ties, may  refer  the  matter  back  to  him  for  correction.     And 
in  determining  such  question  the  court  will  investigate  the 
principles  and  rules  adopted  by  the  master  in  allowing  the  re- 
ceiver's accounts,  without  examining  the  items  in  detail,  or 
the  evidence  on  which  they  rest,  the  latter  duty  being  more 
especially  within  the  province  of  the  master,  and  being  analo- 
gous to  the  province  of  a  jury  upon  questions  of  fact.     If  it 
is  desired  to  take  exceptions  to  the  master's  report  upon  the 
receiver's  accounts,  they  should  be  first  taken  before  the  mas- 
ter; otherwise  they  will  not  be  considered  by  the  court.     The 
object  of  the  rule  is  twofold,  being  to  afford  the  master  an  op- 
portunity to  reconsider  his  decision,  and  to  enable  the  receiv- 
er to  sustain  his  accounts  by  additional  evidence,  or  to  make 
such  explanation  as  the  case  may  require.     And  while  the 
rule  would  not  deter  the  court  from  directing  an  account  to 
be   reformed,    if   it   contained   manifest   errors   or   improper 
charges,  yet  such  errors  should  be  clearly  shown  to  exist,  and 
their  character  should  be  such  as  to  be  shown  by  the  proofs  in 
the  case,  or  by  their  intrinsic  nature.25    But  a  receiver  is  not 
entitled  to  an  order  of  reference  to  examine  and  pass  upon 
his  accounts  until  he  has  presented  a  full  and  definite  state- 
ment, itemizing  the  various  matters,  and  verifying  the  account 
under  oath. 26 

§  802.  Not  compelled  to  account  by  stranger;  nor  to  a 
party,  but  only  to  court ;  party  may  move  for  account ;  duty 
to  account  once  a  year;  allowance  should  be  to  receiver 
and  not  to  party;  when  otherwise.  A  court  of  equity  will 
not  ordinarily  entertain  an  application  from  a  stranger  to  the 
cause  to  have  the  receiver  pass  his  account,  when  no  special 

25  Cowdrey  v.  The  Railroad  Com-  operating  a  railway.     And  see  Fel- 

pany,  1  Woods,  331.     And  see  this  ton  v.  Felton,  47  West  Va.,  27,  34 

case  as  to  principles  governing  the  S.  E.,  753. 

court   in   allowing   a   receiver's   ac-  26  People  v.  Columbia  Car  Spring 

counts    for    expenses    incurred    in  Co.,  12  Hun,  585. 


950  RECEIVERS.  [chap.    XIX. 

ground  is  shown  for  such  order.27  And  a  receiver  can  not 
be  compelled,  pending  litigation,  to  account  to  a  party  to  the 
suit,  or  to  furnish  him  with  statements  of  the  condition  of 
his  accounts.  Being  an  officer  of  the  court  and  not  of  the  par- 
ties litigant,  he  is  only  required  to  account  to  the  court  from 
which  he  derives  his  appointment. ^8  But  when  the  receiver 
in  a  cause  has  never  made  a  full  or  complete  report  of  the  in- 
come and  disbursements  of  the  estate  committed  to  his  care, 
any  party  to  the  cause  may  move  for  such  an  account;  and  it 
IS  the  duty  of  the  receiver  himself,  as  an  officed  of  the  court, 
to  make  a  full  report  and  to  pass  his  accounts  at  least  once 
a  year,  since  in  no  other  way  can  the  parties  to  the  cause  be 
informed  as  to  their  rights  or  the  court  act  understandingly.29 
And  ordinarily  expenses  incurred  in  the  receivership  should  be 
allowed  directly  to  the  receiver  by  the  court  and  not  to  the 
persons  by  whom  the  services  were  rendered. ^^  But  while 
an  allowance  for  the  costs  and  expenses  of  the  receivership 
should  ordinarily  be  allowed  directly  to  the  receiver  himself 
and  not  to  the  person  who  made  the  advances,  yet  where  the 
receiver  has  been  discharged  and  is  no  longer  subject  to  the 
jurisdiction  of  the  court,  the  allowance  may  properly  be  made 
directly  to  the  person  who  made  the  advances. ^^ 

§  803.  Should  keep  funds  distinct  from  his  own;  liable 
for  interest  on  mingling  funds ;  when  interest  not  allowed 
on  claim  of  creditor.  In  the  absence  of  any  special  direc- 
tions of  the  court,  it  is  the  duty  of  a  receiver  to  keep  the  fund 
intrusted  to  him  entirely  separate  and  distinct  from  his  in- 
dividual funds.  If  he  deposits  the  money  in  bank  for  safe 
keeping,  it  should  be  deposited  to  a  separate  account  in  his 
name  as  receiver,  so  that  the  fund  may  at  all  times  be  traced 

27  Colburn  v.   Cooper,  8  Ir.   Eq.,      of  Chancery  upon  this  subject,  the 
510.  opinion    of    Chancellor    Cooper    in 

28  Musgrove  v.  Nash,  3  Edw.  Ch.,      this  case. 

172.  30  Henrdie  &  Bolthoff  Co.  v.  Par- 

29  Lowe   V.    Lowe,    1    Tenn.    Ch.,      ry,  37  Colo.,  359,  86  Pac,  113.    And 
515 ;  Stretch  v.  Gowdey,  3  Tenn.  Ch.,      see,  post,  §  805. 

565.     And  see,  as  to  the  rules  and  31  German  National  Bank  v.  Best, 

orders  of  the  English  High  Court      32  Colo.,  192,  75  Pac,  398. 


CPIAP.    XIX.]  ACCOUNTS.  951 

and  identified.^2  And  when,  in  disregard  of  this  duty,  the 
receiver  violates  his  trust  by  mixing  the  trust  fund  with  his 
own  money,  keeping  the  whole  in  one  common  bank  account 
in  his  own  name,  and  using  large  sums  as  temporary  loans 
from  time  to  time,  he  is  guilty  of  such  a  breach  of  trust  as  to 
render  himself  liable  for  interest  upon  the  fund,  x^nd  such 
interest  will  be  charged  him  in  the  final  settlement  of  his 
accounts,  regardless  of  whether  he  himself  derived  profit  from 
the  fund  or  interest  from  the  loans.^^  So  if  without  author- 
ity of  the  court  he  deposits  funds  of  the  receivership  in  his 
own  bank  in  his  individual  name,  he  will  be  charged  with 
interest  upon  the  money  thus  deposited. ^^  So  when  he  with- 
draws funds  from  his  account  as  receiver  and  deposits  them 
in  another  bank  in  his  private  account,  and  in  the  settlement 
of  his  accounts  he  declines  to  explain  the  matter,  or  to  state 
what  sums  he  has  thus  deposited  in  his  individual  account,  he 
is  properly  chargeable  with  interest.^^  So,  too,  if  he  deposits 
the  funds  of  his  receivership  in  bank  with  his  personal  funds 
in  his  private  account,  against  which  he  draws  his  individual 
checks  from  time  to  time,  thereby  deriving  individual  benefit 
from  the  funds  of  the  receivership,  he  may  be  charged  with 
interest. ^^  But  the  fact  that  the  receiver  has  deposited  the 
funds  of  his  receivership  with  his  own  private  funds  in  bank 
will  not  render  him  liable  to  pay  interest  thereon,  when 
it  is  not  shown  that  he  has  used  any  part  of  the  funds  pertain- 
ing to  the  receivership,  or  in  any  manner  acquired  any  profit 
therefrom. 2"^  And  where  delay  has  been  occasioned  in  the 
payment  of  the  claim  of  a  creditor  because  of  an  appeal  by 
the  receiver  to  the  court  for  instructions,  interest  on  the  claim 
should  not  be  allowed  since  such  delay  is  the  delay  of  the  law 

32  Utica  Insurance  Co.  v.  Lynch,  34  Schwartz  v.  Keystone  Oil  Co., 
11  Paige,  520;  Hinckley  v.  Railroad       153  Pa.  St.,  283,  25  Atl,  1018. 

r-      lAA  TT    o     ic->     r  /-  35  Hinckley  v.   Railroad   Co.,   100 

Co.,  100  U.  S.,  153;  In  re  Common-      ,,    ^     ,_^     -^ 

U.  S.,  153. 
wealth  Fire  Insurance  Co.,  32  Hun,  36^^  ^^  Commonwealth  Fire  In- 

'°-  surance  Co.,  32  Hun,  78. 

33  Utica  Insurance  Co.  v.  Lynch,  37  Radford   v.    Folsom,    55   Iowa, 
11  Paige,  520.                                           276,  7  N.  W.,  604. 


952  RECEIVERS.  [chap.   XIX. 

and  is  incidental  to  all  litigation. ^^  It  is  held  in  Georgia,  that 
a  receiver  should  not  deposit  money  in  bank  without  the  au- 
thority of  the  court.  And  if  he  makes  such  a  deposit  without 
authority,  although  not  in  his  individual  name,  and  a  loss  oc- 
curs through  failure  of  the  bank,  he  will  be  liable  for  such 
loss.^^ 

§  804.  General  liability  of  receivers  for  interest  on  funds. 
In  general  it  may  be  said  that  receivers  will  not  be  allowed 
to  make  interest  for  their  own  benefit  upon  funds  in  their 
hands,  and  will  be  answerable  for  interest  upon  their  bal- 
ances.^^  And  a  receiver  is  chargeable  with  interest  upoil  funds 
derived  from  a  sale  of  property,  either  when  he  receives  inter- 
est or  when  he  might  have  done  so.'^l  If  he  retains  funds  in 
his  hands  after  the  time  when  they  should  be  paid  over,  he 
may  be  required  to  pay  interest  thereon  at  the  time  of  ren- 
dering his  next  account.'*^  And  when  he  is  guilty  of  negli- 
gence in  not  passing  his  accounts  at  the  time  required,  he 
will  be  compelled  to  pay  interest  upon  the  balance  in  his  hands 
from  the  time  when  it  was  his  duty  to  account,  or  to  pay  the 
money  into  court.^^  He  will  not  usually  be  required,  however, 
to  pay  interest  from  the  very  moment  of  receiving  the  money, 
but  only  from  the  time  when  it  should  have  been  paid  into 
court.^^  But  in  the  interval  between  receiving  the  money  and 
the  time  of  passing  his  accounts,  he  can  not  make  interest  on 
the  fund  for  his  own  benefit,  and  if  he  receives  a  sufficient  sum 
to  be  invested,  he  should  apply  for  an  order  to  have  it  paid 
into  court,  in  order  that  it  may  be  made  productive  to  the 

38  Malcomson   v.    Wappoo    Mills,      353 ;   Rosenthal   v.    McGraw,   71    C. 
99  Fed.,  633.     To  the  same  effect,      C.  A.,  277,  138  Fed.,  721. 

see  Solomons  v.  American  B.  &  L.  42  Harman  v.    Forster,    1    Hog., 

Assn.,  116  Fed.,  676.    And  see,  ante,  318;     Speiser  v.     Merchants'    Ex- 

§  394^.  change  Bank,  110  Wis.,  506,  86  N. 

39  Ricks  V.  Broyles,  78  Ga.,  610,  3  W.,  243. 

S.  E.,  772.  43  Fletcher  v.  Dodd,  1  Ves.  Jiin., 

40  Lonsdale  v.  Church,  3  Bro.  C.      85;  v.   Jolland,  8  Ves.,   72; 

C,  41 ;    Shaw  v.   Rhodes,  2  Riiss.,  Potts  v.  Leighton,  15  Ves.,  273. 

539.  44  Potts  V.  Leighton,  15  Ves.,  273. 

41  Hooper    v.    Winston,    24    111., 


CHAP.   XIX.]  ACCOUNTS.  953 

estate.^^  And  where  a  receiver  is  ordered  by  the  court  to 
make  a  particular  investment  of  the  funds  in  his  hands  but  fails 
to  do  so,  he  is  chargeable  with  interest  upon  the  fund  from 
the  time  when  the  investment  should  have  been  made,  but 
the  liability  in  such  case  is  not  for  compound  interest  but  for 
simple  interest  only.^^  When  receivers  have  illegally  appro- 
priated a  balance  in  their  hands,  they  are  chargeable  with  in- 
terest on  such  balance,  and  if  one  of  them  has  made  the  mis- 
appropriation and  the  other  has  negligently  permitted  it,  they 
will  be  held  jointly  liable  therefor  in  the  final  settlement  of 
their  accounts.'*'^  And  when  a  receiver  had  retained  the  funds 
in  his  hands  for  a  long  period  for  his  own  benefit,  he  was 
charged  interest  on  his  yearly  balances,  and  the  interest  was 
computed  by  annual  rests,  that  is  upon  the  balance  in  his 
hands  at  the  end  of  each  year.'^^  So  if  a  receiver,  acting  in 
good  faith,  but  without  the  direction  or  authority  of  the  court, 
loans  the  funds  belonging  to  his  receivership,  and  charges 
himself  with  the  amounts  received  for  interest,  no  losses  oc- 
curring by  reason  of  such  loans  and  the  estate  being  benefited 
thereby,  he  should  not  be  charged  with  interest  beyond  the 
amount  actually  received  by  him.'*^  But  it  is  improper  to  re- 
quire a  receiver  to  pay  interest  upon  the  money  in  his  hands  in 
the  absence  of  any  evidence  upon  the  question  of  his  liability 
to  pay  such  interest. ^^  And  while  a  receiver  is  not  allowed 
to  make  any  personal  profit  out  of  his  office,  aside  from  his 

45  Shaw  V.  Rhodes,  2  Russ.,  539.  compensation  should  be  disallowed, 

46  Roller  v.  Paul,  106  Va.,  214,  55  and  they  should  be  required  to  pay 
S.  E.,  558.  interest  on  their  balances  at  the  rate 

47  Commonwealth  v.  Eagle  Fire  of  five  per  cent,  per  annum.  See 
Insurance  Co.,  14  Allen,  344.  General  Order,  15  Ves.,  278.     And 

48  Foster  v.  Foster,  2  Bro.  C.  C,  see  comments  thereon  by  Lord 
616.  In  17%  a  general  order  was  Eldon  in  Potts  v.  Leighton,  id.,  273. 
entered  by  the  English  Court  of  49  Attorney- -General  v.  North 
Chancery,  requiring  receivers  to  America  Life  Ins.  Co.,  89  N.  Y., 
pass  their  accounts  and  pay  the  94,  affirming  in  part  S.  C,  26  Hun, 
balances  in  their  hands  into  court  294. 

annually,   and   it   was   ordered   that  50  How  v.  Jones,  60  Iowa,  70,  14 

in    default    thereof  their    salary   or       N.  W.,  193. 


954  RECEIVERS.  [chap.   XIX. 

compensation,  the  rule  will  not  be  extended  to  require  him  to 
account  for  money  which  he  has  realized,  not  by  any  act  done 
or  omitted  as  receiver,  but  by  reason  of  the  opportunity  afford- 
ed by  his  receivership.  Thus  a  receiver,  who  had  been  en- 
gaged in  business  as  a  broker  before  his  appointment,  and 
who  while  acting  as  receiver  of  an  insolvent  bank  is  paid  by 
mortgage  debtors  of  the  bank  a  commission  for  procuring 
new  loans  with  which  to  pay  their  indebtedness  to  the  bank, 
will  not  be  required  to  account  for  such  commissions  when  he 
has  acted  in  good  faith  and  without  neglecting  his  duties  as 


receiver 


51 


§  805.  When  and  to  what  extent  allowed  for  counsel 
fees.  Receivers  are  entitled,  in  the  settlement  of  their  ac- 
counts, to  payments  made  on  account  of  legal  services  and 
counsel  fees.^^  And  such  fees,  when  paid  by  the  receiver  in 
good  faith  in  collecting  moneys  to  which  he  is  entitled,  the 
disbursements  being  necessary  and  beneficial  to  the  parties 
ultimately  entitled  to  the  fund,  should  be  paid  from  such  fund 
in  the  settlement  of  the  receiver's  accounts. ^^  The  allowance 
of  counsel  fees  is  regarded  as  being  made  to  the  receiver  as  an 
item  in  his  account,  and  not  directly  to  counsel,  the  allowance 

51  Special  Bank  Commissioners  v.  So.,  916;  Berry  v.  Rood,  209  Mo., 
Franklin  Institution,  11  R.  I.,  557.  662,  22  S.  W..  108.    And  see  Perry- 

52  Howes  V.  Davis,  4  Ab.  Pr.,  71 ;  Mason  Shoe  Co.  v.  Sykes,  72  Miss., 
Cake  V.  Mohun,  164  U.  S.,  311,  17  390,  17  So.,  171,  28  L.  R.  A.,  277; 
Sup.  Ct.  Rep.,  100,  affirming  Cake  Pittman  v.  Hopkins,  74  Miss.,  563, 
V.  Woodbury,  3  App.  D.  C,  60,  and  21  So.,  606.  A  plaintiff  at  whose 
distinguished  in  International  Trust  instance  a  receiver  is  appointed  is 
Co.  V.  United  Coal  Co.,  27  Colo.,  not  entitled  to  counsel  fees  for  his 
246,  60  Pac,  621;  Boston  Safe-De-  attorney  from  a  fund  which,  at  his 
posit  &  T.  Co.  V.  Chamberlain,  14  instance,  has  come  into  the  posses- 
C.  C.  A.,  363,  66  Fed.,  847,  25  U.  S.  sion  of  the  receiver  to  which  an- 
App.,  251 ;  Montgomery  v.  Peters-  other  has  a  superior  claim,  when  it 
burg  S.  &  I.  Co.,  17  C.  C.  A.,  360,  appears  that  the  bringing  of  the 
70  Fed.,  746,  30  U.  S.  App.,  511;  fund  into  court  in  no  way  operated 
Elk  Fork  Oil  &  Gas  Co.  v.  Foster,  for  the  benefit  of  the  latter.  Buck- 
39  C.  C.  A.,  615,  99  Fed.,  495;  Amer-  waiter  v.  Whipple,  115  Ga.,  484,  41 
ican    Loan   &   Trust    Co.    v.    South  S.  E.,  1010. 

Atlantic  &  O.  R.  Co.,  81  Fed.,  62 ;  53  How  v.  Jones,  60  Iowa,  70.  14 

Henry  v.   Henry,  103  Ala.,  582,   15      N.     W.,     193.      But     counsel     fees 


CHAP.   XIX.] 


ACCOUNTS. 


955 


being  made  in  his  accounts  in  order  that  he  may  make  com- 
pensation for  such  services.^'^  And  where  the  value  of  the 
services  rendered  by  counsel  for  the  receiver  of  an  insolvent 
is  clearly  established,  the  court  has  no  authority  to  reduce 
the  amount  of  such  allowance  upon  the  ground  that  by  so  do- 
ing the  amounts  to  be  distributed  among  creditors  will  there- 
by be  increased. 55  And  since  counsel  fees  are  to  be  regarded 
as  part  of  the  costs  of  the  proceeding,  it  is  proper  to  give  them 
a  preference  over  prior  liens,  and  this  is  so  although  the  ap- 
pointment of  the  receiver  was  made  without  prejudice  to  prior 


should  not  be  allowed  out  of  the 
fund  for  an  attorney  who  is  em- 
ployed by  the  debtor  and  represents 
him  to  resist  the  claims  of  the  cred- 
itors at  whose  instance  the  receiver 
has  been  appointed.  Ford  v.  Gil- 
bert, 44  Ore.,  259,  75  Pac.  138.  See 
Stone  V.  Omaha  Fire  Ins.  Co.,  61 
Neb.,  834,  86  N.  W.,  468.  As  to  the 
effect  of  the  individual  interest  in 
the  receivership  proceeding  of  coun- 
sel employed  by  a  receiver  upon  the 
amount  of  his  fees,  see  Villere  v. 
New  Orleans  P.  M.  Co.,  122  La., 
717,  48  So.,  162. 

54  Stuart  v.  Boulware.  133  U.  S., 
78,  10  Sup.  Ct.  Rep.,  242;  First 
National  Bank  v.  Oregon  Paper  Co., 
42  Ore.,  398,  71  Pac,  144,  971 ;  Har- 
rigan  v.  Gilchrist,  121  Wis.,  127,  439, 
99  N.  W..  909,  1008;  Crumlish's 
Adm'r  v.  Shenanddah  V.  R.  Co.,  40 
West  Va.,  627,  22  S.  E.,  90.  As  to 
the  right  to  counsel  fees  out  of  a 
fund  in  court  derived  from  the  fore- 
closure of  a  railway  mortgage  and 
the  operation  of  the  road  by  a  re- 
ceiver, when  counsel  have  rendered 
■services  for  bondholders  and  other 
parties  in  interest,  and  as  to  counsel 
fees  to  the  receiver  in  such  case,  see 
Hand  v.  Railroad  Co.,  21  S.  C,  162. 
And   see,   ante.   §   802.     As   to   the 


right   to    counsel    fees    incurred    in 
resisting  the  application  for  the  ap- 
pointment of  a  receiver,  see  Com- 
monwealth V.  Penn  G.  B.  k  L.  Assn., 
204  Pa.  St.,  29,  53  Atl.,  516.    As  to 
the  allowance  of  counsel  fees  for  a 
receiver  appointed  under  a  void  or- 
der  of  the    court,    see    Sullivan   v. 
Gage,   145   Cal.,   759,   79   Pac,   537. 
In  Barber  v.  International   Co.,  74 
Conn.,  652,  51  Atl.,  857,  92  Am.  St. 
Rep.,  246,  it  was  held  improper  to 
authorize  a  receiver,  in  an  action  in 
which  he  might  be  plaintiff  and  the 
corporation   of  which  he   was   such 
receiver    a     defendant,    to     employ 
counsel  to  represent  such  corpora- 
tion.    In    Kimmerle    v.    Dowagiac 
Mfg.  Co.,  105  Mich.,  640,  63  N.  W., 
529,  it  was  held  that  where  the  sub- 
ject-matter   of    the    litigation    was 
settled  by  an  agreement  of  the  par- 
ties by  which  each  was  to  pay  one- 
half  of  the  fees,  costs  and  expenses 
of   the   receivership,   the   defendant 
could  not  be  heard  to  say  that  coun- 
sel fees  should  not  be  paid  because 
incurred  in  an  attempt  to  maintain 
the  appointment  which  was  irregu- 
lar. 

55  Stone  v.  Omaha  Fire  Ins.  Co., 
61  Neb.,  834,  86  N.  W.,  468. 


956  RECEIVERS.  [chap.  XIX. 

liens.^^  But  ex  parte  orders  for  the  payment  of  fees  to  the 
counsel  for  the  receiver,  who  is  his  law  partner,  such  orders 
being  obtained  by  the  receiver  or  by  the  counsel  himself  with- 
out notice  to  the  parties  in  interest,  are  not  conclusive  upon  a 
reference  to  settle  the  receiver's  accounts,  and  he  will  still  be 
required  to  show  that  such  payments  were  justified  by  services 
rendered. ^'^  And  since  all  administrative  and  executive  work 
in  the  handling  of  an  estate  is  to  be  performed  by  the  receiv- 
er, he  will  be  allowed  counsel  fees  only  for  work  requiring 
special  legal  skill. ^^  And  upon  a  petition  by  the  attorney  for 
the  receiver  for  an  allowance  for  his  services,  the  court  should 
not  allow  more  than  the  amount  claimed  in  the  petition,  al- 
though there  may  be  testimony  in  the  case  which  would  war- 
rant a  larger  allowance. ^^  And  the  courts  are  usually  indis- 
posed to  allow  a  receiver  any  payments  made  to  counsel  for 
services  when  the  employment  has  not  been  authorized  by  the 
court.^^  And  in  fixing  the  compensation  of  counsel,  the 
proper  consideration  is  not  the  work  actually  done  by  the  attor- 

56  Gallagher  v.  Gingrich,  105  59  Richter  v.  Schroeder,  110  111., 
Iowa,  237,  74  N.  W.,  763.  112. 

57  In  re  Commonwealth  Fire  In-  60  Corey  v.  Long,  43  How.  Pr., 
surance  Co.,  32  Hun,  78.  As  to  504;  Dalliba  t/.  Winschell.  11  Idaho, 
allowances  for  counsel  fees  out  364,  82  Pac,  107,  114  Am.  St.  Rep., 
of  the  funds  of  a  receivership  to  267;  Crumlish's  Adm'r  v.  Shenan- 
claimants  against  such  funds,  and  doah  V.  R.  Co.,  40  West  Va.,  627, 
to  intervening  creditors,  see  People  22  S.  E.,  90.  And  see  Hulings  v. 
V.  Security  Life  Insurance  and  An-  Jones,  63  West  Va.,  696.  In  Henry 
nuity  Co.,  23  Hun,  596;  Attorney-  v.  Henry,  103  Ala.,  582,  15  So.,  916, 
General  v.  Continental  Life  Insur-  the  court  use  the  following  lan- 
ance  Co.,  27  Hun,  195 ;  Attorney-  guage  in  regard  to  the  allowance  of 
General  v.  Continental  Life  Insur-  counsel  fees  in  cases  where  not 
ance  Co.,  31  Hun,  623.  As  to  the  previously  authorized  by  the  court: 
practice  in  fixing  the  amount  of  "In  no  case,  except  when  the  cestui 
counsel  fees  for  services  rendered  a  que  trust  are  sui  juris  and  waive 
receiver  of  an  insolvent  life  insur-  it,  should  a  court  suffer  a  credit  to 
ance  company  under  the  statutes  stand,  or  be  entered  upon  the  ac- 
of  New  York,  see  People  v.  Knick-  count  of  any  trustee,  for  expenses 
erbocker  Life  Insurance  Co.,  31  incurred  without  a  previous  order, 
Hun,  622.  whether  for  attorney's  fees  or  other- 

58  Olson  V.  Bank,  72  Minn.,  320,  wise,  until  he  satisfies  the  court  by 
75  N.  W.,  378.  proof,   1.  That  the  expense  was  a 


CHAP.   XIX.] 


ACCOUNTS. 


957 


ney  based  upon  the  time  spent  and  the  amount  customarily 
charged  for  such  work,  but  the  allowance  should  be  based  upon 
what  appears  to  be  proper  for  the  work  which  was  reasonably 
necessary  for  the  due  administration  of  the  trust.^i  And  a 
receiver  is  not  entitled,  in  settling  his  accounts,  to  an  allow- 
ance for  counsel  fees  paid  by  him  out  of  a  particular  fund, 
in  an  unsuccessful  defense  of  an  action  brought  against  him  by 
a  person  entitled  to  that  fund,  and  in  an  appeal  taken  in  such 
action ;  especially  when  the  original  action  is  brought  against 
him  and  the  appeal  is  prosecuted  by  him  in  his  personal  ca- 
pacity, and  not  as  receiver.62  And  when  a  person,  not  in  in- 
terest in  the  controversy,  has  fraudulently  procured  his  own 


reasonably  necessary  one,  and  for  a 
service  not  within  the  ordinary  du- 
ties which  the  trustee   should  him- 
self perform.     2.  That  the  amount 
claimed   is  the   fair  and   reasonable 
value  of  the  service ;  and,  3.  That 
the  amount  has  been  actually  paid, 
in    good    faith,    by   the    trustee.     If 
the  courts  would  vigorously  enforce 
this    rule,    trust    estates    would   not 
suffer,  as  many  have  suffered  in  the 
past.     The  loose  practice  of  execu- 
tors, administrators,  guardians  and 
other  trustees,  of  employing  coun- 
sel,   generally,    without    regard    to 
cost;    without   effort   to   obtain   the 
best   terms   practicable   for  the   es- 
tate;   with  no  thought  of  personal 
responsibility,  or  expectation  of  pay- 
ment until  allowance  is  made,  but, 
too  often,  upon  the  assumption,  ex- 
pressly   or    impliedly    indulged    by 
both,  that  the  attorney  shall  receive 
only  what  he  may  induce  the  court 
to  allow   from   the   funds   in  hand, 
after  the  service  has  been  rendered, 
is  fraught  with  evil,  and  should  not 
be  encouraged.    Under  its  influence, 
estates  have,  not  infrequently,  been, 
in  large  measure,   swallowed  up  in 
cost,  and,  in  some  instances,  courts. 


created  to  protect  the  helpless,  ac- 
tually brought  into  public  disfavor. 
We   mean   no    reflection   upon   any 
one  connected  with  this  cause.    Our 
observations   are   to   emphasize   the 
wisdom    of   the   rule    we    re-affirm. 
We  will  not  be  understood  as  hold- 
ing that   when   the   chancery  court 
has  a  fund  in  gremio  legis—s.  fund 
in  the  hands  of  its  officer — it  may 
not   direct   a   claim   shown   to   have 
been  properly  incurred  by  the  trus- 
tee, although  without  previous  au- 
thority, to  be  paid,  from  the  funds 
in    court,    directly  to   the   party    in 
whose  favor  it  was  incurred.    Cases 
may   arise    where    this    course    will 
best  conserve  the  rights  of  all.    That 
is  a  question,  however,  which  con- 
cerns the  creditor.     The  trustee  or 
receiver,    who   has   had   the   receipt 
and  disbursement  of  the   funds  of 
the  estate,  can  not  complain  of  the 
court's     refusal     to     exercise     this 
power.    If  the  claim  is  a  proper  one, 
he  should  have  paid  it  himself  and 
asked  allowance  for  it." 

61  Harrigan  v.  Gilchrist,  121  Wis., 
127,  438,  99  N.  W.,  909,  1008. 

62Utica  Insurance  Co.  v.  Lynch, 
2  Barb.  Ch.,  573. 


958  RECEIVERS.  [chap.    XIX. 

appointment  as  receiver  of  a  fund  in  litigation,  and  has  ob- 
tained possession  of  the  fund,  in  opposition  to  the  wishes  and 
under  protest  of  all  the  parties  in  interest  and  of  all  parties  to 
the  cause,  he  will  not  be  allowed  to  charge  upon  the  fund  pay- 
ments made  to  counsel  employed  by  him  in  defending  his  ap- 
pointment, the  order  being  reversed  on  appeal. ^^  Nor  will 
counsel  fees  be  allowed  for  services  rendered  in  resisting  an 
application  for  the  removal  of  a  receiver,  when  the  applica- 
tion is  sustained. ^^  Nor  will  fees  be  allowed  in  such  case 
upon  behalf  of  counsel  who  were  employed  to  assist  in  re- 
sisting such  application  by  creditors  and  without  leave  of 
court. ^^  Nor  will  counsel  fees  be  allowed  except  for  legal  as- 
sistance rendered  the  receiver,  and  they  will  not  be  allowed  for 
services  which  he  himself  was  equally  capable  of  performing.^^ 
Nor  should  such  fees  be  allowed  for  making  a  report  to  the 
court  which  is  a  mere  narration  of  his  acts  and  an  account  of 
his  receipts  and  disbursements.^'^  And  where  a  receiver  has 
grossly  mismanaged  the  property  in  his  possession  resulting 
in  great  loss  to  the  estate,  counsel  fees  will  not  be  allowed. ^^ 
And  where  a  receiver  has  been  appointed  in  a  state  court  over 
the  same  property  as  that  over  which  a  receiver  is  subsequently 
appointed  in  a  federal  court,  counsel  fees  claimed  to  have  been 
earned  in  the  state  court  under  a  contract  with  the  receiver 
therein  appointed  will  not  be  allowed  as  a  preferred  charge  upon 
the  property  in  the  federal  court ;  nor  will  such  charges  be  al- 
lowed among  the  claims  of  general  creditors  where  they  have 
not  been  ascertained  and  allowed  by  the  state  court  for  whose 

63  O'Mahoney  v.  Belmont,  62  N.  67  Wilkinson  v.  Washington  Trust 
Y.,  133,  affirming  S.  C,  37  N.  Y.  Co.,  42  C.  C.  A.,  140,  102  Fed.,  28; 
Supr.  Ct.  R.,  223.  Dalliba  v.  Winschell,  11  Idaho,  364, 

64  /„  re  Colvin,  4  Md.  Ch..  126.  82  Pac.,  107,  114  Am.  St.  Rep.,  267. 

65  Anderson  v.  Fidelity  &  Deposit  68  State  Central  Savings  Bank  v. 
Co.,  100  Ga.,  739,  28  S.  E.,  463.  Ball-Bearing  Chain   Co.,   118  Iowa, 

66  Henry  v.  Henry,  103  Ala.,  582,  698,  92  N.  W.,  712.     And  see,  ante,] 
15    So.,    916;    Saulsbury    v.    Lady  §  790. 

Ensley  C,   I.   &  R.   Co.,   110  Ala., 
585,  20  So.,  72. 


CHAP.    XIX.]  ACCOUNTS.  959 

receiver  they  were  rendered. ^^  But  the  receiver's  expenses 
and  fees  for  counsel  and  witnesses,  in  defending  himself 
against  a  motion  for  his  removal,  have  been  allowed  him  when 
the  court  was  satisfied  that  he  had  acted  with  entire  good  faith 
and  strict  integrity;  and  when  the  charges  against  him  have 
been  withdrawn  by  an  amicable  arrangement  between  the 
parties,  and  when  he  has  then  voluntarily  surrendered  his 
trust  to  the  courtJ^  And  a  receiver  of  a  lunatic's  estate  may 
be  allowed  proper  and  reasonable  counsel  fees,  for  advice  and 
assistance  rendered  him  in  the  discharge  of  his  official  duty, 
and  in  aiding  him  to  protect  the  estate^^  And  since  the  com- 
pensation of  the  receiver  forms  a  necessary  element  in  his  ac- 
count, it  is  proper  to  allow  counsel  fees  incurred  in  defending 
this  item  of  the  account. "^^  And  although  the  allowance  of  com- 
pensation to  a  receiver  and  his  counsel  as  fixed  by  the  act  of 
appointment  may  generally  be  considered  as  sufficient  to  fully 
compensate  them  for  their  services,  the  court  may,  in  its  dis- 
cretion, grant  additional  allowances  for  extraordinary  serv- 
ices made  necessary  in  the  progress  of  the  receivership  pro- 
ceeding.'^^  And  an  allowance  of  counsel  fees  will  not  be  dis- 
turbed upon  appeal  where  there  is  nothing  in  the  record  to  show 
the  reviewing  court  what  such  services  or  their  value  were, 
since  in  such  case  it  will  be  presumed  that  the  lower  court 
acted  properly  in  making  the  allowance.'''*  In  the  absence  of 
settled  practice  or  general  rules  to  the  contrary,  motions  for 
the  allowance  of  counsel  fees  should  not  be  heard  ex  parte 
but  only  upon  notice  to  the  parties  in  interest  or  their  solicit- 
ors.'^5 

69  American  Loan  &  Trust  Co.  v.       Minn.,   129,    114  N.  W.,  651.     And 
South  Atlantic  &  O.  R.  Co.,  81  Fed.,      see,  ante,  §  790. 

62.  '^4  St.   Paul  Title,  I.  &  T.  Co.  v. 

70  Cowdrey  v.  The  Railroad  Co.,  Diagonal    Coal    Co.,   95    Iowa,    551, 
1  Woods,  331.  64  N.  W.,  606. 

71  In  re  Colvin,  4  Md.  Ch.  126.  75  Merchants'  Bank  v.  Crysler,  14 

72  Baxter  v.   Hewes,  45  La.  An.,  C.  C.  A.,  444,  67  Fed.,  388,  32  U. 
1065,  13  So.,  864.  S.  App.,  187. 

73  State   v.    Germania    Bank,    103 


960  RECEIVERS.  [chap,    XIX. 

§  806,  When  allowed  counsel  fees  paid  to  counsel  of  the 
parties.  The  courts  are  usually  averse  to  allowing  a  re- 
ceiver to  employ  as  his  counsel  the  counsel  of  either  party  to 
the  cause,  when  there  are  conflicting  interests.  And  when 
counsel  for  the  plaintiff,  in  an  action  for  the  dissolution  of 
a  partnership,  had  also  acted  as  associate  counsel  to  the  re- 
ceiver, the  court  refused  to  allow  a  claim  for  compensation 
for  such  services. '^^  But  where  the  counsel  of  one  of  the  par- 
ties has  been  employed  by  the  receiver,  not  adversely  to  either 
of  the  parties,  but  to  advance  the  common  interest  of  both, 
such  employment  does  not  fall  within  the  principle  of  the 
rule  prohibiting  the  receiver  from  employing  the  counsel  of 
either  party.  In  such  case,  therefore,  it  is  proper  to  allow  the 
receiver,  in  passing  his  accounts,  a  reasonable  sum  for  coun- 
sel fees.'''^  But  compensation  will  be  allowed  in  such  case 
only  when  it  is  entirely  clear  that  the  necessarily  and  proper- 
ly prejudicial  attitude  of  counsel  can  not  have  affected  their 
services  to  the  receiver.'^s  And  in  the  settlement  of  his  ac- 
counts, a  receiver  has  no  authority  to  credit  himself  with 
counsel  fees  paid  for  or  in  behalf  of  either  of  the  parties  to 
the  cause.  If,  however,  upon  final  settlement,  sufficient  funds 
remain  belonging  to  the  parties  for  whom  he  has  made  such 
advances,  he  may  be  reimbursed  out  of  such  funds  if  the 
amounts  so  advanced  were  reasonable  and  proper,  or  made  at 
the  request  of  the  party  charged.'^^  And  where  it  is  sought  to 
have  an  allowance  of  fees  upon  behalf  of  counsel  of  an  in- 
tervening creditor,  it  must  appear  that  the  intervention  re- 
sulted in  a  direct  benefit  to  the  fund  and  to  the  parties  in 
interest;  and  such  an  allowance  should  not  be  made  where 
the  only  questions  raised  must  inevitably  have  arisen  without 
the  intervention,  and  the  interests  of  the  receiver  were  identical 

76  Adams  v.  Woods,  8  Cal.,  306.  78  Speiser  v.  Merchants'  Ex- 
And  see  Bennett  v.  Chapin,  3  change  Bank,  110  Wis.,  506,  86  N. 
Sandf.,   673.  W.,  243. 

77  Bennett  v.  Chapin,  3  Sandf.,  79  Drake  v.  Thyng,  Z7  Ark.,  228. 
673.      See   Ryckman   v.    Parkins,   5 

Paige,  543. 


CHAP.    XIX.]  ACCOUNTS.  961 

with  those  of  the  intervener  and  it  appeared  that  the  receiv- 
er and  his  counsel  were  entirely  competent  to  present  such 
questions.^^ 

§  807.  Receiver  in  suit  against  administrator  not  al- 
lowed for  services  rendered  as  solicitor  for  the  adminis- 
trator. When  a  receiver  is  appointed  in  a  suit  in  chancery 
against  an  administrator  to  recover  property  of  the  deceased, 
he  will  not  be  allowed  to  credit  himself  in  his  account  with 
an  amount  due  him  for  services  which  he  has  rendered  as 
solicitor  for  the  administrator  in  defending  the  suit,  since  this 
is  properly  a  claim  against  the  administrator,  which  should 
be  allowed  by  the  court  of  probate.^^ 

§  808.  Not  allowed  counsel  fees  paid  to  himself;  receiv- 
er, an  attorney,  not  bound  to  render  legal  services.  A  re- 
ceiver, in  stating  his  accounts,  will  not  be  allowed  to  charge 
for  counsel  fees  paid  to  himself  for  services  rendered,  he  be- 
ing an  attorney,  in  addition  to  the  legal  costs  properly  tax- 
able in  suits  prosecuted  or  defended  by  him.  And  it  is  deemed 
as  unsafe  to  permit  a  receiver  to  contract  with  and  to  pay 
himself  for  such  extra  services,  as  it  would  be  to  permit  him 
to  become  a  purchaser  of  the  trust  property,  which  it  is  his 
duty  to  sell  to  the  best  advantage  of  the  estate.^2  ^nd  since 
the  duties  of  a  receiver  are  administrative  and  executive,  he 
is  not  required,  because  of  the  fact  that  he  is  an  attorney,  to 
render  legal  services  for  the  estate. ^^ 

§  809.  What  costs  and  expenses  allowed  in  receiver's 
accounts;  preference  for  costs;  allowance  discretionary; 
expense  of  taking  care  of  property.  The  costs  of  the  ap- 
pointment of  a  receiver  are  entitled  to  priority  of  payment 
out  of  the  fund  realized  by  him,  before  all  other  demands.^'* 

80  Weed    V.    Central    of    Georgia  83  Olson  v.  Bank,  72  Minn.,  320, 
Ry.  Co.,  40  C.  C.  A.,  319,  100  Fed.,      75  N.  W.,  378. 

162.  84  Read  v.  Corcoran,  1  Ir.  Ch.,  N. 

81  Battaile  v.  Fisher,  36  Miss.,  321.      S.,  235. 

82  Jn  re  Bank  of  Niagara,  6  Paige, 
213.  And  see  State  v.  Butler,  15 
Lea,  113. 

Receivers  61. 


962  RECEIVERS.  [chap.    XIX. 

And  the  costs  of  a  receivership  are  properly  given  a  prefer- 
ence over  prior  Hens  aUhough  the  appointment  of  the  re- 
ceiver was  made  without  prejudice  to  prior  Hens.^^  And  in 
general  it  may  be  stated  that  the  allowance  of  costs  in  receiv- 
ership proceedings  rests  largely  in  the  discretion  of  the  lower 
court  and  that,  in  the  absence  of  a  manifest  abuse  of  such  dis- 
cretion, the  action  of  that  court  in  allowing  or  rejecting  items 
of  costs  will  not  be  disturbed  upon  appeal.^^  If  the  receiver 
permits  costs  to  accrue  which  he  ought  to  have  prevented,  as  if 
he  neglects  to  pay  rent  due  to  the  landlord  upon  premises  sub- 
ject to  the  receivership,  he  will  be  required  to  pay  such  costs 
out  of  his  own  pocket.^"^  But  a  receiver  who  is  discharged 
because  of  his  inability  to  procure  new  sureties,  will  not  be 
charged  with  the  costs  of  appointing  a  new  receiver.^^  And 
when  it  does  not  appear  that  a  receiver  has  been  guilty  of  any 
fraud  or  bad  faith  in  his  accounts,  the  costs  of  a  reference  for 
their  settlement  should  not  be  charged  against  him,  even 
though  some  items  in  his  accounts  are  not  allowed.^^  And 
where  a  receiver  was  properly  appointed  by  the  court  to  take 
possession  of  the  property  in  controversy  and  operate  it  pend- 
ing the  determination  of  the  proceeding,  the  expense  of  taking 
care  of  the  property  and  operating  it  becomes  a  charge  upon  it 
and  is  properly  payable  out  of  the  fund  in  the  hands  of  the 
receiver.^0    But  where  the  appointment  of  a  receiver  is  wrong- 

85  Gallagher  v.  Gingrich,  105  see  the  case  first  cited  as  to  the 
Iowa,  237,  74  N.  W.,  763.  allowance  of  advances   made   by  a 

86  Pennsylvania  Co.  v.  Jackson-  party  to  the  suit  and  the  receiver 
ville,  T.  &  K.  W.  R.  Co.,  13  C.  C.  pending  the  receivership.  And  in 
A.,  550,  66  Fed.,  421,  30  U.  S.  App.,  Buster  v.  Mann,  69  Ark.,  23.  62  S. 
188.  W.,  588,  it  was  held  that  where  the 

87  Cook  z;.  Sharman,  Sir.  Eq.,  515.  receiver    of    an    insolvent    concern, 

88  Lane  v.  Townsend,  2  Ir.  Ch.,  together  with  several  of  the  cred- 
N.  S.,  120.  itors,    had    advanced    money    with 

89  Radford   v.    Folsom,    55    Iowa,  which  to  carry  on  the  business,  the^ 
276,  7  N.  W.,  604.  receiver  was  not  entitled  to  a  pref- 

90  Ferguson  v.  Dent,  46  Fed.,  88;  erence  over  such  creditors  in  case 
Elk  Fork  Oil  &  Gas  Co.  v.  Foster,  of  a  deficiency  after  the  sale  of  the 
39  C.  C.  A.,  615,  99  Fed.,  495.     And  property.     See,  ante,  §  36,  as  to  the 


CHAP.   XIX.]  ACCOUNTS.  963 

ful,  only  such  items  of  expense  should  be  allowed  as  would 
necessarily  have  been  incurred  had  no  receiver  been  appoint- 
ed.9i 

§  809a.  When  costs  and  expenses  charged  against  plain- 
tiff. As  a  general  rule  where  a  plaintiff  has  sought  and 
procured  the  appointment  of  a  receiver  in  a  case  where  the 
jurisdiction  is  properly  exercised,  persons  dealing  with  the 
receiver  must  look  for  their  reimbursement  solely  to  the  fund 
or  property  in  the  charge  of  the  court  without  any  personal 
liability  upon  the  part  of  the  plaintiff.  The  mere  inadequacy 
of  the  property  and  its  failure  to  realize  at  a  sale  a  sufficient 
amount  to  cover  the  costs  and  expenses  of  the  receivership  will 
not  render  the  plaintiff  personally  liable  for  such  deficiency, 
where  he  has  been  guilty  of  no  irregularity  and  has  properly 
invoked  the  jurisdiction  of  the  court  in  the  first  instance.^^ 
If,  however,  the  appointment  is  improperly  rriade  in  the  first 
instance,  without  notice  to  the  defendant  and  without  suffi- 
cient averments  in  the  bill  to  warrant  the  relief,  and  the  re- 
ceiver is  continued  against  the  objections  of  the  defendant, 
the  costs  and  expenses  of  the  receivership  should  not  be 
charged  against  him,  but  against  the  plaintiff  in  the  action, 
by  whom  they  were  caused. ^^  So  where  a  receiver  has  been 
appointed  upon  a  bill  which  contained  no  cause  of  action  in 
a  case  where  such  appointment  was  held  improper  and  the 
fund  upon  which  the  defendant  held  a  lien  has  been  thereby 
depleted,  it  is  proper  for  the  court,  in  settling  the  receiver's 
accounts,  to  allow  the  defendant  to  recover  from  the  plaintiff 
a  part  of  the  fees  and  expenses  which  have  been  allowed  the  re- 
ceiver out  of  the  property  upon  which  the  defendant  held  liens.^* 

allowance   of   the   expenses    of   the  S.  C,  76  C.   C.  A.,  396,   145  Fed., 

carrying  on  of  a  business  by  a  re-  820. 

ceiver.  93  Moyers  v.  Coiner,  22  Fla.,  422 ; 

9iOgden   City  v.   Irrigation   Co.,  Horn  v.  Bohn,  96  Md.,  8,  53  Atl.,. 

18  Utah,  279,  55  Pac,  385.  576.    And  see,  ante,  §  796. 

92  Atlantic    Trust    Co.    v.    Chap-  94  Cutter  v.   Pollock,  7  N.  Dak.,, 

man,  208  U.   S.,   360,  28   Sup.   Ct.  631,  76  N.  W.,  235. 
Rep.,  406,  52  L.  Ed.,  528,  reversing 


964  RECEIVERS.  [chap.   XIX. 

And  where  it  appears  that  the  order  appointing  a  receiver  was 
unwarranted  and  without  authority  of  law,  the  costs  are  prop- 
erly taxed  against  the  plaintiff  upon  whose  application  the 
receiver  was  appointed.^^     So  where  the  necessity  for  the  re- 
ceivership resulted  from  the  assertion  by  the  plaintiff  of  a 
cause  of  action  which  was  finally  shown  to  be  unwarranted 
and  fraudulent,  the  costs  of  the  proceeding  should  be  charged 
against  the  plaintiff  and  are  not  payable  out  of  the  fund  in 
the  hands  of  the  receiver.^^    So  where  a  receiver  was  appoint- 
ed improperly  and  without  notice  and  upon  motion  is  after- 
ward discharged,  he  is  not  entitled  to  recover  his  expenses 
out  of  the  fund  but  must  look,  if  at  all,  to  the  person  at  whose 
instance  he  was  appointed. ^"^     So  if  a  receiver  is  improperly 
granted  over  property  belonging  to  third  persons,  who  are  not 
parties  to  the  action  and  who  derive  no  benefit  from  the  re- 
ceivership, as  against  such  persons  the  receiver  will  not  be 
allowed  to  retain  any  portion  of  the  fund  derived  from  such 
property  in  payment  of  his  compensation  and  costs,  and  he 
must  look  to  the  person  who  procured  his  appointment  for 
such  payment.9^    And  where  a  receiver  has  been  appointed  im- 
properly and  without  authority  of  law,  as  subsequently  held 
by  the  court,  and  after  exhausting  all  the  funds  in  his  hands, 
there  remains  a  balance  due  for  rent  of  the  premises  occupied 
for  the  purpose  of  carrying  on  the  business  of  the  receiver- 
ship, the  lessor  to  whom  such  balance  is  due  is  entitled,  by  pe- 
tition in  the  receivership  proceeding,  to  compel  the  payment 
of  such  balance  by  the  plaintiff  upon  whose  application  the 
receiver  was  appointed.     And  especially  is  this  so  where  the 
plaintiff  has  greatly  prolonged  the  receivership  and  the  pos- 
session of  the  lessor's  property  by  contesting  the  latter's  claim 
of  priority  in  the  payment  of  his  rent.99    And  it  is  held  that 

95  McAnrow  v.  Martin,  183  111.,  97  Couper  v.  Shirley,  21  C.  C.  A., 
467,  56  N.  E.,  168;  Wills  Valley  288,  75  Fed.,  168,  44  U.  S.  App.,  586. 
Mining  &  Mfg.  Co.  v.  Galloway,  155  98  Howe  v.  Jones,  66  Iowa,  156, 
Ala.,  628,  —  So.,  — .  23  N.  W.,  376. 

96  Highley  v.  Deane,  168  111.,  266,  99  Link  Belt  Machinery  Co.  v. 
48  N.  K,  50.  Hughes,  195  111.,  413,  63  N.  E.,  186. 


CHAP.   XIX.]  ACCOUNTS.  965 

where  the  plaintiff  procures  the  appointment  of  a  receiver,  he 
acts  at  his  peril  and  is  chargeable  with  knowledge  of  the 
fact  that  if  the  fund  of  which  the  receiver  takes  possession  is 
not  adequate  to  defray  the  costs  and  expenses  of  the  receiver- 
ship, he  may  be  compelled  to  pay  such  expenses  himself ;  and 
in  such  case  it  is  not  incumbent  upon  the  persons  who  make 
such  advances  to  notify  the  plaintiff  that  they  look  to  him 
for  payment.!  -q^^  it  is  improper  to  tax  the  costs  against  the 
unsuccessful  plaintiff  where  no  objection  was  made  by  the  de- 
fendant to  the  receiver's  report  in  which  he  asks  for  compensa- 
tion and  costs.2 

§  810.  When  defendant  in  suit  by  receiver  entitled  to 
costs;  motion  for  receiver  to  pay  judgment  for  costs.  In 
an  action  prosecuted  by  the  receiver  of  a  corporation  for  the 
collection  of  money  demands,  when  the  action  is  carried  on 
for  the  enhancement  of  the  fund  in  the  receiver's  hands,  for 
the  benefit  of  those  who  shall  be  finally  determined  to  be  en- 
titled thereto,  if  the  receiver  is  unsuccessful  in  his  suit,  the 
defendant  is  entitled  to  costs.  And  such  defendant  will  not 
be  required  to  await  the  final  distribution  of  the  assets  and  to 
share  pro  rata  with  other  creditors  or  parties  interested,  but 
he  is  entitled  to  an  immediate  order  for  payment  of  the  costs 
out  of  any  funds  in  the  receiver's  hands.^     But  it  has  been 

1  German  National  Bank  v.  Best,  prosecuted  by  receivers  for  the  col- 
32  Colo.,  192,  75  Pac,  398.  And  lection  of  alleged  money  demands, 
see  Bradford  v.  Cooledge,  103  Ga.,  instituted  or  carried  on  for  the  en- 
753,  30  S.  E.,  579.  hancement    of    the    fund,    for    the 

2  Harrington  v.  Foley,  108  Iowa,  benefit  of  those  to  whom  it  is  ulti- 
287,  79  N.  W.,  64.  mately  to  be  paid,  is  the  defendant 

3  Columbian  Insurance  Co.  v.  Ste-  entitled  to  costs  to  be  paid  to  him 
vens,  37  N.  Y.,  536.  The  action  immediately,  or  must  he  stand  as 
was  an  ordinary  suit  at  law  by  the  a  general  creditor  to  await  the  final 
receivers  for  the  recovery  of  a  administration  and  receive  only  (as 
money  demand.  Defendants  had  the  case  may  be)  his  distributive 
judgment  for  their  costs  of  suit,  share  of  the  fund  pro  rata,  with 
and  applied  by  motion  for  an  order  those  for  whose  benefit  he  has  been 
that  the  receiver  pay  such  costs  subjected  to  a  groundless  litiga- 
out  of  funds  in  his  hands.  "Wood-  tion?  ...  It  was  conceded  on  the 
ruff,  J.,  says,  p.  537 :    "In  an  action  argument   that   the   costs   in   ques- 


966 


RECEIVERS. 


[chap.   XIX. 


held  to  constitute  no  ground  for  sustaining  a  motion  to  re- 
quire a  receiver  to  pay  a  judgment  for  costs,  that  he  has  re- 
cently been  in  possession  of  funds  sufficient  to  pay  the  judg- 
ment, or  that  he  has  paid  other  and  larger  demands,  since  the 
receiver  is  not  bound  to  render  a  general  account  of  his  trust 
to  each  creditor  who  may  assail  him  with  such  a  motion.'* 

§  811.  When  receiver  allowed  costs  of  unsuccessful  liti- 
gation. Under  the  English  chancery  practice,  it  was  held 
that  while  a  receiver  could  not  be  allowed  his  costs  and  ex- 
penses in  defending  actions  without  leave  of  court,  if  he  failed 
in  such  defense,  yet  if  he  was  successful  he  was  entitled  to 
his  costs,  although  he  had  defended  without  the  sanction  of  the 
court.5  But  a  receiver  of  an  infant's  estate  will  not  be  allowed 
his  costs  and  expenses  incurred  in  defending  actions  without 
the  sanction  of  the  court,  since  it  is  improper  for  him  to  incur 
any  expense  to  the  estate  without  leave  of  court.^  And  when 
a  receiver  has  improvidently  instituted  proceedings  at  law  in 
a  certain  form  of  action,  which  he  has  afterward  abandoned 


tion  are  chargeable  upon  and  are 
to  be  collected  out  of  the  fund. 
This  could  not  well  be  denied,  and 
yet,  in  a  case  in  which  it  does  not 
appear  by  anything  stated  in  the 
papers  that  there  are  other  claims 
on  that  fund,  of  any  sort,  except 
the  interests  of  the  stockholders  of 
the  company,  it  would  seem  to  fol- 
low, as  of  course,  that  the  receiver 
should  have  been  directed  to  pay 
those  costs.  Such  an  order  is  the 
appropriate  mode  of  reaching  funds 
in  the  receiver's  hands.  Not  being 
in  form  a  party  to  the  action,  no 
execution  could  reach  the  prop- 
erty he  holds,  and  being  the  custo- 
dian of  the  fund  as  an  officer  of 
the  court,  he  is  subject  to  imme- 
diate direction  to  pay  it  to  a  party 
entitled.    .    .    .    The  receiver  is,  pro 


hac  vice,  the  representative  of  the 
company,  its  creditors  and  stock- 
holders. The  action  is  prosecuted 
for  the  increase  of  a  fund  which 
is  to  be  paid  to  them.  It  is  not  ac- 
cording to  any  rule  of  justice  or 
equity  toward  third  parties  that 
actions  like  the  present  should  be 
prosecuted  by  the  company  or  such 
representative,  otherwise  than  at 
the  expense  and  risk  of  the  fund 
which  it  is  sought  thereby  to  in- 
crease." 

4  Devendorf  v.  Dickinson,  21 
How.  Pr.,  275.  See,  as  to  liability 
of  receivers  for  costs  under  the 
New  York  code  of  procedure,  Marsh 
V.  Hussey,  4  Bosw.,  614. 

5  Bristowe  v.  Needham,  2  Ph., 
190. 

6  Swaby  v.  Dickon,  5  Sim.,  629. 


GHAP.   XIX.]  ACCOUNTS.  967 

under  the  advice  of  counsel,  and  has  brought  his  action  in 
another  form,  in  which  he  is  successful,  it  would  seem  that 
he  can  not  be  allowed  the  costs  of  the  former  proceeding, 
but  must  bear  them  himself.'^  Where,  however,  an  applica- 
tion was  made  and  proceedings  were  had  against  a  receiver, 
but  the  application  was  refused  with  costs,  which  the  applicant 
was  wholly  unable  to  pay,  the  receiver  was  allowed  his  costs, 
as  between  solicitor  and  client,  out  of  the  fund  in  his  hands.^ 

§  811a.  Taxes  on  property  in  receiver's  hands  payable 
as  expenses  of  administration.  Taxes  levied  upon  personal 
property  in  the  hands  of  a  receiver  become  a  charge  upon  the 
estate,  and  are  properly  payable  by  the  receiver  as  a  part  of 
the  costs  and  expenses  of  the  administration  of  the  trust.  And 
the  fact  that  the  tax  is  assessed  in  the  name  of  the  insolvent 
over  whom  the  receiver  is  appointed  rather  than  in  the  name 
of  the  receiver  constitutes  no  objection  against  the  validity 
of  the  tax,  nor  will  it  avail  against  the  tax  that  there  is  no 
averment  or  proof  that  there  are  sufficient  funds  in  the  hands  of 
the  receiver  to  pay  the  tax  in  question.^ 

§  812.  English  practice  as  to  costs.  Under  the  English 
chancery  practice,  a  receiver  was  not  allowed  his  costs  for  ap- 
pearing in  response  to  a  petition  for  his  final  discharge,  since 
he  need  not  have  appeared,  being  merely  an  officer  of  the 
court,  and  not  a  party  interested. i*^  And  a  receiver  was  not 
usually  allowed  to  take  any  steps,  by  petition  or  otherwise, 
for  the  satisfaction  of  his  costs  and  expenses,  this  being  left 
to  the  action  of  the  parties  to  the  cause.  If,  however,  the  par- 
ties had  been  guilty  of  long-continued  negligence  and  delay 
in  moving  for  the  taxation  and  payment  of  the  receiver's  costs, 
he  was  held  to  be  justified  in  presenting  a  petition  himself  for 
their  allowance  and  payment. ^^ 

7  In  re  Montgomery,  1  Mol.,  419.  10  Herman  v.   Dunbar,  23  Beav., 

8  Courand  v.  Hanmer,  9  Beav.,  3.      312. 

9Wiswall  V.   Kunz,  173  111.,   110,  H  Ireland  v.  Eade,  7  Beav.,  55. 

50  N.  E.,  184. 


968  RECEIVERS.  [chap.   XIX. 

§  813.  When  chargeable  for  hire  of  property;  not  al- 
lowed for  payment  of  charges  against  predecessor  in  ar- 
rears. When  a  receiver  has  used  property  intrusted  to  his 
care  in  and  about  his  private  business,  thereby  deriving  profit 
to  himself,  he  is  properly  chargeable  in  his  account  for  the  hire 
of  the  property.i2  But  he  will  not  be  allowed  to  charge  in 
his  account  for  money  advanced  by  him  in  payment  of  charges 
against  his  predecessor  in  office,  who  was  largely  in  arrears 
on  account  of  the  funds  intrusted  to  him  as  receiver,  so  that 
he  himself  would  not  have  been  entitled  to  the  credit  on  his 
own  account.12 

§  814.  May  account  pending  bill  of  interpleader;  plain- 
tiff can  not  have  receiver  discharged  without  passing  ac- 
counts; court  should  not  render  final  judgment  without 
passing  account.  In  case  of  rival  claimants  to  a  fund  in 
the  hands  of  a  receiver,  he  may  institute  an  action  in  the  na- 
ture of  a  bill  of  interpleader,  to  compel  them  to  interplead  and 
determine  their  rights ;  and  pending  such  action  he  may  proceed 
to  render  his  accounts  and  pay  over  the  fund  into  court,  to 
abide  the  result  of  the  interpleader.^^  But  a  plaintiff  who  has 
procured  the  appointment  of  a  receiver  can  not  dismiss  his  bill 
and  have  the  receiver  discharged  without  first  requiring  him 
to  pass  his  accounts.^^  And  it  is  improper  for  the  court  to 
render  final  judgment  in  the  cause  without  passing  upon  the 
receiver's  account,  nor  should  the  court  direct  that  the  fees 
and  expenses  of  the  receivership  should  be  taxed  by  the  clerk 
of  the  court  as  costs.  The  proper  practice  is  for  the  court, 
after  it  has  reached  its  conclusion  and  upon  notice  to  all  parties 
in  interest,  to  order  the  receiver  to  render  his  account,  and, 
having  passed  upon  the  various  items  in  the  account,  to  enter 
a  decree  providing  for  the  amount  of  the  receiver's  compensa- 

12  Battaile  v.  Fisher,  36  Miss.,  321.  13  Battaile  v.  Fisher,  36  Miss.,  321. 

And  see  as  to  liability  of  a  receiver  14  Winfield    v.    Bacon,    24   Barb., 

of    rents    and    profits    to    account,  154. 

when    he    has    been    appointed    by  15  White   v.   Lord   Westmeath,  2 

agreement   of  the  parties,   Ford  v.  Hog.,  33. 
Rackham,  17  Beav.,  485. 


CHAP.  XIX.]  ACCOUNTS.  969 

tion  and  the  other  items  of  his  expenses  and  to  direct  the 
manner  in  which  the  receiver  shall  pay  the  items  in  the  ac- 
count.^6 

§  815.  Plaintiff  should  not  be  delayed  by  litigation  con- 
cerning receiver's  accounts.  A  receiver  being  an  officer  of 
the  court,  and  neither  party  to  the  litigation  being  responsible 
for  his  misfeasance  or  malfeasance,  it  is  held  that  plaintiffs  in 
the  action  in  vv^hich  he  is  appointed  should  not  be  delayed  in 
the  collection  of  the  amounts  due  them,  until  the  close  of  a 
litigation  concerning  the  receiver's  accounts,  which  may  extend 
over  a  considerable  period  of  time,  since  this  would  be  a 
manifest  injustice  and  hardship  upon  plaintiffs. ^"^ 

§  816.  Receiver  irregular  in  accounts  ordered  to  pre- 
sent account  yearly  and  to  verify  by  affidavit.  When  a  re- 
ceiver had  been  very  irregular  and  careless  in  his  accounts,  so 
that  it  was  impossible  to  determine  from  them  what  were  the 
balances  in  his  hands  for  which  he  was  chargeable,  it  was 
deemed  proper  that  he  should  be  specially  ordered  to  bring  in 
his  accounts  every  year  within  a  specified  time,  and  that  he 
verify  by  affidavit  the  amount  of  his  receipts  and  disbursements 
and  the  balances  in  his  hands  at  the  date  of  his  reports. ^^ 

§  817.  Executors  of  receiver  not  compelled  to  pass  his 
accounts ;  executor  denied  petition  for  account  of  payment 
into  court;  court  should  not  pass  account  of  deceased  re- 
ceiver without  notice  to  personal  representative.  In  case 
of  the  death  of  a  receiver,  equity  has  no  jurisdiction,  upon  a 
petition  in  behalf  of  parties  interested,  to  order  the  executors 
of  the  deceased  receiver  to  bring  in  and  pass  his  accounts,  and 
to  pay  the  balance  found  due  out  of  his  assets. ^^  If,  however, 
the  receiver  dies  pending  proceedings  against  him  for  an  ac- 
counting, the  court  has  power  to  make  an  order  against  his 
executors  reviving  and  continuing  the  accounting  as  against 

16  Cutter  V.   Pollock,  4  N.  Dak.,  18  Bertie    v.    Lord    Abingdon,    8 
205,  59  N.  W.,  1062,  25  L.  R.  A.,      Beav.,  53. 

ZTJ,  50  Am.  St.  Rep.,  644.  19  Jenkins  v.  Briant.  7  Sim.,  171. 

17  Milwaukee  &  Minnesota  R.  Co. 
V.  Soutter,  2  Wal.,  510. 


970  RECEIVERS.  [chap.    XIX. 

them.20  But  after  the  death  of  a  receiver  and  the  appointment 
of  his  successor,  the  court  has  no  power  to  finally  pass  upon 
his  accounts  without  giving  his  personal  representative  an  op- 
portunity to  be  heard. 2^  But  when  a  receiver,  appointed  for 
the  benefit  of  a  tenant  for  life,  never  acted,  but  permitted  the 
solicitor  in  the  cause  to  act  as  receiver  and  to  collect  all  the 
rents,  and  after  many  years  the  executor  of  the  receiver  was 
compelled  to  pay  into  court  the  amount  found  to  be  due,  not- 
withstanding the  solicitor  had  previously  paid  a  portion  to  the 
tenant  for  life,  it  was  held  that  the  executor  could  not  main- 
tain a  petition  for  an  accounting  of  what  was  paid,  and  for  a 
lien  upon  the  estate  for  the  amount  which  should  be  found  due 
upon  the  accounting.22 

§  818.  When  salary  forfeited  for  delay  in  payment  into 
court;  when  delay  excusable.  When  a  receiver,  after  his 
discharge,  had  not  paid  into  court  the  balance  found  due  upon 
his  account  within  the  time  required,  he  was  ordered  to  pay 
the  same,  together  with  the  amount  which  had  been  allowed 
him  for  his  salary,  with  interest  on  both  sums  from  the  date 
first  appointed  for  payment.23  But  when  a  receiver  had  de- 
layed passing  his  account  in  order  to  obtain  additional  rent 
from  a  tenant,  thereby  benefiting  the  estate,  he  was  allowed  his 
commission  or  poundage  thereon  and  the  costs  of  passing  his 
account ;  ^4  so,  also,  when  the  receiver  had  delayed  passing  his 
account  at  the  request  of  the  parties,  in  order  to  save  expense 
pending  a  compromised^ 

§  819.  Receiver  of  minor  compelled  to  account  from  be- 
ginning, on  minor  coming  of  age.  It  has  been  held  that  a 
receiver  over  a  minor's  estate  may,  upon  the  minor  coming  of 
age,  be  properly  required  to  account  to  him  from  the  begin- 
ning concerning  the  management  of  his  affairs,  although  he 

20 /m  r^  Columbian  Insurance  Co.,  23  Harrison    v.    Boydell,    6    Sim., 

30  Hun,  342.  211. 

21  Overholt  v.  Old  D.   Mfg.  Co.,  24  Flood  v.   Lord  Aldborough,  8 
98  Va.,  654,  37  S.  E.,  307.  Ir.  Eq.,  103. 

22  Gurden   v.    Badcock,    6    Beav.,  25  Purcell  v.  Woodley,  10  Ir.  Eq., 
157.  422. 


CHAP.  XIX.]  ACCOUNTS.  971 

has  before  presented  his  accounts  from  time  to  time  to  the 
coiirt.26 

§  819a.  How  receiver's  accounts  may  be  questioned. 

When  a  receiver  is  charged  with  having  allowed  and  paid,  un- 
der an  order  of  court,  claims  which  are  fictitious  and  unfound- 
ed, the  proper  practice  for  a  creditor  desiring  to  contest  such 
allowances  is  to  apply  to  be  made  a  party  to  the  suit  in  which 
the  order  was  made  and  to  have  such  order  vacated. 27  But 
when  a  receiver's  accounts  have  once  been  passed  and  approved 
by  the  court,  they  may  be  questioned  only  by  a  direct  proceed- 
ing or  petition,  calling  attention  to  some  error,  fraud  or  mistake 
in  the  accounts.  And  when  there  have  been  several  receivers 
in  the  same  cause,  some  of  whose  accounts  have  been  passed 
and  approved,  and  a  general  order  is  then  made  requiring  the 
receivers  to  account  before  the  master,  such  order  does  not  re- 
quire that  the  accounts  already  approved  shall  be  reopened. 28 

§  819&.  Right  of  appeal  from  order  settling  receiver's 
accounts.  While  a  receiver,  being  a  mere  officer  or  custo- 
dian of  the  court,  can  not  appeal  from  an  order  directing  him  to 
turn  over  the  property  or  money  in  his  hands,  yet,  if  the  order 
erroneously  fixes  the  amount  of  property  or  money  in  his 
hands,  and  directs  him  to  turn  over  more  than  is  in  his  posses- 
sion, he  is  entitled  to  an  appeal  from  such  order.29  So  he  may 
appeal  from  a  final  decree  settling  his  accounts  and  fixing  the 
balance  due  from  him,  and  for  this  purpose  he  occupies  sub- 
stantially the  position  of  a  party  to  the  cause.^^     Upon  the 

26  Wildridge  v.  McKane,  2  Mol.,  29  How  v.  Jones,  60  Iowa,  70,  14 

545.  N.    W.,    193;    JMerriam    v.    Victory 

2TSchenck  v.  Ingraham,  4  Hun,  Mining  Co.,  37  Ore.,  321,  56   Pac, 

67;  S.  Q,  5  Hun,  397.  75,  58  Pac,  37,  60  Pac,  997. 

28  Farmers'  Loan  &  Trust  Co.  v.  30  Hinckley  v.  G.,  C.  &  S.  R.  Co.. 

Central  Railroad,  2  Fed.,  751,  1  Mc-  94  U.  S.,  467;  Henry  v.  Henry,  103 

Crary,    352.      As    to    the    effect    of  Ala.,  582,  15  So.,  916;  Saulsbury  v. 

laches  upon  the  right  of  a  party  in-  Lady  Ensley  C,  I.   &  R.   Co.,   110 

terested  to  set  aside   an  order  di-  Ala.,  585,  20  So.,  72. 
recting  the  payment  of  funds  by  a 
receiver,  see  Lombard  v.  Wade,  Zl 
Ore.,  426,  61  Pac,  856. 


972  RECEIVERS.  [chap.    XIX. 

same  principle,  where  an  order  has  been  entered  approving  a 
receiver's  report  and  account  and  finally  discharging  him  and  a 
writ  of  error  is  sued  out  to  review  such  order  of  discharge,  the 
receiver  is  a  necessary  party  to  the  proceeding  and  it  is  error 
for  the  reviewing  court  to  proceed  without  him.^^  So  the  par- 
ties to  the  cause  in  which  he  is  appointed,  and  who  are  interested 
in  the  fund  in  his  hands,  may  appeal  from  a  final  decree  settling 
the  receiver's  accounts.^^  And  where  a  receiver's  account  em- 
braces every  transaction  in  his  trust  relation  and  covers  the 
entire  period  for  which  he  was  originally  appointed,  an  order 
settling  his  account  is  final  and  therefore  appealable  at  the  in- 
stance of  any  party  in  interest  and  this  is  so  although  he  has, 
by  a  subsequent  order,  been  continued  in  his  trust.^^  But  an 
order  approving  a  receiver's  accounts,  which  is  not  final  and 
which  directs  the  receiver  to  continue  the  management  of  the 
property  until  the  further  order  of  the  court,  is  not  appealable, 
and  an  appeal  therefrom  will  be  dismissed.24  So  an  ex  parte 
order  making  an  allowance  of  counsel  fees  is  interlocutory  and 
is  therefore  not  appealable.^^ 

§  819c.  Appeal  by  one  creditor  resulting  in  benefit  to 
all;  entitled  to  expenses  and  counsel  fees.  Where  a  fund 
in  the  hands  of  a  receiver  has  been  increased  as  the  result  of  an 
appeal  by  a  particular  creditor,  such  augmented  fund  belongs 

31  Haigh  V.  Carroll,  197  III.,  193,  to  sue  out  another  writ  of  error  to 

64  N.  E.,  375.    In  this  case  the  ap-  which  the  receiver  should  be  made 

pellate    court    reversed    the    lower  a  party. 

court   and   remanded   the   cause   to  32  Hovey    v.    McDonald,    109    U. 

that   court   with    directions   to   dis-  S.,  150,  3  Sup.  Ct.  Rep.,  136;  Chand- 

allow  the  expenditures  made  by  the  ler   v.    Gushing- Young    S.    Co.,    13 

receiver   during   the   period   of   re-  Wash.,  89,  42  Pac,  548. 

demption,  and  to  order  the  payment  33  Patterson  v.  Ward,  6  N.  Dak., 

of  the  money  collected  by  him  to  359,  71  N.  W.,  543. 

the  owner  of  the  equity  of  redemp-  34  Rochat  v.  Gee,  91  Gal.,  355,  27 

tion.    Upon  writ  of  error  to  review  Pac,  670.     And   see  Illinois  Trust 

the  judgment  of  the  appellate  court,  &  Savings  Bank  v.   Pacific  R.  Co., i 

the  supreme  court,  after  holding  as  99  Gal.,  407,  33  Pac,  1132. 

indicated  in  the  text,  reversed  and  35  Wilder  v.  Reed,  46  Ore.,  54,  78 

remanded   the   cause   to   the  lower  Pac,  1027. 
court  without  prejudice  to  the  right 


CHAP.  XIX.]  ACCOUNTS.  973 

to  the  creditors  generally  and  not  alone  to  the  one  who  prose- 
cuted the  appeal.  Such  creditor,  however,  is  entitled  out  of  the 
fund  to  all  his  costs  and  expenses  incurred  upon  the  appeal,  as 
well  as  to  counsel  fees  earned  in  thus  increasing  the  fund.^^ 

36  Schwartz  v.  Keystone  Oil  Co.,  164  Pa.  St.,  415,  30  Atl.,  297. 


CHAPTER  XX. 

OF  THE  RE^IOVAL  AND  DISCHARGE  OF  RECEIVERS. 

I.  Removal  for  Cause   §  82Q 

II.  Final  Discharge     832 

I.  Removal  for  Cause. 

§  820.     Power  of  removal  or  discharge  a  necessary  incident  to  power 
of  appointment. 

821.  Discretionary  nature  of  power  of  removal;  effect  of  relation- 

ship to  the  parties  as  ground  for  removal;  want  of  notice  of 
appointment  of  successor  no  ground  for  removal. 

822.  Receiver  not  removed  to  make  way  for  agent  of  the  parties. 

823.  Employing  counsel  of  the  parties  no  ground  for  removal. 

824.  Power  of  removal  in  vacation;  vacating  order  of  appointment;. 

notice  of  motion  for  removal  requisite;  notice  to  creditors 
unnecessary. 

825.  Removal    not    appealable;    may    be   made    after    plaintiff    is    non- 

suited and  pending  motion  for  new  trial. 

826.  Analogy     between     removing     receiver     and     dissolving     injunc- 

tion; removed  when  equities  of  bill  denied  by  answer. 

827.  Removal  and  substitution  by  consent;  extending  one  receiver 

in  place  of  several. 

828.  Receiver's  interest  as  stockholder  and  director  in  plaintiff  bank;. 

employment  of  debtor  by  receiver  in  creditor's  suit. 

829.  Required  to  restore  fund  on  removal. 

830.  Receiver  not  heard  on  motion  to  vacate  his  appointment. 

831.  When  defendants  estopped    from  seeking  removal. 
831a.  Diligence  essential  to  application  for  removal. 

§  820.  Power  of  removal  or  discharge  a  necessary  inci- 
dent to  power  of  appointment.  The  subject  of  the  removal 
or  discharge  of  receivers,  although  to  a  considerable  degree 
regarded  as  a  matter  of  practice  and  to  be  discussed  as  such, 
is,  nevertheless,  deemed  of  sufficient  importance  to  merit  sep- 
arate treatment.  The  power  of  a  court  of  equity  to  remove  or 
discharge  a  receiver  whom  it  has  appointed  may  be  regarded  as 

974 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  975 

well  settled,^  and  it  may  be  exercised  at  any  stage  of  the  liti- 
gation.2  Indeed,  it  would  seem  to  be  a  necessary  adjunct  of 
the  power  of  appointment,  and  to  be  exercised  as  an  incident  to 
or  consequence  of  that  power ;  the  authority  to  call  such  officer 
into  being  necessarily  implying  the  authority  to  terminate  his 
functions  when  their  exercise  is  no  longer  necessary,  or  to  re- 
move the  incumbent  for  an  abuse  of  those  functions,  or  for 
other  cause  shovvn.^  And  the  cases  upon  this  branch  of  the  sub- 
ject will  be  found  to  resolve  themselves  into  two  classes,  viz., 
cases  of  removal  or  substitution  for  cause,  and  cases  of  dis- 
charge because  of  the  necessity  for  the  appointment  having 
ceased  to  exist. 

§  821.  Discretionary  nature  of  power  of  removal;  ef- 
fect of  relationship  to  the  parties  as  ground  for  removal; 
want  of  notice  of  appointment  of  successor  no  ground  for 
removal.  As  regards  the  power  of  a  court  of  equity  to  re- 
move a  receiver  for  cause  and  to  substitute  another  in  his  stead, 
it  is  to  be  observed  that  the  exercise  of  the  power  is  regarded 
as  a  matter  properly  resting  in  the  sound  discretion  of  the  court, 

1  Ferry  v.  Bank  of  Central  New  attorney-general  to  ask  for  the  re- 
York,  15  How.  Pr.,  446.  For  the  moval  of  a  receiver  of  an  insolvent 
distinction  between  "vacation  of  or-  corporation  under  the  statutes  of 
der  of  appointment,"  "removal"  and  New  York,  and  as  to  the  practice 
"discharge,"  see  Pagett  v.  Brooks,  in  such  cases,  see  Attrill  v.  Rock- 
140  Ala.,  257,  37  So.,  263.  As  to  the  away  Beach  Improvement  Co.,  25 
proper  practice  upon  a  petition  for  Hun,  509.  And  see  S.  C,  25  Hun, 
the  discharge  of  a  receiver  for  cause,  376.  But  the  removal  of  a  receiver 
see  Farmers'  Loan  &  Trust  Co.  v.  over  a  corporation,  upon  the  appli- 
Northern  Pac.  R.  Co.,  61  Fed.,  546.  cation  of  its  stockholders,  has  been 

2/m  re   Colvin,  3    Md.    Ch.,   300.  denied    when    it    appeared    that    a 

And  see  Crawford  v.  Ross,  39  Ga.,  majority   of  the   directors   were   in 

44.    As  to  the  removal  of  a  receiver  sympathy     and     co-operation     with 

appointed  through  collusion,  and  to  such  stockholders,  upon  the  ground 

the  point  that  the  proper  method  of  that     the     stockholders     might     be 

questioning    such    an    order    of    re-  heard    through    the    corporation    or 

moval    is    by    appeal,    and    not    by  its  directors.     Fifth  National  Bank 

injunction     to     restrain     the     new  v.  P.  &  C.  S.  R.  Co.,  1  Fed.,  190. 
receiver   from   interfering  with  the  3  Wehrs  v.  Sullivan,  217  Mo.,  167, 

former  one,  see  Wilson  v.  Barney,  116  S.  W.,  1104. 
5  Hun,  257.    As  to  the  right  of  the 


976  RECEIVERS.  [chap.    XX. 

and  hence  to  be  governed  by  the  circumstances  of  the  particular 
case.^  It  is  difficult,  therefore,  to  frame  any  definite  rules 
susceptible  of  general  application,  and  the  power  of  removal 
for  cause  is  referred  to  the  broad  and  undefined  region  of  the 
discretionary  jurisdiction  of  courts  of  equity.  It  may  be  re- 
garded as  settled,  however,  that  the  mere  fact  of  relationship 
between  the  receiver  and  the  plaintiff  in  the  action  in  which  he 
was  appointed,  is  not,  of  itself,  sufficient  ground  for  his  remov- 
al, such  relationship  affording,  at  the  most,  merely  a  circum- 
stance to  be  taken  into  consideration  at  the  time  of  his  appoint- 
ment.5  A  receiver  will  not,  therefore,  be  removed  solely  be- 
cause of  his  relationship  to  the  plaintiff,  when  no  improper  con- 
duct has  been  shown  on  his  part,  and  when  he  is  in  every  way 
qualified  for  the  office  and  has  given  ample  security,  especially 
when  his  appointment  was  requested  by  a  large  majority  of  the 
creditors  of  the  fund  in  litigation.^  But  when  the  person  ap- 
pointed was  the  brother  of  one  of  the  parties  to  the  litigation, 
and  the  son  of  one  claiming  to  be  largely  interested  as  a  credit- 
or, and  was  admitted  by  the  plaintiff  to  have  taken  an  active 
part  in  the  controversy  as  his  agent  and  friend,  he  was  regarded 
as  too  far  enlisted  in  the  cause  to  permit  of  his  being  an  unbiased 
and  impartial  receiver,  and  he  was,  therefore,  removed."^  And 
since  absolute  impartiality  as  between  the  parties  to  the  litiga- 
tion is  an  indispensable  qualification  of  a  receiver,  upon  an  ap- 
plication for  his  removal  the  court  may  properly  consider  his 
past  relations  to  the  parties,  as  well  as  his  present  sympathies. 
And  when  it  is  shown  that  he  was  the  nominee  of  one  hostile 
party  and  bitterly  opposed  by  the  other,  and  that  he  was  ap- 

4  Siney  t;.  New  York  Consolidated  5  Wetter  v.  Schlieper,  7  Ab.  Pn, 

Stage  Co.,  28  How.  Pr.,  481 ;  S.  C,  92 ;  Shainwald  v.  Lewis,  8  Fed.,  878. 

18    Ab.    Pr.,    435;    First    National  6  Wetter  v.  Schlieper,  7  Ab.  Pr., 

Bank    v.     Barnum    Wire    &    Iron  92. 

Works,   58   Mich.,  315,  24   N.   W.,  T  Williamson  v.  Wilson,  1  Bland, 

543,  25  N.  W.,  202;  State  v.  Rey-  418. 
nolds,  209  Mo.,  161,  114  S.  W.,  1097; 
In  re  Angell,  131  Mich.,  345,  91  N. 
W.,  611. 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  977 

pointed  under  the  mistaken  belief  that  all  interests  had  united 
in  his  selection,  and  that  by  reason  of  his  interest  his  efficiency 
as  an  officer  of  the  court  is  impaired,  it  is  proper  to  remove 
him.S  But  it  constitutes  no  ground  for  the  removal  of  a  re- 
ceiver that  by  his  advice  and  suggestion  he  has  favored  and 
given  aid  to  a  particular  scheme  of  the  reorganization  commit- 
tee of  the  insolvent  concern  over  which  he  w^as  appointed.^ 
And  where,  upon  the  resignation  of  one  receiver,  the  court  of 
its  own  motion  appoints  another  to  fill  the  vacancy,  it  is  no 
ground  for  the  removal  of  such  receiver  that  a  party  interested 
in  the  ownership  had  no  notice  of  his  appointment,  where 
there  is  no  showing  of  incompetence  or  unfitness.io  And  if 
the  only  right  of  the  creditor  seeking  the  removal  of  a  receiver 
is  to  have  his  claim  paid  in  full  and  a  sufficient  fund  is  reserved 
in  the  receiver's  hands,  to  be  applied  to  such  payment  when  the 
claim  shall  be  established,  it  is  proper  to  refuse  the  application 
for  his  removal,  all  other  creditors  being  satisfied  with  the  re- 


ceiver 


11 


§  822.  Receiver  not  removed  to  make  way  for  agent  of 
the  parties.  It  is  to  be  observed  that  a  court  of  equity  will 
not  remove  its  own  receivers,  in  order  to  make  way  for  agents 
or  receivers  who  may  be  selected  by  private  persons  interested 
in  the  litigation.  And  when  the  court  has  appointed  its  receiv- 
er, who  has  entered  upon  the  duties  of  his  office,  it  will  not  re- 
move him  upon  the  application  of  another  creditor  of  the  de- 
fendant, who  is  entitled,  under  his  security,  to  appoint  an  agent 
or  receiver  to  collect  the  rents  and  profits  of  defendant's  estate 
for  the  payment  of  such  creditor.^^ 

§  823.  Employing  counsel  of  the  parties  no  ground  for 
removal.  While  it  has  been  held  to  be  improper  for  the 
counsel  of  either  party  to  the  litigation  to  act  as  counsel  for 

8  Wood   V.   Oregon  Development  H  First  National  Bank  v.  Barnum 

Co     55  Fed     901.  Wire  &  Iron  Works,  58  Mich.,  315, 

s'ciarke  v.  Central  R.  &  B.  Co.,  24  N.  W.,  543,  25  N.  W.,  202. 

66  Fed.,  16.  ^-  Sanders  v.  Lord  Lisle,  Ir.  Rep., 

10  Fowler  v.  Jarvis-Conklin  M.  T.  4  Eq.,  43. 
Co.,  66  Fed.,  14. 

Receivers — 62. 


9~8  RECEIVERS.  [chap.    XX. 

the  receiver,  yet  the  mere  fact  of  the  receiver  having  employed 
as  his  own  counsel  the  counsel  of  one  of  the  parties  does  not,  of 
itself,  unless  shown  to  be  collusive,  furnish  sufficient  ground  for 
his  removal  after  he  has  entered  upon  the  discharge  of  his 
duties.^^ 

§  824.  Power  of  removal  in  vacation ;  vacating  order  of 
appointment;  notice  of  motion  for  removal  requisite;  no- 
tice to  creditors  unnecessary.  It  is  held  in  Georgia  that 
courts  of  equity  are  to  be  regarded  as  being  always  open  for  the 
purpose  of  removing  receivers,  and  that  the  power  of  removal, 
like  the  power  of  appointment,  may  be  exercised  by  the  court 
upon  due  notice  in  vacation. i^  And  under  the  statute  of  Con- 
necticut it  is  held  that  the  court  has  the  power  to  remove  its  re- 
ceiver in  vacation  upon  due  notice  to  him.^^  And  since  the 
appointment  is  itself  a  matter  resting  largely  in  the  sound  dis- 
cretion of  the  court  to  which  the  application  is  addressed,  if 
the  court  at  a  subsequent  stage  of  the  cause  becomes  satisfied 
that  the  appointment  was  improvidently  made,  it  has  undoubted 
power  to  vacate  its  order,  thus  in  effect  removing  the  receiv- 
er, i^  But  before  the  court  will  entertain  a  motion  for  the  re- 
moval of  a  receiver,  due  notice  must  be  given  of  the  motion  in 
writing,  which  notice  should  set  forth  specifically  the  grounds 
upon  which  the  removal  is  sought.  And  a  failure  to  give  such 
notice  will  warrant  the  court  in  refusing  to  hear  the  motion. ^'^ 
Nor  will  the  rule  requiring  notice  be  relaxed,  even  though  suffi- 
cient grounds  are  shown  for  removal,  and  an  order  of  removal 
made  without  such  notice  will  be  reversed  upon  appeal. ^^  But 
notice  to  every  creditor  who  has  filed  his  claim  is  not  neces- 

13  Bank  of  Monroe  v.  Schermer-  ing  Co.,  31  Hun,  195;  Campbell  v. 
horn,  Clarke  Ch.,  366.  Spratt,  5  N.  Y.  Weekly  Digest,  25. 

14  Crawford  v.  Ross,  39  Ga.,  44.  And  a  notice  to  the  receiver  of  five 

15  In  re  Premier  Cycle  Mfg.  Co.,  days  has  been  held  sufficient.  In  re 
70  Conn.,  473,  39  Atl.,  800.  Premier  Cycle  Mfg.  Co.,  70  Conn., 

16  Copper    Hill     Mining    Co.     v.  473,  39  Atl.,  800. 

Spencer,  25  Cal.,  11.  IS  Campbell    v.    Spratt,    5    N.    Y. 

1"  Dougherty    v.    Jones,    37    Ga.,      Weekly  Digest,  25. 
348;  Bruns  v.  Stewart  Manufactur- 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  979 

sary.19  It  is,  however,  proper  for  the  court  to  revoke  or  rescind 
its  order  appointing  a  receiver  without  notice  to  him. 2*^ 

§  825.  Removal  not  appealable;  may  be  made  after 
plaintiff  is  nonsuited  and  pending  motion  for  new  trial. 
Since  the  removal  of  a  receiver  is  a  matter  addressed  to  the 
sound  discretion  of  the  court,  its  decision  removing  the  incum- 
bent and  substituting  another  in  his  stead  can  not  ordinarily  be 
reviewed  upon  appeal  to  an  appellate  court.^i  Nor  has  a  re- 
ceiver any  such  interest  in,  or  title  to  his  office  as  will  enable 
him  to  maintain  an  appeal  from  an  order  of  removal. ^2  But 
where  the  order  of  removal  is  in  effect  a  settlement  of  the  re- 
ceiver's accounts  and  a  refusal  to  make  him  proper  compensa- 
tion, an  appeal  will  lie  at  the  instance  of  the  receiver.23  And 
when,  upon  the  final  trial  of  the  cause,  judgment  of  nonsuit 
is  rendered  against  the  party  on  whose  application  the  appoint- 
ment was  made,  the  court  may  vacate  the  order  of  appointment, 
thus  removing  the  receiver,  notwithstanding  the  pendency  of  a 
motion  for  a  new  trial. ^4 

§  826.  Analogy  between  removing  receiver  and  dissolv- 
mg  injunction ;  removed  when  equities  of  bill  denied  by  an- 
swer. The  jurisdiction  of  a  court  of  equity,  wdiich  is  ex- 
ercised in  the  removal  of  receivers,  bears  a  striking  resemblance 
to  that  which  is  called  into  action  upon  the  dissolution  of  an 
interlocutory  injunction,  and  in  both  cases  the  power  to  termi- 

19  In  re  Premier  Cycle  Mfg.  Co.,  Ct.  Rep.,  625,  43  L.  Ed.,  941,  modi- 
70  Conn.,  473,  39  Atl.,  800.  fying  and  affirming  S.  C,  26  C.  C. 

20  Howard  v.  Lowell  Machine  A.,  279;  80  Fed.,  969,  S3  U.  S.  App., 
Co.,  75  Ga.,  326.  302 ;  In  re  Premier  Cycle  Mfg.  Co., 

21  Siney  v.  New  York  Consoli-  70  Conn.,  473,  39  Atl.,  800;  Young 
dated  Stage  Co.,  28  How.  Pr.,  481;  v.  Irish,  104  Minn.,  367,  116  N.  W., 
S.  C,  18  Ab.  Pr.,  435 ;  Milwaukee  &  656 ;  State  v.  Superior  Court,  36 
Minnesota  R.  Co.  v.  Soutter,  154  Wash.,  80,  78  Pac,  202.  And  see 
U.  S.,  540,  14  Sup.  Ct.  Rep.,  1158;  post,  §  836. 

Coolbaugh  v.  Herman,  221  Pa.  St.,  23  Young  v.  Irish,  104  Minn.,  367, 

503,  70  Atl.,  830.    And  see  Crawford  116  N.  W.,  656. 

V.  Ross,  39  Ga.,  44.  24  Copper    Hill     Mining    Co.    v. 

22  Bosworth  v.  St.  Louis  Termi-  Spencer,  25  Cal.,  11. 
nal  R.  Assn.,  174  U.  S.,  182,  19  Sup. 


980  RECEIVERS.  [chap.    XX. 

nate  seems  to  flow  naturally  and  as  a  necessary  sequence  from 
the  power  to  create.  And  as  an  interlocutory  injunction  is  us- 
ually dissolved  upon  the  coming  in  of  defendant's  answer,  de- 
nying under  oath  the  allegations  of  the  bill,^^  so  in  the  case  of 
a  receivership,  if  the  answer  under  oath  fully  and  satisfactorily 
denies  the  equities  of  the  bill,  or  the  material  allegations  upon 
which  the  appointment  was  made,  and  these  allegations  are  not 
sustained  by  any  testimony  in  the  case,  the  order  of  appoint- 
ment will  be  reversed  and  the  receiver  will  be  removed.26  Nor 
is  it  necessary,  in  all  cases,  to  secure  the  removal  that  the 
equities  of  the  bill  should  be  entirely  negatived,  if  it  be  satis- 
factorily made  to  appear  to  the  court  that  there  is  no  necessity 
for  its  intervention.  And  if  the  court  is  satisfied,  upon  the 
coming  in  of  the  answer,  that  there  is  no  imminent  danger  and 
no  pressing  or  urgent  necessity  for  a  receiver,  it  is  proper  to  re- 
voke the  appointment. 27 

§  827.  Removal  and  substitution  by  consent;  extending 
one  receiver  in  place  of  several.  It  is  competent  for  the 
court  to  remove  one  receiver,  and  to  substitute  another  in  his 
stead,  by  consent  of  all  parties,  when  the  proceedings  are 
bona  Me,  and  when  there  is  no  attempt  to  traffic  in  the  receiver- 
ship. ^8  And  when  different  receivers  have  been  appointed  over 
the  estate  of  a  defendant,  upon  the  application  of  different  cred- 
itors, the  hardship  and  expense  of  such  a  state  of  facts,  as 
against  the  owner  of  the  estate,  will  justify  the  court  in  remov- 
ing all  the  receivers  but  one,  and  extending  him  over  the  entire 
estate.29    But  the  removal  of  a  receiver  and  the  appointment  of 

25HoIIister  v.  Barkley,  9  N.  H.,  394;   Kaighn  v.   Fuller,   1   McCart., 

230 ;  Armstrong  z/.  Sanford,  7  Minn.,  419;    Schoeffler    v.    Schwarting,    17 

49;    Anderson    v.    Reed,    11    Iowa,  Wis.,  30. 

177;    Stevens    v.    Myers,    id.,    183;  26  Voshell  t;.  Hynson,  26  Md.,  83; 

Taylor  v.  Dickinson,  15  Iowa,  483;  Drury  v.  Roberts,  2  Md.  Ch.,  157. 
Hatch  V.  Daniels,  1  Halst.  Ch.,  14;  27  Crawford  v.  Ross,  39  Ga.,  44. 

Washer  v.  Brown,  id.,  81 ;   Suffern  28  Farran  v.  Morris,  1  Ir.  Ch.,  N. 

V.  Butler,  3  C.  E.  Green,  220;  Park-  S.,  680. 

inson  v.  Trousdale,  3   Scam.,  367;  29  Kelly  v.   Rutledge,  8  Ir.   Eq., 

Roberts  v.  Anderson,  2  Johns.  Ch.,  228. 
202;  Harris  v.  Sangston,  4  Md.  Ch.. 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  981 

another  in  his  stead  does  not  have  the  effect  of  invalidating 
claims  against  the  former  receivership,  since  the  management 
of  the  estate  by  the  court  is  one  and  the  same,  although  it  be- 
comes necessary  to  change  the  receiver.^^ 

§  828.  Receiver's  interest  as  stockholder  and  director 
in  plaintiff  bank;  employment  of  debtor  by  receiver  in 
creditor's  suit.  It  has  elsewhere  been  shown,  that  the 
courts  are  always  averse  to  the  appointment  of  receivers  who 
are  in  any  manner  interested  in  the  cause,  the  office  being  re- 
garded as  one  requiring  the  strictest  impartiality.^!  While  this 
is  true,  yet  in  a  case  where  the  fact  of  the  receiver's  interest, 
he  being  a  stockholder  and  director  in  the  plaintiff  bank,  was 
not  known  to  the  court  at  the  time  of  his  appointment,  and  he 
had  entered  upon  the  discharge  of  his  duties  and  had  spent 
much  time  in  making  himself  familiar  with  the  property  intrust- 
ed to  his  charge,  and  no  objection  was  shown  to  his  fidelity  or 
honesty,  and  no  complaint  was  made  of  any  improper  discharge 
of  his  duties,  or  misconduct,  it  was  held  that  he  should  not  be 
removed  immediately  upon  motion,  and  he  was  allowed  to  act 
until  a  new  reference  could  be  had  to  a  master  in  chancery,  to 
make  a  new  appointment.^^  ^nd  it  is  not  sufficient  cause  for 
removing  a  receiver  of  a  judgment  debtor,  appointed  in  a 
creditor's  suit,  that  he  has  employed  the  debtor  to  assist  him 
in  collecting  a  portion  of  the  indebtedness  assigned  to  the  re- 
ceiver, when  no  part  of  the  fund  has  been  used  for  the  debtor's 
benefit,  and  he  has  had  no  possession  of  or  control  over  the 
property  after  its  assignment  to  the  receiver,  and  when  the 
solvency  of  the  receiver  is  unquestioned  and  his  security 
ample.^^ 

§  829.  Required  to  restore  fund  on  removal.  When  a 
person  not  in  interest  in  the  controversy  has  fraudulently  pro- 

30  Ex  parte  Brown,  15  S.  C,  518.  the  grounds  of  removal,  under  the 

31  See  chapter  III,  ante.  statutes  of  Ohio,  Lafayette  Bank  v. 

32  Bank  of  Monroe  v.  Schermer-  Buckingham,  12  Ohio  St.,  419;  State 
horn,  Clarke  Ch.,  366.     See,  as  to  v.  Claypool,  13  Ohio  St.,  14. 

the  power  of  removing  receivers  of  33  Ross  v.  Bridge,  24  How.   Pr., 

insolvent  banking  corporations  and      163;  S.  C,  15  Ab.  Pr.,  150. 


982  RECEIVERS.  [chap.    XX. 

cured  himself  to  be  appointed  receiver,  contrary  to  the  wishes 
of  all  parties  in  interest,  but  the  appointment  is  reversed 
upon  appeal,  thus  removing  him  from  the  trust,  he  will 
be  compelled  to  make  restitution  of  the  fund  received  by 
him  to  the  person  rightfully  entitled  thereto,  and  will  not 
be  allowed  to  make  any  deduction  from  such  fund.^*  And 
when  a  receiver  appointed  in  behalf  of  incumbrancers  has  been 
guilty  of  gross  negligence  in  the  discharge  of  his  duties,  he 
may  be  removed  upon  their  application,  and  may  be  required  to 
pay  interest  upon  the  balances  from  time  to  time  in  his  hands, 
and  to  pay  the  costs  of  the  proceeding  for  his  removal. ^^ 

§  830.  Receiver  not  heard  on  motion  to  vacate  his  ap- 
pointment. Upon  a  motion  to  vacate  an  order  appointing 
a  receiver,  the  motion  being  made  by  defendant  and  assented 
to  by  plaintiff,  the  receiver  himself  should  not  be  heard  in  oppo- 
sition, since  he  is  not  a  party  in  interest,  and  has  no  standing 
in  court  to  oppose  the  motion,  and  can  not  interfere  in  ques- 
tions affecting  the  rights  of  the  parties  or  the  disposition  of  the 
property  in  his  hands. ^^ 

§  831.  When  defendants  estopped  from  seeking  re- 
moval. When  defendants  in  the  cause  have  agreed  with 
plaintiffs  that,  upon  the  latter  giving  security  in  a  specified 
amount,  they  may  have  possession  and  management  of  the 
property  in  controversy,  and  may  nominate  a  receiver,  defend- 
ants occupy  a  somewhat  different  attitude  toward  the  receiver 
from  that  in  the  case  of  an  ordinary  appointment  by  the  court. 
And  in  such  a  case,  it  does  not  lie  with  defendants  to  object 
to  the  person  of  the  receiver  and  to  obtain  his  removal,  unless 
he  commits  some  overt  act  of  unfaithfulness  to  his  trust.  Nor 
will  the  court,  under  such  circumstances,  permit  defendants  to 
go  into  the  previous  acts  of  the  receiver  in  his  capacity  as  plain- 

34  O'Mahoney  v.   Belmont,  62  N.  35  /„  re  Estate  of  St.  George,  19 

Y.,   133,  affirming  S.  C,  37  N.   Y.      L.  R.,  Ir.,  566. 

Supr.  Ct.  R.,  223.  36  L'Engle  v.   Florida  Central  R. 

Co.,  14  Fla.,  266, 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  983 

tiff,  before  his  appointment  as  receiver,  to  furnish  grounds  for 
his  removal. ^"^ 

§  831a.  Diligence  essential  to  application  for  removal. 
If  the  removal  of  a  receiver  is  sought  because  of  informalities  in 
his  appointment,  as  for  insufficiency  of  the  notice  of  the  applica- 
tion, due  diligence  should  be  used  by  the  parties  seeking  such 
removal.  And  when  they  delay  making  application  for  the  re- 
moval for  a  considerable  period,  during  which  the  receiver 
makes  large  expenditures  in  the  completion  of  a  railway  over 
which  he  is  appointed,  they  will  be  held  to  have  so  far  ac- 
quiesced in  the  appointment  as  to  be  estopped  from  asking  for 
the  removal  upon  the  ground  of  such  irregularities.^^ 

STCowdrey      v.      The      Railroad  38  Allen   v.    D.   &   W.    R.   Co.,   3 

Company,  1  Woods,  331.  Woods,  316. 


984  RECEIVERS.  [chap.    XX. 


11.  Final  Discharge. 

§  832.  Receiver  discharged  when  necessity  terminates;  receiver  of 
estate  of  deceased  lunatic  discharged  on  appointment  of  ad- 
ministrator. 

833.  Functions  usually  terminate  with  the  litigation;  not  discharged 

ipso  facto  by  termination  of  suit,  or  reversal  on  appeal;  when 
jurisdiction  retained  notwithstanding  dismissal  of  bill. 

834.  Effect  of  final  decree  as  to  receiver's  discharge. 

835.  Receiver  over  two  infants  not  discharged  on  one  attaining  ma- 

jority. 

836.  Appeal  from  discharge  not  allowed;  when  receiver  punished  by 

attachment. 

837.  Right  to  have  receiver  discharged  on  plaintiff's  demand  being 

satisfied;    conflict   of   authority;    the  better   doctrine   averse   to 
such  right. 

838.  Receiver  not  entitled  to  discharge  as  of  course  on  his  own  ap- 

plication; must  show  cause;  not  discharged  on  giving  bond. 

839.  Mortgagee  may  apply  for  discharge  of  receiver  appointed  to 

enforce  trusts  of  mortgagor's  will. 

840.  Owner  of  mortgaged  premises  has  absolute  right  to  discharge 

of  receiver  on  paying  amount  due. 

841.  Interests  of  all  parties  kept  in  view;  receiver  of  corporation 

discharged   when  corporation  shown  to  be  solvent. 

842.  Receiver  on   creditors'    bill  discharged  when  bill  denied  by  an- 

swer. 

843.  Plaintiff's  delay  in  prosecuting  his  suit  ground  for  discharging 

receiver. 

844.  Placing  purchaser  in  possession  of  lands  held  by  receiver  equiv- 

alent   to    discharge. 

845.  Bankruptcy  of  receiver  as  ground  for  discharge. 

846.  Defendant    may    move    for;     practice    on    application;    costs; 

notice. 

847.  Order  of  discharge  not  appealable  in  Michigan. 

848.  Discharge   no  bar  to  action  against  receiver  for  liability  in- 

curred; notice  to  general  creditors  unnecessary. 
848a.  Effect  of  discharge  on  appeal  from  order  of  appointment. 

§  832.  Receiver  discharged  when  necessity  terminates; 
receiver  of  estate  of  deceased  lunatic  discharged  on  ap- 
pointment of  administrator.  As  regards  the  question  of 
the  final  discharge  of  a  receiver,  as  distinguished  from  his  re- 
moval for  cause,  it  may  be  laid  down  as  a  general  proposition, 
that  when  the  necessity  for  the  office  ceases  to  exist,  the  office 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  985 

itself  must  terminate  and  the  receiver  be  discharged.  And 
when  a  court  of  equity  has  temporarily  taken  possession  of 
property  by  the  hands  of  its  receiver,  until  the  proper  person 
may  be  determined  who  is  entitled  to  take  it,  the  court  will  not 
continue  such  possession  after  this  necessity  ceases.^^  Thus, 
when  a  receiver  is  appointed  to  take  charge  of  the  assets  and 
property  of  a  deceased  lunatic,  until  it  may  be  determined  who 
is  entitled  thereto,  upon  the  appointment  of  an  administrator 
pendente  lite  by  the  proper  court  of  probate  jurisdiction,  the 
receiver  will  be  discharged  and  directed  to  turn  over  the  assets 
to  the  administrator  pendente  liteA^  And  when  a  receiver  has 
been  improperly  appointed  over  property  belonging  to  a  person 
not  a  party  to  the  cause,  the  court  will  order  the  discharge  of  the 
receiver,  although  the  cause  has  abated  by  the  death  of  the  sole 
defendant.^^ 

§  833.  Functions  usually  terminate  with  the  litigation; 
not  discharged  ipso  facto  by  termination  of  suit,  or  re- 
versal on  appeal;  when  jurisdiction  retained  notwith- 
standing dismissal  of  bill.  The  functions  of  a  receiver  usu- 
ally terminate  with  the  termination  of  the  litigation  in  which  he 
was  appointed. "^2  And  when  the  bill  upon  which  the  appoint- 
ment was  made  is  afterwards  dismissed  upon  demurrer,  the 
duties  of  the  receiver  cease  as  between  the  parties  to  the  ac- 
tion.^^  So  when  defendant  in  the  action  in  which  the  receiver 
was  appointed  finally  obtains  judgment  therein  in  his  favor, 
the  entry  of  judgment  would  seem  to  have  the  effect  of  termi- 
nating the  receiver's  functions,  although  plaintiff  in  the  action 
perfects  his  appeal  to  an  appellate  court.44  It  is  to  be  observed, 
however,  that  the  abatement  of  the  action,  or  the  entry  of  final 

39 /m  re  Colvin,  3  Md.   Ch.,  297.  Hickox    v.    Holladay,    12    Sawyer, 

40 /n  re  Colvin,  3  Md.  Ch.,  297.  204. 

41  Lavender     v.     Lavender,     Ir.  43  Field  v.  Jones,  11  Ga.,  413. 
Rep.,  9  Eq.,  593.  44  Ireland    v.    Nichols,    40    How. 

42  Field  V.  Jones,  11  Ga.,  413;  Pr.,  85;  S.  C,  9  Ab.  Pr.,  N.  S.,  71; 
Ireland  v.  Nichols,  40  How.  Pr.,  Harris  v.  Root,  28  Mont.,  159,  72 
85 ;  S.  C,  9  Ab.  Pr.,  N.  S.,  71 ;  Bev-  Pac,  429. 

eriey     v.     Brooke,     4     Grat.,     220; 


986  RECEIVERS.  [chap.  XX. 

judgment  therein,  does  not  have  the  effect  of  discharging  the 
receiver  ipso  factoA^  So  the  reversal  of  an  order  appointing  a 
receiver  does  not  resuU,  ipso  facto,  in  the  discharge  of  the  re- 
ceiver's And  although  as  between  the  parties  to  the  litiga- 
tion his  functions  have  terminated  with  the  determination  of 
the  suit,  he  is  still  amenable  to  the  court  as  its  officer  until  he 
has  complied  with  its  directions  as  to  the  disposal  of  the  funds 
which  he  has  received  during  the  course  of  his  receivership. 
And  when  the  bill  is  dismissed  upon  demurrer,  it  is  the  plain 
duty  of  the  court  to  direct  the  receiver  to  restore  the  funds  re- 
ceived to  the  person  from  whom  they  were  taken.^'^  But  an  or- 
der of  discharge  does  not  necessarily  follow,  in  all  cases,  be- 
cause of  the  determination  of  the  suit,  and  the  court  may,  upon 
sufficient  cause  shown,  either  discharge  or  continue  the  re- 
ceiver, according  to  the  exigencies  of  the  case.'S  And  where, 
after  the  appointment  of  a  receiver,  plaintiff  dismisses  his  bill 
but  the  receiver  is  not  discharged  and  subsequently  claimants 
to  the  fund  in  the  receiver's  hands  intervene  in  the  receivership 
suit,  it  is  proper  for  the  court  to  retain  jurisdiction  for  the 
purpose  of  disposing  of  the  fund  in  the  receiver's  hands,  al- 
though it  is  not  the  proper  practice  to  reinstate  the  original 
cause  upon  the  application  of  such  interveners.49 

§  834.  Effect  of  final  decree  as  to  receiver's  discharge. 
Since  the  final  decree  in  the  cause  is  generally  decisive  of  the 
subject-matter  in  controversy,  and  determines  the  right  to  the 
possession  of  the  fund  or  property  held  by  the  receiver,  it  is 
usually  the  case  that  such  decree  supersedes  the  functions  of  the 
receiver,  since  there  is  then  nothing  further  for  him  to  act  upon, 
although  it  would  seem  to  be  still  necessary  that  a  formal  appli- 
cation be  made  for  his  discharge.     But  when  the  court  by  its 

45McCosker    v.    Brady,    1    Barb.  46  ElHs    v.    Warsaw,    92    Minn., 

Ch.,    346;    Ireland    v.    Nichols,    40  444. 

How.  Pr.,  85;  S.  C,  9  Ab.  Pr..  N.  47  Field  v.  Jones,  11  Ga.,  413. 

S.,  71;  Pagett  v.  Brooks,  140  Ala.,  48  Ireland    v.    Nichols,    40    How. 

257,  37  So.,  263.     See,  also.  White-  Pr.,  85,  S.  C,  9  Ab.  Pr.,  N.  S.,  71. 

side   V.    Prendergast,    2   Barb.    Ch.,  49  Fountain  z/.  Mills,  HI  Ga.,  122, 

471.  36  S.  E.  428. 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  987 

decree  does  not  attempt  to  decide  the  main  question  in  contro- 
versy, and  leaves  the  receiver's  possession  undisturbed,  it  can 
not  be  held  to  have  the  effect  of  operating  as  a  discharge,  or  of 
superseding  his  functions. ^^ 

§  835.  Receiver  over  two  infants  not  discharged  on 
one  attaining  majority.  In  general,  a  receiver  will  not  be 
discharged  until  the  object  for  which  he  was  appointed  has 
been  fully  accomplished,  or  until  the  court  is  satisfied  that  the 
exigency  calling  for  a  receiver  has  ceased.^^  For  example, 
where,  as  between  tenants  in  common  of  real  estate,  two  of 
whom  are  infants,  a  receiver  is  appointed  for  the  protection  of 
the  infants,  with  directions  to  pay  over  to  the  adults  their  share, 
he  will  not  be  discharged  upon  the  application  of  one  of  the 
infants  on  coming  of  age,  the  other  not  having  attained  his  ma- 
jority. In  such  case,  the  object  sought  by  invoking  the  extra- 
ordinary powers  of  a  court  of  equity  being  the  protection  of 
the  property  during  the  infancy  of  both,  the  discharge  will  not 
be  allowed  until  this  object  is  fully  accomplished.^^ 

§  836.  Appeal  from  discharge  not  allov<^ed;  v^hen  re- 
ceiver punished  by  attachment.  It  follows  from  the  well- 
established  doctrine  that  a  receiver  is  not  the  agent  or  repre- 
sentative of  either  party  to  the  litigation,  and  in  no  manner  in- 
terested in  its  result,  that  he  can  not  properly  appeal  from  an 
order  of  the  court  discharging  him  from  his  trust  and  direct- 
ing him  to  turn  over  the  property  received  to  another  person. 
Being  merely  the  officer  or  representative  of  the  court,  with- 
out personal  interest  or  personal  rights  in  the  litigation,  the 
right  to  discharge  him  rests  with  the  court  at  any  stage  of  the 
controversy,  and  from  the  exercise  of  this  right  he  can  not  ap- 
peal.^2    The  court  will,  therefore,  continue  to  execute  its  or- 

50  Beverley   v.    Brooke,    4    Grat.,  52  Smith  v.  Lyster,  4  Beav.,  227. 
220.     But   see  Visage  v.   Schofield,  53 /„  re  Colvin,  3  Md.  Ch.,  300; 
60  Ga.,  680.  Ellicott    v.    Warlord,    4    Md.,    80; 

51  Smith  V.  Lyster,  4  Beav.,  227;  Bosworth  v.  St.  Louis  Terminal  R. 
In  re  Long  Branch  &  Sea  Shore  R.  Assn.,  174  U.  S.,  182,  19  Sup.  Ct. 
Co.,  9  C.  E.  Green,  398.  Rep.,  625,  43  L.  Ed.,  941,  modify- 


988  RECEIVERS.  [chap.    XX. 

der,  and  will  compel  the  receiver  to  turn  over  the  property  as 
directed  in  the  order  of  discharge,  notwithstanding  he 
has  prayed  an  appeal,  and  has  filed  an  appeal  bond.  And  in 
case  of  refusal  on  the  part  of  the  receiver  to  comply  with  the 
direction  in  the  order  of  discharge  as  to  the  disposition  to  be 
made  of  the  property,  the  court  may,  if  necessary,  enforce  obe- 
dience by  attachment.^^  And  because  the  appointment  of  a  re- 
ceiver determines  no  rights  between  the  parties  litigant,  his 
possession  being  merely  that  of  the  court,  a  party  to  the  cause 
can  not  appeal  from  an  order  discharging  a  receiver.^^ 

§  837.  Right  to  have  receiver  discharged  on  plaintiff's 
demand  being  satisfied;  conflict  of  authority;  the  better 
doctrine  averse  to  such  right.  With  reference  to  the 
question  of  the  right  of  a  defendant,  against  whom  a  receiver 
has  been  appointed,  to  have  him  discharged  upon  extinguish- 
ing or  satisfying  plaintiff's  demand,  there  being  other  parties 
interested  in  having  the  receiver  continued,  a  direct  conflict  of 
authority  exists  in  the  reported  cases.  The  doctrine  of  the 
English  Court  of  Chancery,  as  laid  down  by  Lord  Eldon,  was, 
that  with  the  right  of  the  plaintiff  to  a  receiver  must  fall  the 
rights  of  all  other  parties  to  the  action ;  and  that  a  receiver  ap- 
pointed in  behalf  of  a  plaintiff  should  be  discharged  when  plain- 
tiff's right  to  maintain  the  action  failed,  notwithstanding  other 
parties  to  the  litigation  might  insist  on  their  right  to  have  the 
receiver  retained  as  their  receiver.^^  The  better  doctrine,  bow- 
ing and  affirming  S.  C,  26  C.  C.  A.,  he  claimed  to  have  a  charge.  De- 
279,  80  Fed.,  969,  53  U.  S.  App.,  302.  fendant  having  paid  and  plaintiff 
And  see,  ante,  §  825.  having  received  the  amount  claimed 

54  In  re  Colvin,  3  Md.  Ch.,  300.      to   be    due,    the    receiver   was    dis- 

55  Washington  City  &  P.  L.  R.  charged,  although  other  defendflnts, 
Co.  V.  S.  M.  R.  Co.,  55  Md.,  153.  claiming   to   have   annuities   or   in- 

56  Davis  V.  Duke  of  Marl-  cumbrances  upon  the  same  prop- 
borough,  2  Swans.,  168.  This  was  a  erty,  objected  and  asked  to  be  heard 
case  where  plaintiff,  claiming  to  be  against  the  discharge.  Lord  Eldon 
an  equitable  creditor  or  incum-  observes :  "I  apprehend  that  with 
brancer  of  defendant,  had  obtained  (he  right  of  the  plaintiff*  to  have 
a  receiver  of  the  rents  and  profits  of  the  receiver  must  fall  the  rights 
defendant's  real  estate  upon  which      of  the  other  parties.     It  would  be 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  989 

ever,  as  deduced  from  the  clear  weight  of  authority  and  from 
the  better  legal  reasoning,  is  directly  the  reverse.  And  since 
the  appointment  of  a  receiver  is  regarded  as  being  made  for 
the  benefit  of  all  parties  in  interest  in  the  litigation,  he  will  not 
be  discharged  merely  upon  the  application  of  the  party  at  whose 
instance  he  was  appointed,  after  his  demand  against  the  defend- 
ant is  satisfied,  when  the  rights  of  other  parties  are  involved. 
The  duty  of  the  court  being  to  protect  the  rights  of  all  parties 
in  interest,  and  not  merely  those  of  the  plaintiff  at  whose  suit 
the  extraordinary  aid  of  the  court  has  been  invoked,  it  will  not 
permit  the  receiver  to  be  discharged  upon  the  consent  of  the 
plaintiff,  when  it  appears  that  the  discharge  may  prejudice  the 
rights  of  other  parties  to  the  action  who  do  not  consent  there- 
to.57  Thus,  when  a  legatee  under  a  will  has  filed  a  bill  in  behalf 
of  himself  and  of  such  other  creditors  and  legatees  as  may  come 
in  under  the  decree,  to  obtain  satisfaction  of  his  legacy,  and  has 
joined  as  a  defendant  an  incumbrancer  having  a  charge  upon 
the  estate,  the  receiver  will  not  be  discharged  upon  the  consent 
of  plaintiff,  without  the  consent  of  such  incumbrancer.^^  So 
where  a  receiver  is  appointed  over  a  corporation  at  the  in- 
stance of  a  creditor,  such  appointment  is  for  the  benefit  of  all 
creditors  and  the  plaintiff  procuring  the  appointment  can  not 
have  him  discharged  against  the  protest  of  any  unsatisfied  cred- 
itor who  might  be  damaged  by  such  discharge.^9  And  in  any 
event,  a  plaintiff  who  has  procured  the  appointment  of  a  re- 
ceiver can  not  dismiss  his  bill  and  have  the  receiver  discharged, 
without  the  receiver  being  first  required  to  pass  his  accounts.^^ 

most    extraordinary    if,    because    a  Largan   v.   Bowen,    1    Sch.  &  Lef., 

receiver  has  been  appointed  on  be-  296;  Lenoir  v.  Linville  I.  Co.,  117 

half  of  the  plaintiff,  any  defendant  N.  C,  471,  23  S.  E.,  442. 

is   entitled  to   have  a   receiver   ap-  58  Largan    v.    Bowen,    1    Sch.    & 

pointed  on  his  behalf.     My  decided  Lef.,  296. 

opinion  is  that  the  order  for  the  re-  59  Lenoir  v.   Linville  L   Co.,   117 

ceiver  must  be  discharged,  and  that  N.  C,  471,  23  S.  E.,  442. 

all  falls  together."  60  White  v.   Lord   Westmeath,   2 

5T  Fay  v.  Erie  &  Kalamazoo  Rail-  Hog.,  33 ;   Hoffman  v.   Bank,  4  N. 

road  Bank,  Harring.  (Mich.),  194;  Dak.,  473,  61  N.  W.,  1031. 
Bainbrigge  v.   Blair,  3  Beav.,  421; 


990  RECEIVERS.  [chap.    XX. 

§  838.  Receiver  not  entitled  to  discharge  as  of  course 
on  his  own  application;  must  show  cause;  not  discharged 
on  giving  bond.  A  receiver,  being  appointed  for  the  inter- 
est of  the  parties  to  the  action  rather  than  his  own,  is  not  en- 
titled to  his  discharge  as  of  course  upon  his  own  apphcation, 
since  the  court  will  not  permit  the  parties  to  be  put  to  the  ex- 
pense and  inconvenience  of  a  change  simply  because  the  re- 
ceiver desires  to  be  relieved  from  the  trust.  When,  therefore,  a 
receiver  seeks  to  be  relieved  from  his  duties  and  to  have  another 
appointed  in  his  place,  he  will  be  required  to  show  some  reason- 
able cause  for  the  application,  especially  when  his  discharge  and 
the  substitution  of  another  person  might  result  in  inconvenience 
to  the  parties  in  interest  and  to  third  parties.^^  And  it  will  not 
suffice  to  sustain  such  an  application,  that  the  receiver  alleges 
his  inability,  because  of  other  engagements,  to  properly  close 
up  the  business  of  his  receivership,  since  such  reasons,  while 
sufficient  to  excuse  him  from  accepting  the  trust  in  the  first  in- 
stance, are  not  sufficient  ground  for  discharging  him  from  his 
obligation  after  it  has  once  been  accepted. ^^  And  where  a  claim 
has  been  allowed  against  the  fund  in  the  hands  of  a  receiver 
from  which  an  appeal  is  pending  and  undetermined,  the  re- 
ceiver is  not  entitled  to  his  discharge  against  the  objection  of 
the  claimant ;  and  in  such  case,  the  giving  by  the  receiver  of  a 
bond,  with  sureties,  running  to  the  clerk  of  the  court  for  the  use 
of  the  claimant  and  all  other  persons  whose  claims  may  be  ad- 
judged valid  will  not  justify  his  discharge  and  the  releasing  of 
the  fund.63 

§  839.  Mortgagee  may  apply  for  discharge  of  receiver 
appointed  to  enforce  trusts  of  mortgagor's  will.  When  a 
receiver  has  been  appointed  over  mortgaged  premises  in  an  ac- 
tion to  enforce  and  carry  into  execution  the  trusts  of  the  mort- 

61  Beers  v.  The  Chelsea  Bank,  4  62  Beers  v.  The  Chelsea  Bank,  4 

Edw.  Ch.,  277;  Smith  v.  Vaughan,      Edw.  Ch.,  277. 
Ca.  temp.  H.,  251.  63  Johnson  v.  Central  Trust  Co., 

159  Ind.,  605,  65  N.  E.,  1028. 


CHAP.  XX.]  liEMOVAL  AND  DISCHARGE.  991 

gagor's  will,  it  would  seem  that  a  mortgagee,  who  was  not  a 
party  to  the  suit,  is  entitled  to  apply  for  the  receiver's  dis- 
charge. And  this  is  regarded  as  the  proper  course  for  him  to 
pursue,  since  he  has  no  power  to  divest  the  receiver's  possession 
merely  by  notice  to  the  tenants  of  the  mortgaged  premises  to 
pay  their  rents  to  him.^'* 

§  840.  Owner  of  mortgaged  premises  has  absolute  right 
to  discharge  of  receiver  on  paying  amount  due.  While  the 
propriety  of  discharging  a  receiver,  like  that  of  appointing  him, 
is  to  some  extent  a  matter  of  judicial  discretion,  yet  in  some 
cases  the  right  to  a  discharge  becomes  an  absolute  right,  which 
the  court  has  no  discretion  to  refuse.  Thus,  when  a  receiver  of 
mortgaged  premises  is  appointed  and  takes  possession,  in  an 
action  for  the  foreclosure  of  the  mortgage,  upon  the  owner  of 
the  equity  of  redemption  offering  to  pay  the  mortgage  indebt- 
edness, or  so  much  thereof  as  is  due,  his  right  to  have  the  re- 
ceiver discharged  is  an  absolute  right,  the  denial  of  which  is 
judicial  error.^^ 

§  841.  Interests  of  all  parties  kept  in  view;  receiver  of 
corporation  discharged  when  corporation  shown  to  be 
solvent.  In  passing  upon  an  application  for  a  receiver's 
discharge,  the  court  should  have  in  view  the  interests  of  all 
parties,  and  if  satisfied  that  the  rights  of  all  parties  in  interest 
will  be  best  promoted  by  granting  the  discharge,  it  should  be 
allowed.  Thus,  when  a  receiver  is  appointed  over  a  corpora- 
tion, under  a  law  of  the  state  authorizing  receivers  of  insolvent 
corporations,  it  is  proper  for  the  court  to  discharge  him  upon 
motion  of  the  defendant  corporation,  upon  being  satisfied  that 
it  is  in  solvent  circumstances  and  able  to  resume  business,  and 
that  the  interests  of  the  creditors  will  be  best  secured  by  this 


course. 


66 


64  Thomas  v.  Brigstocke,  4  Russ.,  66  Ferry  v.  Bank  of  Central  New 
64.                                                              York,  15  How.  Pr.,  445. 

65  Milwaukee  &  INIinnesota  R.  Co. 
V.  Soutter,  2  Wal.,  510;  S.  C, 
Woolworth's  C.  C,  49. 


992  RECEIVERS.  [chap.    XX. 

§  842.  Receiver  on  creditors'  bill  discharged  when  bill 
denied  by  answer.  When,  upon  a  creditor's  bill  filed 
against  a  judgment  debtor  and  a  mortgagee  to  whom  he  has 
mortgaged  his  personal  property,  in  trust  for  the  payment  of 
various  debts,  an  injunction  is  granted  and  a  receiver  is  ap- 
pointed, upon  allegations  in  the  bill  that  the  debtor  is  in  pos- 
session of  the  property  and  converting  the  proceeds  of  sales  to 
his  own  use,  the  bill  also  alleging  the  debtor's  insolvency  and 
consequent  danger  of  plaintiff  losing  his  debt,  if  these  charges 
are  expressly  and  fully  denied  by  the  answer,  the  court  should 
dissolve  the  injunction  and  discharge  the  receiver.^^ 

§  843.  Plaintiff's  delay  in  prosecuting  his  suit  ground 
for  discharging  receiver.  The  negligence  and  delay  of 
a  plaintiff,  at  whose  instance  a  receiver  has  been  appointed, 
may  be  sufficient  ground  for  discharging  the  receiver.68  Thus, 
when  the  plaintiff,  after  moving  for  the  appointment  of  a  re- 
ceiver of  his  debtor's  property,  consents  that  the  proceedings 
may  lie  dormant,  and  takes  no  further  steps  therein  for  a  period 
of  over  a  year,  and  until  another  creditor  has  procured  the  ap- 
pointment of  a  receiver,  the  court  will  not  allow  the  one  thus 
appointed  upon  the  subsequent  application  to  be  displaced,  but 
will  discharge  the  other. ^^ 

§  844.  Placing  purchaser  in  possession  of  lands  held  by 
receiver  equivalent  to  discharge.  The  putting  a  purchaser 
into  possession  of  lands  held  by  the  receiver  in  a  cause,  and  sold 
under  the  final  decree,  is  equivalent  ipso  facto  to  a  discharge  of 
the  receiver,  and  is  sufficient  ground  for  vacating  his  recog- 
nizance.'^^ 

§  845.  Bankruptcy  of  receiver  as  ground  for  discharge. 
A  receiver  appointed  in  a  cause,  having  filed  his  petition  in 
bankruptcy  and  compromised  with  his  creditors,  which  corn- 
er Furlong  v.  Edwards,  3  Md.,  99.  69  National     Mechanics     Banking 
68  National     Mechanics     Banking      Association    v.    Mariposa     Co.,    60 
Association    v.    Mariposa    Co.,    60      Barb.,  423. 

Barb.,  423 ;  Cohen  t/.  Gold  Creek  M.  70  Anonymous,    2    Ir.    Eq.,    416; 

Co.,  95  Fed.,  580.  Ponsonby  v.  Ponsonby,  1  Hog.,  321. 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  993 

promise  was  approved  by  the  court,  it  was  ordered  that  he  be 
discharged  from  his  receivership  and  pass  his  final  accounts,'''^ 
§  846.  Defendant  may  move  for;  practice  on  applica- 
tion; costs;  notice.  A  defendant  in  the  action  in  which  a 
receiver  has  been  appointed  has  the  undoubted  right  to  move  for 
his  discharge  pendente  lite,  and  upon  such  motion  the  court  will 
not  enter  upon  the  question  whether  the  order  of  appointment 
was  originally  opposed  by  the  defendant  at  the  time  it  was 
made.'^2  And  when  a  receiver  is  appointed  upon  the  application 
of  plaintiff  for  purposes  ancillary  to  the  action,  and  judgment 
is  afterward  rendered  for  defendant  from  which  plaintiff  ap- 
peals, the  court  below  has  jurisdiction,  pending  the  appeal,  to 
entertain  a  motion  by  defendant  for  the  discharge  of  the  re- 
ceiver. A  writ  of  prohibition,  will  not,  therefore,  lie  to  pre- 
vent the  court  from  entertaining  such  motion."^^  Under  the 
English  practice,  the  receiver,  although  served  with  the  petition 
for  his  discharge,  need  not  appear  upon  the  hearing  of  the  peti- 
tion, since  he  is  merely  the  officer  of  the  court.  Nor  will  he  be 
allowed  his  costs  when  he  has  appeared  upon  such  application.'^^ 
But  while  it  is  regarded  as  the  proper  practice  to  notify  all 
parties  in  interest  of  an  application  for  the  discharge  of  a  re- 
ceiver, the  fact  that  he  has  been  discharged  without  such  no- 
tice to  the  defendants  in  the  cause  may  be  treated  as  a  mere  ir- 
regularity, which  will  not  justify  a  reversal  of  the  order  upon 
appeal. "^5  But  in  Iowa,  it  is  held  that  the  court  has  no  power  to 
make  an  order  of  final  discharge  without  notice  to  the  parties  in 
interest,  and  that  such  order,  when  entered,  is  properly  set 
aside."^^ 


71  Ellard  v.  Cooper,  17  Ir.  Ch.,  N.  English   practice   upon    applications 
S.,  151.  to    discharge    receivers    and    vacate 

72  Grenfell   v.   Dean   and   Canons  their  recognizances,  Lawson  v.  Rick- 
of  V^indsor,  2  Beav.,  544.  etts,  11  Beav.,  627. 

73  Baughman   v.    Superior   Court,  75  Coburn  v.  Ames,  57  Cal.,  201. 
72  Cal.,  572,  14  Pac,  207.  76  Williams  v.  Des  Moines  L.  & 

74  Herman  v.   Dunbar.  23  Beav.,  T.    Co.,   126  Iowa,  22,   101    N.   W., 
312.     And  see  generally  as  to  the  277. 

Receivers — 63. 


994  RECEIVERS.  [chap.    XX. 

§  847.  Order  of  discharge  not  appealable  in  Michigan. 

It  is  held,  in  Michigan,  that  an  order  discharging  a  receiver 
and  providing  for  passing  his  accounts  and  cancehng  his  bond, 
and  for  paying  into  court  any  surplus  in  his  hands,  and  restor- 
ing the  property  of  which  he  had  taken  possession  as  receiver, 
is  not  such  a  final  order  as  is  appealable  under  the  laws  of  the 
state.'^? 

§  848.  Discharge  no  bar  to  action  against  receiver  for 
liabiHty  incurred ;  notice  to  general  creditors  unnecessary. 
When  a  receiver  has  been  properly  discharged  and  has  sur- 
rendered all  assets  pertaining  to  his  receivership,  the  court  will 
refuse  to  entertain  an  application  by  a  creditor  for  payment  out 
of  the  fund.  In  such  case,  the  receiver  being  functus  officio  and 
no  longer  the  representative  of  the  court,  and  having  no  funds 
in  his  hands,  the  remedy  of  such  creditor  should  be  sought  by 
an  application  to  vacate  the  order  of  discharge."^^  And  in  such 
case  the  receiver  may  be  discharged  and  the  suit  dismissed  with- 
out the  necessity  of  giving  notice  to  general  creditors.'^^  But 
when  a  receiver  is  discharged  pending  an  appeal  from  a  judg- 
ment recovered  against  him,  which  judgment  is  affirmed  upon 
the  appeal,  his  discharge  is  no  bar  to  the  final  entry  of  the  judg- 
ment against  him  as  affirmed.^^ 

77  Colgate  V.  Michigan  Lake  gun  against  co-receivers  to  recover 
Shore  R.  Co.,  28  Mich.,  288.  damages  for  personal  injuries  sus- 

78  New  York  &  W.  U.  T.  Co.  v.  tained  by  one  of  their  employees, 
Jewett,  115  N.  Y.,  166,  21  N.  E.,  and  afterward  the  co-receivers  were 
1036.  But  see,  contra,  Miller  v.  discharged  and  the  corporation  over 
Loeb,  64  Barb.,  454.  which  they  were  appointed  was  sub- 

79  Rockwell  v.  Portland  Savings  stituted  as  defendant,  and  afterward 
Bank,  31  Ore.,  431,  50  Pac,  566.  the  court  again  took  possession  of 

80  Woodruff  V.  Jewett,  115  N.  Y.,  the  property  and  appointed  one  of 
267,  22  N.  E.,  156.  But  the  court  the  co-receivers  receiver  and  he  was 
decline  to  pass  upon  the  question  thereupon  made  a  defendant  in  his 
of  the  efifect  of  such  discharge  new  capacity,  no  judgment  could 
when  the  receiver  is  finally  called  be  rendered  against  him  upon  the 
upon  to  pay  the  judgment.  In  Lee  theory  that  his  discharge  was  con- 
V.  Powell  Bros.  &  Sanders  Co.,  122  ditional  upon  the  payment  of  the 
La.,  639,  48  So.,  134,  it  was  held  debts  of  the  receivership  by  the 
that  where  an  action  had  been  be-  corporation. 


CHAP.  XX.]  REMOVAL  AND  DISCHARGE.  995 

§  848a.  Effect  of  discharge  on  appeal  from  order  of  ap- 
pointment. When  an  appeal  has  been  taken  or  writ  of 
error  or  other  process  sued  out  to  review  an  order  appointing 
a  receiver,  and,  pending  the  hearing  of  the  appeal,  it  is  brought 
to  the  attention  of  the  reviewing  court  that  the  receiver  has 
been  finally  discharged  by  the  court  of  his  appointment,  the 
correctness  of  the  order  of  appointment  thereby  becomes  merely 
a  moot  question  and  the  appeal  should  be  dismissed.^^ 

81  Visalia  City  Water  Co.  v.  Superior  Court,  120  Cal.,  219,  52  Pac,  485. 


INDEX 


A. 

ACCOUNTABILITY,  Section 

of  receiver,  strictness  exacted  38 

ACCOUNTS, 

failure  of  receiver  to  render,  fixes  liability  on  bond 129 

of  receiver  of  railway,  what  expenditures  allowed 392 

of  executor,  not  examined  on  application  for  receiver  against  ...  720 

receiver's   accounts    797-8l9c 

duty  of  receiver  to  file 797 

held  to  great  strictness 797 

when  delay  not  justifiable 797 

receiver  not  entitled  to  jury  to  pass  on 797 

bill  should  not  be  dismissed  without  settling 797 

degree  of  diligence  required 797 

expenditures  must  be  authorized  by  court 798 

receiver  must  produce  vouchers  798 

reward  paid  for  lost  books  allowed 798 

payment  for  necessary  taxes  allowed 798 

procuring  surety  on  official  bond 798 

when  payments  allowed,  though  unauthorized 798 

entitled  to  charge  for  watching  property 798 

reference  to  master  as  to  whether  expenditure  beneficial 798 

not  allowed  expenses  for  services  which  he  might  have  per- 
formed himself  799 

unnecessary  expenses  not  ratified 799 

refused  compensation  paid  deputy  799 

when  facts  of  employment  should  be  reported  to  court 799 

master's  report  on   800  801 

review  of   gQQ 

courts  investigate  principles  of,  but  not  items 800,  801 

distinction   as   to    801 

exceptions  to   801 

application  from  stranger  to  pass  not  entertained 802 

receiver  not  compelled  to  account  to  party 802 

party  may  move  for  account  802 

duty  to  account  once  a  year   802 

allowance  is  to  receiver  and  not  to  person  entitled  thereto. ..  802 

otherwise  after  discharge  of  receiver  802 

997 


998  INDEX. 

ACCOVNTS— Continued.  Section 

receiver's  accounts ;  should  keep  funds  separate   803 

liability  for  interest   803,  804 

on    mixing    funds    803 

on  claim  of  creditor   803 

on    balances     804 

on  funds  derived  from  sale  804 

on  failure  to  invest  funds  as  ordered  by  court   804 

from  what  time  required  to  pay 804 

on   illegal    appropriation    804 

counsel  fees  805-808 

receivers  entitled  to  payments  for  805 

preference  for,  allowed   805 

employment  of  counsel  should  be  authorized   805 

not  allowed  for  unsuccessful  defense 805 

for   defending   fraudulent   appointment 805 

for  work  requiring  no  legal  skill  805 

test  as  to  allowance   805 

allowance  is  to  receiver  and  not  to  counsel 805 

not   allowed    for   services   which   could   have   been   per- 
formed  by    receiver    805 

where  receiver  has  grossly  mismanaged  the  estate  .  805 

when  allowed  for  defending  motion  for  removal 805 

allowed  for  defending  item  for  fees  in  account 805 

when  allowance  of,  not  disturbed  on  appeal 805 

when  extra  compensation  allowed  805 

should  be  allowed  only  on  notice 805 

allowed   receiver  of  lunatic's  estate 805 

fees  to  counsel  for  parties,  when  disallowed 806 

when    allowed     806 

services  by  receiver  as  solicitor  for  administrator 807 

not  allowed  counsel  fees  paid  to  himself  808 

receiver,  an  attorney  not  bound  to  render  legal  services. .  808 

costs     ' 809-812 

of  appointment,  entitled  to  priority 809 

when  receiver  required  to  pay   809 

when  not  charged  with,  of  new  appointment  809 

allowance  of,  discretionary  809 

expenses  of  receivership  entitled  to  priority 809 

when,  and  expenses  charged  against  plaintiff 809a 

when  defendant  in  suit  by  receiver  entitled  to 810 

when  dependent  on  receiver's  success  811 

of  unauthorized  litigation,  receiver  not  allowed 811 

of  improvident  litigation,  not   allowed    811 

when  tax  on  personalty  allowed  as 811a 

for  appearing  on  motion  to  discharge,  not  allowed 812 

when  receiver  may  move  for  allowance  of 812 


INDEX.  999 

ACCOUNTS — Continued.  Section 

when  receiver  charged  with  hire  of  property 813 

when  not  allowed  payments  made  for  predecessor 813 

receiver  may  render,  pending  interpleader   814 

plaintiff  can  not  have  receiver  discharged  without  passing  . .  814 

court  should  not  render  final  judgment  without  passing 814 

plaintiff  should  not  be  delayed  pending  litigation  concern- 
ing      815 

when  ordered  to  bring  in  yearly  and  verify  by  affidavit 816 

executors  of  receiver,  not  ordered  to  bring  in 817 

not  entitled  to  petition  for  account  of  payments   817 

entitled  to  notice  of  passing  of  accounts  817 

when  receiver  deprived  of  salary  for  default  in 818 

when  allowed  commission  after  delay   818 

receiver  over  minor  attaining  majority  must  account  from 

first  819 

how  receiver's  accounts   questioned 819a 

appeal   from   settlement   of  accounts 819& 

appeal  by  one  creditor  resulting  in  benefit  to  all 819c 

expenses  of,  and  counsel  fees  allowed  in  receiver's  ac- 
counts      819c 

ACCOUNT  BOOKS, 

receiver  required  to  produce  before  master 544 

ACQUIESCENCE, 

bars    right   to    receiver    14 

in  appointment,  effect  of  37 

bar  to  receiver  over  corporation  on  behalf  of  shareholder 295 

in  debtor's  possession  of  property,  when  bars  receiver  in  aid  of 

j  udgment  creditor   402 

in  defendant's  possession  of  real  property,  bars  receiver 560 

iCTIONS.     (See  Right  of  Action,  Suits.) 

ADMINISTRATION,     (See  Administrator.) 

receiver  not  granted  to  interfere  with  427 

ADMINISTRATIVE  ORDERS, 

court  may  make,  to  preserve  property,  notwithstanding  appeal  and 

supersedeas    190a 

appeal  from,  by  receiver  will  not  lie 264& 

ADMINISTRATORS,     (See  Executors.) 

receiver  against,  when  order  appealable   27 

of  receiver,  when  ordered  to  pay  over  285 

of  deceased  partner,  eligible  as  receiver 78 

when  entitled  to  receiver  as  against  surviving  partner 532,  533 

receivers    over    706-724 

not  allowed  when  it  would  interfere  with  due  course  of  ad- 
ministration         716 


1000  INDEX. 

ADMINISTRATORS— Con/JHMfd.                                                       Section 
receiver  of,  in  personal  capacity,  not  entitled  to  rents  in  admin- 
istrative  capacity    717 

receiver  refused  on  bill  by  surety  on  bond  of 721 

granted  in  favor  of  ward 722 

ADMINISTRATRIX.    (See  Administrators,  Executors.) 

ADMISSIONS, 

receiver  may  make    175 

ADVERSE  PARTY, 

receiver  not  an  175 

AFFIDAVITS, 

copies  of,  should  be  served 84 

admissible   for   plaintifif  after  answer    85 

for  defendant  before  answer 85 

admissible  to  explain  doubtful  passage  in  answer 85 

must  be  entitled  in  cause  85 

may  be  presented  on  hearing  of  motion 88 

when  copies  of  should  go  to  appellate  court 88 

should  be  distinct  and  precise  89 

as  to  insolvency  of  bank,  need  not  be  positive 89 

of  defendant,  when  regarded  as  an  appearance 103 

as  to  insolvency,  receiver  refused  when  insufficient 106 

interlocutory  application  before  answer,  heard  on 107 

facts  may  be  verified  by  affidavit  of  plaintifif  alone 107 

admissible  for  defendant  in  opposition  to  motion 107 

of  receiver,  on  information  and  belief,  sufficient  for  attachment 

for  interference  with  rents 167 

general  allegations  of  fraud  in,  not  sufficient  to  warrant  receiver 

over  corporation  292 

as  to  insolvency  of  bank  on  information  and  belief,  when  insuffi- 
cient     346 

when  sufficient 353 

when  receiver  required  to  verify  account  by 816 

AGENT, 

receiver  not  an  1 

when  agent  of  plaintiff 2 

of  receiver  may  conduct  sale  191 

AGREEMENT, 

by  receiver,  power  of  court  to  vacate  or  modify 186 

ALIMONY.     (See  Divorce.) 

ANCILLARY  RECEIVERSHIPS, 

when  not  granted  at  instance  of  foreign  receiver 47 

when  ancillary  receiver  not  liable  for  tort  of  domiciliary  receiver  47a 

over  private  corporations 306& 

over  railways  375o 


INDEX. 


1001 


ANNUITANT,                                                                                       Section 
not  allowed  receiver  over  a  pension  31 

may  have  receiver  when  annuity  in  arrears 410,  574 

not  allowed  receiver  when  he  may  distrain 574 

may  have  receiver  as  against  prior  mortgagee  not  in  possession. .     683 

ANNUITY,     (See  Annuitant.) 

purchase  of  by  receiver,  when  set  aside 194 

ANSWER, 

denial  in,  bar  to  a  receiver 24 

ground  for  removal • °26 

for  discharge  ^2 

receiver  formerly  granted  after 103 

granted  before,  under  modern  practice  103 

grounds  of  interference  before 104,  105 

strong  grounds  required  for  receiver  before 106 

of  corporation  under  seal,  when  not  decisive 355 

waiver  of,  under  oath,  no  bar  to  receiver  on  creditor's  bill 434 

denial  in,  in  partnership  cases,  bar  to  receiver 491,  515 

ground  for  dissolving  inj  unction 491 

when  receiver  appointed  over  real  property  before  coming  in  of. .  598 

receiver  in  foreclosure  of  leasehold  mortgage  allowed  before 665 

APPEAL, 

discretion  of  court  below  not  controlled  on  7,  25 

not  granted  from  interlocutory  order  appointing  receiver 26 

not  allowed  from  appointment  by  consent 26 

from  temporary  receivership,  when  properly  dismissed 26 

when  granted  in  Michigan 27 

from  appointment  of  receiver  against  administrator 27 

against  surviving  partner 27 

as  affected  by  legislation  in  various  states 27 

allowed  if  right  finally  determined 27a 

under  Court  of  Appeals  Act 27& 

effect  of,  on  receiver's  functions 29 

pending,  receiver  may  be  appointed  in  another  suit 30 

want  of  notice  as  ground  of 112 

pending,  when  receiver  appointed HO 

effect  of  supersedeas  pending 190 

should  restore  property  to  defendant 190 

court  may  make  administrative  orders  pending 190a 

will  lie  from  order  of  sale 198 

from  order  confirming  sale 198 

effect  of,  on  receiver's  possession 136,  161 

by    receiver,    from    adverse    decision,    not    evidence    of   misman- 

9C\7 
agement  "' 

want  of  leave  to  sue  receiver,  availability  on 254a 

will  not  lie  from  order  granting  leave  to  sue  receiver 254& 


1002  INDEX. 

APPEAL — Continued.  Section 

receiver  as  party  to 258 

when  receiver  entitled  to,  from  orders  in  receivership  cause 246a 

not  entitled  to,   from  administrative  orders    264& 

nor  from  order  of  distribution    264& 

receiver  personally  liable  for  costs  on  unauthorized 264& 

by  receiver  of  railway  from  order  directing  restoration  of  former 

wage  scale   3936 

on  question  of  jurisdiction,  receiver  not  ordered  to  sell  pending. .     543 

pending  from  judgment  in  ejectment,  when  receiver  denied 557 

will    not    lie    from    order    permitting    receiver    to    collect    rents 

through  defendant   628 

receiver  of  rents  pending,  from  foreclosure  decree 665a 

action  of  lower  court  in  fixing  compensation  ordinarily  not  dis- 
turbed on  781,  783 

compensation  of  receiver  pending,  not  allowed  by  appellate  court    796 

from  allowance  or  refusal  of  receiver's  compensation 796a 

allowance  of  counsel  fees,  when  not  disturbed  on 805 

from  order  settling  receiver's  accounts 819& 

by  one  creditor  resulting  in  benefit  to  all 819c 

expenses  of,  allowed  in  receiver's  accounts 819c 

receiver  can  not  maintain,  from  order  of  removal 824 

nor  from  order  of  discharge 836 

from  appointment,  effect  of  discharge  on 848a 

APPEAL  BOND, 

when  receiver's  duty  to  sue  on,  without  leave 208 

APPEARANCE, 

receiver  formerly  granted  only  after 103 

affidavit  of  defendant  considered  as 103 

of  counsel  in  suit  against  receiver,  waiver  of  want  of  leave  to 
bring  suit    261 

ARREST, 

when  receiver  exempt  from 183 

ASSESSMENTS, 

on    premium    notes    to    insurance    company,    receiver's    right    of 

action  for  326 

what  receiver  must  allege  and  prove  327 

receiver  must  make  assessment  and  apportionment 328 

receiver  takes  place  of  directors 329 

functions  of  court  in  making 329 

receiver  may  make  new 330 

approval  of,  by  court,  not  a  judicial  act  330 

form  of,  and  proofs  required 331 

receiver  may  sue  on,  to  pay  equitable  claims  for  losses 332 

what  defense  denied  maker 332 


INDEX. 


1003 


ASSIGNEE,     (See  Quasi-Assignee.)  Section 

of  contract  with  receiver ^°° 

of  debtor,  rights  not  determined  by  receivership 411 

refusal  to  act,  ground  for  receiver 412 

mismanagement  of,  ground  for  relief 412 

of  partner,  when  entitled  to  receiver 507 

of  lease,  denied  receiver 5/9 

of  insolvent  debtor,  when  allowed  receiver  of  rents 587 

receiver  not,  of  term  of  lease 273,.  394in 

ASSIGNEE  IN  BANKRUPTCY, 

when  subordinate  to  receiver  in  state  court 51,  52 

can  not   dispossess  receiver  over  mortgaged  premises  appointed 


by  state  court 


52 


can  not  have  receiver  over  bankrupt's  property  held  by  receiver 

of  state  court 52 

actions  by,  to  recover  property  held  by  receiver   52 

of   partnership,    when   allowed   receiver   against   assignment    for 

creditors    -" 

receiver  of  debtor  incompatible  with T^ 

when  required  to  surrender  possession  to  receiver 153 

of  one  partner,  exclusion  from  firm 527 

ASSIGNMENT, 

by  defendant  to  receiver,  right  of  action  under 244 

designation  of  plaintiff  as  receiver,  when  descriptio  persona  244 

by  insurance  company,  ground  for  receiver 304 

of  chose  in  action  of  corporation  by  receiver 338 

fraudulent,  by  judgment  debtor,  ground  for  receiver 411 

rights  under,  not  determined  by  receivership 41 1 

receiver  allowed,  on  refusal  of  assignee  to  act 412 

on  mismanagement  by 412 

after  receivership  does  not  defeat  right  to  receiver 412 

before  receivership   412,  note 

not  appointed  to  set  aside,  when  it  may  be  done  by  judgment 

creditor    414 

when  title  vests  in  receiver  on  setting  aside 423 

to  receiver,  effect  of  as  to  passing  title 443 

what  passes  to  receiver  under 444 

should  except  exempted  property 444 

irregularities  in  appointment  no  justification  for  refusal  to  assign  445 

debtors  compelled  to  make,  although  swearing  to  no  property 446 

partakes  of  nature  of  mortgage 446 

no  re-assignment  necessary  446 

not  necessary  under  New  York  code 447 

fraudulent,  by  debtor,  receiver  may  sue  to  set  aside  454 

should  j  oin  all  fraudulent  grantees 454 

limit  to  receiver's  right  of  action 455 


1004  INDEX. 

ASSIGNMENT— CoH//«M^i  Section 

fraudulent  by  debtor,  can  not  sue  when  creditors  estopped 456 

receiver  can  not  take  forcible  possession  of  property  assigned  457 

debtor  proper  defendant 459 

for  benefit  of  creditors 458-460 

action  by  receiver  to  set  aside,  when  assignees  may  retain 

possession    458 

when  receiver  denied  injunction  and  receiver 458 

what  receiver  must  allege 459 

by  insolvent  partners  after  dissolution,  ground  for  receiver 517 

by  continuing  partner  for  benefit  of  all  creditors,  not  ground  for  518 

by  one  partner  to  exclude  copartner,  ground  for 523 

assignee  can  not  defeat  application  for  receiver 523 

ASSISTANCE.     (See  Writ  of  Assistance.) 

ATTACHMENT, 

receivership  compared  with 5,  6 

lien  of,  protected  against  foreign  receiver 47 

for  not  accounting,  surety  of  receiver  liable  for  costs  of 131 

lien  of,  obtained  pending  application  for  receiver  not  invali- 
dated by  subsequent  appointment 136 

possession  of  receiver  can  not  be  interfered  with  by 141 

for  failure  to  surrender  property  to  receiver 144 

receiver  not  subject  to  garnishment  as  to  assets  in  possession....  151 

may  be  garnished  when  not  yet  in  possession 151 

not  allowed  as  to  property  taken  by  receiver  into  foreign  state  or 

country    162a 

punishment  by,    for  contempt   of  court   in  interfering   with   re- 
ceiver's possession  163 

for  interference  with  collection  of  rents  by  receiver 167 

against  defendant  for  refusing  to  surrender  property 168 

for  contempt  in  refusing  to  surrender  to  receiver,  court  the  only 

competent  j  udge  169 

for    interference    with    receiver's    possession,    actual    disturbance 

necessary 171 

levy  and  sale  by  sheriff  considered 171 

courts  averse  to  punishment  as  between  different  receivers..  173 

against  receiver  for  refusing  to  surrender  possession 174 

of  corporate  assets,  not  dissolved  by  receivership 348 

not  allowed  after  receivership 348 

against  partners  to  deliver  assets  to  receiver 541 

funds  held  by  receiver  of  firm  not  subj  ect  to 552 

against  tenants  for  refusing  to  pay  rent  to  receiver 625,  626 

rights  of  third  persons  not  determined  on 627 

sale  of  chattels  under,  invalid  as  against  prior  mortgagee 647 

ATTORNEY, 

lien  of,  on  fund  for  fees,  paramount  to  receiver's  title 138 


INDEX.  1005 

ATTORNEY — Continued.  Section 

when  required  to  deliver  trust  property  to  receiver 144 

fraud  of,  when  receiver  not  liable  for 275 

of  railway  company,  when  salary  allowed  preference 394d 

ATTORNEY-GENERAL, 

proceedings  by,  against  insolvent  corporation 53 

when  affidavit  on  information  sufficient 353 

AUCTIONEER, 

receiver  of,  when  entitled  to  funds  as  against  customer 155 

AUXILIARY  REMEDY, 

receivership  considered  as 6,  49 

B. 

BANK,     (See  Corporations,  National  Banks.) 

creditor  not  entitled  to  receiver  where  remedy  at  law 10 

insolvent,  governor  authorized  to  appoint  receiver 39 

officer  of,  eligibility  as  receiver 72 

insolvency  of,  positive  affidavit  not  required 89 

oath  to  receivers  of,  omission  does  not  vitiate  proceedings 99 

receiver  of,  right  to  sue  in  his  own  name 210 

need  not  be  made  party  to  suit  by  receiver  for  foreclosure  of 

mortgage  210 

trover  by  receiver  of,  for  conversion  of  bonds 212 

suit  begun  by,  continued  by  receiver 213 

need  not  be  party  to  foreclosure  suit  by  receivers 215 

defense  to  suit  by  receiver  of,  against  depositor 245 

set-off  in  suit  by  receiver  of,  on  notes 247,  248 

suit  to  recover  notes  illegally  transferred  to  a  director,  counter- 
claim for  amount  paid  not  allowed 251 

failure  of,  when  receiver  liable  for  loss  of  funds 274 

receiver  of,  when  Ifable  to  pay  in  full 274a 

to  pay  draft  or  check 274a 

not  necessary  party  to  subsequent  proceedings   for  another 

receiver   291 

illegal  issue  of  notes,  receiver  to  take  charge  of  securities 293 

rights  of  action  of  receiver  of 317 

to  recover  against  stockholders 317a 

in  courts  of  foreign  state 3\7b 

receiver  as  quasi-assignee    317c 

against  president  of  bank 320 

for  unauthorized  transfer  to  director 320 

note  transferred  by  receivers  of,  assignee  may  recover  on 323 

contract  of,  after  insolvency,  receiver  may  decline  to  ratify 334 

insolvency   of,   when   insufficient,   on   information   and   belief,   to 
warrant  receiver  346 


1006  INDEX. 

BANK— Continued.  Section 

assets  of,  not  subject  to  attachment  after  receivership 348 

suit  against,  when  not  allowed  after  receivership 350 

BANKRUPTCY, 

proceedings  in,  in  United  States  court,  when  subordinate  to  re- 
ceivership in  state  court 51,  52 

against  insolvent  corporation,  asserted  exclusively 53 

appointment  of  receiver  over  partnership,  when  an  act  of 56 

assignee  of  partnership  in,  when  allowed  receiver 57 

proof  of  debt  in,  made  by  receiver  of  corporation  in  another  state  242 
of  railway  in  United  States  court,  will  not  interfere  with  prior 

receiver  in  state  court 370 

discharge  in,  when  no  bar  to  receiver  on  creditor's  bill 425 

receiver  in  aid  of  proceedings  in 426 

receiver  to  collect  rents  in  aid  of 587 

of  executors,  ground  for  receiver 711 

of  receiver,  ground  for  discharge 845 

BARRISTER, 

eligible  as  receiver   70 

as  member  of  parliament  70 

BENEFICE, 

of  clergyman,  receiver  over  rents  of 432 

BIDS, 

discretion  of  receiver  as  to  accepting 176 

BILL, 

necessary  to  granting  receiver 83 

need  not  contain  specific  prayer 83 

multifariousness  of,  no  objection  to  receiver 86 

may  be  dismissed  by  plaintiff,  although  receiver  appointed 101 

omission  of  prayer  for  receiver,  not  fatal 109,  110 

dismissal  of,  does  not  release  receiver  from  liability 286 

not  demurrable  because  of  prayer  for  receiver 291 

when  receiver  continued  after  dismissal  of 437 

BILL  OF  EXCEPTIONS, 

when,  must  contain  affidavits  upon  which  application  for  receiver 

is  based  88 

BOND,     (See  Appeal  Bond.) 

in  lieu  of  receiver 9,  308,478,  761 

approval  by  clerk  when  invalid 43 

of  non-resident  receiver  69 

usually  required  of  receiver  before  entering  upon  duties 118 

two  sureties  required  under  English  practice 118 

effect  of  consent  to  dispense  with 118 

recognizance  of  receiver  alone,  when  sufficient 119 


INDEX.  1007 

BOND — Continued.  Section 

dispensed  with,  when  unnecessary „ .  120 

when  same  receiver  extended  to  different  actions 120 

title  not  acquired  until  receiver  executes 121 

failure  to  execute,  a  ground  of  nonsuit  in  action  by  receiver 121 

when  may  be  filed  nunc  pro  tunc 121 

informality  in,  effect  of,  in  suit  by  receiver  121 

filing  of,  receiver's  title  relates  back  to  date  of  appointment 121a 

failure  to  require,  as  part  of  final  decree,  no  ground  for  reversal  122 

by  defendant  to  account  as  receiver,  held  good 124 

requiring  new,  upon  making  temporary  receiver  permanent 126^? 

liability  of  sureties  on 127-133c 

sureties  strictly  held  to 127 

bond  may  be  vacated  as  to  one  surety 127 

practice  on  so  vacating 127 

when  liability  becomes  absolute 129 

when  action  will  lie  on 129 

independent  action  on,  against  surety 129a 

suit  on,  after  death  of  receiver 130 

liable  for  interest  131 

liable  for  costs  of  attachment  for  not  accounting 131 

not  liable  for  violation  of  duties  beyond  scope  of  appointment  133& 

when  liable  although  bill  is  afterward  dismissed 133c 

when  receiver  seeking  injunction  must  give 140,  note 

failure  to  execute,  effect  on  suit  by  receiver 227 

informality  in,  effect  on  suit  by  receiver 227 

by  defendant  in  lieu  of  receiver 9 

by  corporation  m  lieu  of  receiver 308 

by  partner  in  lieu  of  receiver 478,  761 

BONDHOLDERS,     (See  Mortgages,  Railways.) 

of   railway,   granted    receiver   in   United    States   court,   notwith- 
standing subsequent  proceedings  in  state  court 54 

receivers  in  aid  of 376-389 

grounds  for  376 

over  tolls  of  railway 381 

to  prevent  land  grant  from  lapsing 386 

on  application  for,  court  will  not  pass  on  validity  of  bonds  387 

discharge  of  receiver   389 

of  municipal  corporation,  secured  by  rates  and  assessments,  de- 
nied  receiver    658 

of  canal  company,  allowed  receiver  in  case  of  insolvency 678 

BOOK-KEEPER, 

of  corporation,  when  eligible  as  receiver 72 

BREWING, 

receiver  in  business  of,  his  functions  and  duties 549 


1008  INDEX. 

BRIDGE  COMPANY,  Section 

receiver  over  tolls  and  franchise  of ^ . . . .     300 

BUILDING  ASSOCIATION, 

receiver  over  304 

BUSINESS, 

management  of,  by  receiver 36 

discretionary  with  court   36 

preferring  debts  incurred  in 36 

may  employ  help  in  management  of 175 

when  receiver  personally  liable  on  note  given  in  carrying  on....  272 

management  of,  by  receiver  of  partnership 480,  481 

of  colliery,  should  not  be  carried  on  by  receiver 615 

c 

CANAL  COMpJJnY, 

bondholders  of,  allowed  receiver  on  insolvency 678 

CAPITAL  STOCK.     (See  Corporations,  Subscriptions.) 

CARRIAGES, 

when  may  be  let  by  receiver 481 

CAR  TRUSTS, 

priorities  of,  in  railway  receiverships  394/ 

CATTLE, 

damages  for  killing,  not  enforced  in  state  court  against  receiver 
of  United  States  court 397 

CAVEAT  EMPTOR, 

applies  to  receiver's  sales 199b 

CERTIFICATES.     (See  Railways,  Receiver's  Certificates.) 

CERTIORARI, 

appointment  of  receiver  not  reversed  on 28 

CESTUI  QUE  TRUST.     (See  Trusts,  Trustees.) 

CHAMBERS, 

application  to  supply  vacancy,  may  be  made  in 96 

CHANCELLOR, 

duty  of,  in  appointing  receiver,  a  delicate  one 3 

CHATTELS, 

mortgagee  of,  receiver  as  against,  on  creditor's  bill 420 

when  receiver  can  sustain  no  action  concerning 467 

mortgage  of,  securing  rents,  when  receiver  entitled  to 644 

when  receiver  appointed  as  to 647 

when  relief  allowed 676 


INDEX.  1009 

CHECK,  Section 

when  not  entitled  to  payment  in  full 274a 

CHOSE  IN  ACTION, 

when  sale  of,  not  set  aside 198 

construction  of  term  as  applied  to  insolvent  corporation 212 

of  corporation,  may  be  assigned  by  receiver  without  corporate  seal  338 

of  debtor,  assignment  to  receiver  not  necessary 443 

title  to,  as  between  receiver  of  debtor  and  purchaser 449 

of  partnership,  receiver  entitled  to 541 

CHURCH,     (See  Religious  Society.) 

possession  of,  by  receiver,  protected  by  injunction 140 

CLAIMS, 

of  creditors  not  presented  by  receiver 175,  note 

brother  of  receiver  may  become  purchaser  of,  against  estate.  .175,  note 

CLERGYMAN, 

receiver  to  collect  rents  of  benefice  of 432 

CLERK  OF  COURT, 

receiver  over  fees  of 22 

approval  of  bond  by,  invalid 43 

not  necessarily  a  receiver 71 

clerk  and  master  ordered  to  act  as  receiver 71 

liability  of  sureties  of,  when  clerk  appointed  receiver 133a 

CLOUD  UPON  TITLE, 

when  receiver  may  remove 454 

CODE  OF  PROCEDURE, 

of  New  York,  receiver  an  incident  to  general  jurisdiction 23 

receiver  in  creditor's  suit  under 401 

of  North  Carolina,  has  not  changed  general  equity  jurisdiction 

as  to  receivers 23 

COLLATERALS, 

deposited  by  corporation,  receiver  may  exercise  option 337 

COLLATERAL  SUIT, 

receivership  can  not  be  questioned  in 39a 

illustrations    39& 

otherwise  if  court  without  jurisdiction 39c,  203 

receiver's  sale  can  not  be  questioned  in 196 

when  want  of  leave  to  sue  receiver  not  available  in 254a 

COLLEGE, 

fellowship  in,  receiver  refused  over 311 

COLLIERY, 

receiver  as  between  tenants  in  common  of 606 

on  bill  by  purchaser  to  set  aside  purchase  of 615 

receiver  should  not  ordinarily  carry  on  business  of 615 

Receivers — 64. 


1010  INDEX. 

COMMERCIAL  PAPER,  Section 

receiver's  possession  of,  not  that  of  bona  fide  holder  for  value  159 

surrender  of,  by  receiver  to  third  person 159' 

refusal  to  deliver  notes  to  receiver,  when  not  a  contempt 168 

when  receiver  can  not  maintain  action  on  premium  note 204 

defense  to  suit  by  receiver  on  stock  subscription  note 205 

defense  to  suit  by  receiver  of  bank  on  note  of  depositor 245' 

want  of  consideration  and  fraud,  when  not  available  in  defense 

of  suit  on  note  by  receiver .^ 246 

set-off  in  suit  by  receiver  of  bank  on  notes 247 

in  suit  by  receiver  of  payee  against  maker 249' 

counter-claim  allowed  for  services   rendered  receiver 249 

when  maker  can  not  set  off  judgment  against  receiver 252 

trover  for  conversion  of  note,  by  receiver  of  corporation 316> 

canceled  note  for  insurance,  receiver  can  not  sue  on 319' 

note  transferred  by  receiver  of  bank,  assignee  may  recover  on..  323 

COMMON,     (See  Tenants  in  Common.) 

right  of,  not  to  be  exercised  against  receiver's  possession 154 

COMPENSATION  OF  RECEIVER, 

power  of  courts  to  fix 781 

court  may  act  on  its  own  knowledge 781 

for  carrying  on  hotel  business 781,  note 

English  practice,  no  settled  rule 782 

reference    to   master 782 

considerations  influencing  782 

court  may  summarily  end  proceedings  before  master 782 

no  fixed  rule  in  this  country 783 

should  correspond  with  capacity  and  responsibility 783 

no  compensation  after  reversal  of  appointment 783 

court  may  hear  evidence 783 

final  compensation  783 

practice  as  to  partial  compensation 783 

compensation  after  removal   783 

action  of  court  in  fixing,  not  ordinarily  disturbed  on  appeal.. 781,  783 

Massachusetts   doctrine    784 

percentage  not  allowed 784 

when  court   will    refuse  to  pass   on   exceptions   to   master's 

report   784 

in  Maryland,  same  as  on  trustee's  sales 784 

in  Alabama,  same  percentage  as  guardians 785 

in  New  York,  same  rate  as  executors 785 

but  courts  not  bound  by 785r 

receivers  in  lieu  of  executors  allowed  same  compensation 786 

receiver  of  railway  allowed  more  liberal  compensation 787 

considerations   in  determining 787 

entitled  to,  although  work  performed  by  others 788* 


INDEX.  1011 

COMPENSATION  OF  RECEIVER— Continued.  Section 

commissions  on  receipts  and  disbursements 788 

compensation  of  agent  of  corporation  acting  as  receiver 788 

rests  in  accounts 789 

extra  compensation  790 

receiver's  mismanagement  ground  for  refusal  of  compensation. .  790 
receiver   of   insurance   company   allowed   commissions   on   notes 

surrendered    791 

payment  into  court  to  avoid 792 

extra  remuneration  for  survey  of  minor's  estate  not  allowed....  793 

receiver  entitled  to,  unless  otherwise  ordered 794 

when  appointed  by  consent 794 

plaintiff  partner  not  entitled  to,  when  appointed  receiver 795 

receiver  can  not  take  judgment  for,  against  parties,  on  motion...  796 

practice  in  fixing  796 

may  be  taxed  as  costs 796 

when  part  taxed  as  costs  against  unsuccessful  plaintiff 796 

when  chargeable  on  fund 796 

should  not  be  allowed  without  notice 796 

when  not  subject  to  set-off 796 

reviewing  court  will  not  make  allowance 796 

appeals  from  allowance  or  refusal  of 796a 

receiver's  right  to  retain,  before  surrendering  fund  to  trustee  in 

bankruptcy   796& 

agreement  by  party  to  pay,  of  receiver  void  as  against  public  policy  796c 

agreement  by  receiver  to  serve  without 796c 

when  deprived  of,  for  delay  in  payment 818 

when  allowed,  although  receiver  has  delayed  accounting 818 

COMPROMISE, 

of  claims  and  actions  by  receiver 177,  336 

receiver  in  possession  continued  pending 564 

COMPTROLLER  OF  THE  CURRENCY.  (See  National  Banks.) 

CONDEMNATION.     (See  Eminent  Domain.) 

CONFIRMATION, 

of  receiver's  sale,  unnecessary 199c 

when  not  refused 199c 

what  amounts  to 199c,  note 

CONSENT, 

receiver  not  appointed  by,  in  improper  case 7 

appointed  by,  under  Irish  practice   94 

to  appointment  waives  want  of  notice 112 

CONTEMPT  OF  COURT, 

by  receiver  of  United  States  court  interfering  with  receiver  of 
state  court   51 

interference  with  receiver's  possession  punishable  by  attachment    163 


1012  INDEX. 

CONTEMPT  OF  COURT— Continued.  Section 

interference  by  subsequent  receiver  punishable  as  a 164 

by  garnishing  funds  due  receiver 164 

not  justifiable  because  of  impropriety  of  appointment 165 

liability   for,  not  dependent  on  official  or   formal  notice  of  ap- 
pointment      166 

in  interfering  with  collection  of  rent  by  receiver 167 

by  defendant  in  refusing  to  surrender  property  to  receiver 168 

refusal  to  deliver  possession  to  receiver,  when  not  a  contempt...  168 

court  itself  only  competent  judge  as  to 169 

resistance  to  enforcement  of  order  for  receiver  in  foreign  country 

constitutes  a 170 

actual  disturbance  of  receiver's  possession  requisite  to 171 

levy  and  sale  by  sheriflf  considered 171 

proceedings  for,  receiver's  title  not  determined  in 172 

when  claimant  required  to  restore  property 172 

courts  averse  to  punishment  for,  as  between  different  receivers..  173 

in  interfering  with  receiver's  rights  under  patent 174a 

form  of  j  udgment  in  proceedings  for 174& 

receiver's  disobedience  of  writ  of  supersedeas  constitutes  a 190 

suit  against  receiver  without  leave  of  court,  constitutes  a 254 

refusal  of  receiver  to  pay  money  constitutes  a 280 

appropriation  of  money  by  receiver  constitutes  a 280 

CONTRACT,     (See  Liabilities,  Covenant.) 

by  receiver,  court  may  vacate  or  modify 186 

assignee  of,  bound  by 186 

persons  making,  chargeable  with  notice   186a 

of  receiver  binding  on  co-receiver 370a 

of  railway  not  binding  on  its  receiver 393<r,  398a 

of  person  over  whom  receiver  appointed,  receiver  not  liable  on  273,  394m 

for  public  works,  receiver  of,  refused 702 

CONVENIENCE, 

relative,  and  inconvenience  considered 7 

CONVEYANCE.  (See  Deed.) 

CORPORATIONS, 

governor  authorized  to  appoint  receiver  over  insolvent  bank....  39 

positive  affidavit  not  required 89 

receiver  of,  how  recognized  in  other  state 47 

insolvent,  exclusive  jurisdiction  asserted  by  United  States  courts 

in  bankruptcy   53 

selecting  receiver  of,  officer  ineligible 72 

relaxation  of  the  rule   72 

stockholder  as  receiver 72 

eligible  by  statute  72 

another  corporation  eligible 73 

stockholder   and   director   of  plaintiff,    ineligible 80 


INDEX.  1013 

CORPORATIONS— CoM/mM^J.  Section 

oath  to  receivers  of,  omission  does  not  vitiate  proceedings 99 

shares  of  stock  of,  when  receiver  improper  before  answer  106 

insolvent,  notice  necessary  before  appointment  of  receiver 115 

receiver  of,  not  subject  to  garnishment   151 

suit   by    receiver   of,    on    stock   subscription   note,    what   defense 

available    205 

judgment  in  one  state,  a  bar  to  subsequent  action  in  another  206 

must  be  in  corporate  name  209 

receivers  of  bank,  suit  in  their  own  name 210 

may  be  in  name  of  receiver  when  authorized  by  statute  ...  211 
corporation  can  not  recover  in  its  own  name  when  right  of 

action  vested  in  receiver  211 

suit  begun  by  corporation,  continued  by  receiver 213 

when  defendant  can  not  object  to  irregularities  in  appoint- 
ment    225 

corporation  not  proper  party  plaintiff 225 

not  maintainable  in  other  states  240 

allowed  in  other  states  on  principles  of  comity 241 

when   corporation   dissolved    241 

receiver  of  corporation  allowed  to  prove  debt  in  bankruptcy 

in  another  state   242 

when  fraud  no  defense 246 

set-offs,  what  admissible  247,  248 

against  shareholder  for  illegal  dividends,  set-off  not  allowed  .  250 
foreclosure  of  mortgage  given  by,  when  receivers  need  not  be 

made  defendants  260 

action  against,  not  abated  by  appointment  of  receiver  260 

when   receivers   should  be  made   defendants    260 

receivers  over,  principles  governing  the  relief   287-312^ 

jurisdiction  enlarged  by  statute   287 

not  appointed  under  general  equity  powers  288 

courts  proceed  cautiously  289 

construction  of  statutes  conferring  the  power 289 

not  necessarily  result  of  injunction  289 

corporation  must  be  party  and  before  the  court 290 

corporate  functions  suspended  by  appointment   290 

delivery  of  corporate  deed  after  appointment   290 

receiver  of  bank  need  not  be  made  party  to  subsequent  pro- 
ceedings for  another  receiver   291 

general  allegations  of  fraud  insufficient   292 

should  not  be  appointed  in  absence  of  fraud  or  danger  to 

property  292 

mere   insolvency   insufficient    292 

difference  of  opinion  as  to  management  of  business  in- 
sufficient      292 


1014  INDEX. 

CORPORATIONS— Co«/niMcJ.  Section 

directors  holding  over  insufficient    292 

iurther   illustrations    292 

receivers  over,  failure  of  corporation  to  act  293 

breach  of  trust  by  officers  293 

no  place  of  business  and  no  officers 293 

Illegal    issue   of  bank   notes    293 

death  of  one  of  three  directors  293 

deadlock  among  directors  293 

courts  interfere  cautiously  in  behalf  of  shareholders   294 

■when  refused  in  behalf  of  shareholder  on  ex  parte  appli- 


cation 


294 


former  shareholder  not  entitled  to  294 

acquiescence  or  laches  of  shareholder  bar  to 295 

in  behalf  of  minority  shareholders,   when  receiver  not  ap- 
pointed      295a 

when  receiver  appointed 295& 

action  by  shareholders  against  directors 295?? 

when  demand  on  receiver  to  sue  is  unnecessary 295& 

demand  on  officers  and  directors  to  proceed 295c 

when   demand    unnecessary    295c: 

when  relief  determined  by  legislation  and  decisions  of  other 

state    296 

refused   as   to   new   issue   of   stock   ratified  by   state   where 

company   incorporated    296 

under  statute  on  expiration  of  charter 297 

sequestration  for  benefit  of  creditors  297 

rights  of  attaching  creditors  subordinate  297 

right  of  judgment  creditor  to,  under  statute 298 

judgment  creditor  may  file  bill  for,  after  execution  returned 

unsatisfied     299 

creditors  share  alike  in  funds  realized  by 299_ 

judgment   creditor   may   have,   over   tolls   and    franchise   of 

bridge  company 200 

creditor  without  j  udgment  can  not  have 301 

can  not  have  when  remedy  at  law  301 

effect  of  receivership  on  judgment  lien 302 

does  not  divest  title  to  real  estate  in  limine 302 

on  dissolution,  real  estate  vests  in  receiver 303 

mismanagement  of  trust  funds  of  insurance  company,  ground 

for   receiver    304 

insolvency  and  assignment   304 

receiver  refused  over  foreign   insurance  company  when  no 

assets  in  state  304 

foreign  corporations,   receivers  over,   in  behalf  of  creditors 

in  New  York  305 


INDEX.  1015 

CORPORATIONS— CoMh'nM^rf.  Section 

receiver    refused    over    foreign    corporation    when    no    assets    in 
state    305 

receivers  in  behalf  of  shareholders  306 

domiciliary  receiver  of  mutual  benefit  association,  when  en- 
titled to  possession  of  assets  in  another  state 306a 

court  will  preserve  equality   306a 

ancillary  receiverships    306b 

not  allowed  before  judgment  of  forfeiture  in  quo  warranto..     307 
nor  upon  involuntary  dissolution  by  expiration  of  charter    307 

bond  in  lieu  of  308 

case  retained  for  accounting 308 

no  bar  to  suit  against  shareholders  for  subscription  309 

registration  of  shares  in  hands  of 310 

not  allowed  over  dividends  of  college  fellowship   311 

one  corporation  may  be  receiver  over  another   312 

duty  of  officers  to  deliver  assets  to  receiver 312a 

receiver's  certificates  3126 

preferred    debts     312c 

weight  of  authority  opposed  to  preference   3l2d 

abuse  of  corporate  franchise  as  ground  for  receiver  in  quo  voar- 
ranto    312^ 

functions,  duties  and  rights  of  action  of  receivers  over 313-342a 

legislative   enactments    313 

receiver  represents  both  creditors  and  shareholders  314 

represents  corporation  for  purposes  of  litigation  315 

may  not  plead  usury  when  corporation  could  not 315 

may  purchase  at  mortgage  sale 315a 

may  prosecute  or  defend  suits 315a 

rights  of  action  of  316 

succeeds  to  rights  of  action  of  corporation 316 

may  enforce  them  by  same  remedies  316 

may  maintain  trover  for  conversion  of  note 316 

may  enforce  all  securities  for  payment  of  debts 316 

of  receiver  of  insolvent  bank 317 

individual  liability  of  stockholders  317a 

right  to  enforce  individual  liability  in  foreign  state 317Z; 

the  same ;  receiver  as  quasi-assignee  317r 

not  changed  by  receiver's  appointment 318 

same  defenses  available  as  in  suit  by  corporation 318 

defense  to  suit  by  receiver  on  premium  note 318 

change  of  corporate  name  318 

can  not  litigate  questions  determined  against  corporation 318 

can  not  avoid  lawful  settlement  made  by  corporation 319 

can  not  sue  on  canceled  note  given  for  insurance  319 

i  not  bound  by  illegal  act  of  corporation 320 


1016  INDEX. 

CORPORATIONS— Continued.  Section 

rights  of  action  of,  may  maintain  suit  to  set  aside  illegal  transfer 

of    securities    320 

to  set  aside  void  mortgage  or  fraudulent  judgment....  320 
may    maintain    suit    against    president    of    bank    for    money 

fraudulently  disposed  of 320 

unauthorized  transfer  of  notes  of  bank  to  director 320 

counter-claim  disallowed  320 

may  recover  dividends  improperly  paid 321 

functions  and  powers  conferred  by  statute 322 

power  to  dispose  of  and  divide  assets 323 

presumed  to  have  properly  discharged   duty    323 

right  of  action  to  recover  subscription  to  capital  stock 324 

rule    in    different    states    324 

defenses  to  such  actions   324a 

shareholder  not  entitled  to  injunction  against 325 

fraud  no  defense  to,  when  all  parties  participated 325 

right  of  action  to  recover  assessments  on  premium  notes 326 

what  receiver  must  allege  and  prove 327 

liability  not  increased  by  receivership   328 

must  make  assessment  and  apportionment 328 

receiver  takes  place  of  directors    329 

sanction  and  approval  of  court,  effect  of 329 

not  a  judicial  act    330 

receiver  may  make  new  assessment 330 

form  of  assessment  and  proof  required  331 

receiver  may  sue  on,  to  pay  equitable  claims 332 

what  defense  denied  maker 332 

set-offs,  what  may  be  allowed  by  receiver  333 

not  allowed  in  action  to  recover  illegal  dividends   333 

discretion  of,  in  settling  claims  against  corporation   334 

may   decline   to   ratify   contract   made  by   corporation   after 

insolvency  334 

can  not  waive  express  stipulations  of  insurance  policy 334 

can  only  allow  demands  recoverable  by  suit  335 

duty  to  resist  allowance  by  referees 335 

may  be  authorized  by  court  to  compromise  doubtful  claims  336 

may  allow  officers'  salaries  pro  rata  336 

may    exercise    option    of    treating    deposit    of    collaterals    as 

payment  337 

may  assign  chose  in  action,  without  seal 338 

sale  by,  effectual  without  seal    338 

not  set  aside  because  applied  for  by  creditor  who  was  also 

j  udge  of  the  court   338 

suit  by,  when  defendant  entitled  to  costs  339 

action  against,  to  collect  tax,  how  judgment  entered 340 

suit  by,  against  debtor,  not  act  of  bankruptcy  341 


INDEX.  1017 

CORPORATIONS— Co7j/n!M^rf.  Section 

on    bill    by   judgment   creditors    against,    not   required   to    apply 

money  on  j  udgments   342 

ancillary  bill  by  receiver  to  determine  claims  to  property  in  his 

possession   342a 

inj  unction     342a 

receivers    over   insolvent   corporations,   jurisdiction    enlarged    by 

statute    343 

power  may  be  conferred  on  executive  officers 343 

primary  object  to  preserve  assets  344 

discretionary    with    court    whether   to    allow    corporation    to 

resume  management    344 

not  appointed  upon  petition  of  corporation 344a 

corporation  not  dissolved  by   appointment  of  receiver   ....  344Z; 

pending  actions  do  not  abate 34ib 

corporation  may  be  sued  344& 

otherwise  on  dissolution  344& 

right  to  appoint  unquestioned 345 

appointment    of,    pending    proceedings    for    forfeiture,    does 

not  revive  corporate  body   345 

what  allegations  necessary  as  to  insolvency  346 

when    affidavit    on    information    and    belief    insufficient    to 

warrant    346 

not  appointed  ex  parte   346 

practice  on  appointing   346 

shareholders   entitled  to  relief   346a 

fraudulent  transfers    346a 

discretion  of  court  in  management  364a 

inj  unction  as  adj  unct  of 347 

does  not  necessarily  follow  inj  unction  347 

lien  of  creditors  not  affected  by  348 

does  not  dissolve  attachment  of  assets 348 

assets  can  not  be  attached  after  appointment  of 348 

does  not  prevent  creditors  from  suing   349 

when  creditor  can  not  sue  after 350 

other  creditors  may  come  in  350 

appointment  of,  operates  as  transfer  of  property 351 

right  to  rents  as  affected  by   351 

creditors  not  allowed  to  sue  for  unpaid   subscriptions  after 

appointment  of  352 

application  by  attorney-general  for,  under  statute 353 

affidavit  on  information  sufficient    353 

when  corporate  officers  competent  as 354 

effect  of  corporate  answer  under  seal   355 

purchaser  from,  acquires  no  right  of  action  against  former 

officer  356 


1018  INDEX. 

CORPORATIONS— Co«/ni»crf.  Section 

receivers  over  insolvent  corporations,  when  shareholder  estopped 

from  questioning  appointment  of,  or  order  for  sale   ....     356 

when  discharged  on  solvency  of  corporation 357 

not   when   rights  of  other  creditors  have  intervened    357 

national  banks,  receivers  over  358-364^ 

power  vested  in  comptroller  of  the  currency 358 

effect  of    " 358 

title  acquired  by  359 

not  entitled  to  notes  pledged  by  bank  359 

assets  exempt  from  taxation   359 

regarded  as  agent  of  comptroller  360 

has  no  control  over  bonds  deposited  to  secure  currency  . . .     360 

rights  of  action  of   360 

power  to  contract   360 

may  enforce  individual  liability  of  shareholders  360a 

right  of  action  against  directors  for  mismanagement 360b 

suits  by,  what  must  be  averred  361 

what  must  be  proven 361 

power  of  comptroller  to  appoint,  does  not  exclude  jurisdic- 
tion of  equity 362 

judgment  creditor  may  have    362 

jurisdiction  of  state  and  federal  courts  over 363 

property  in  hands  of,  can  not  be  sold  by  creditor 364 

subject  to  same  set-off  as  bank    364a 

railways,   receivers   over    365-398; 

principles    governing    365-37Sa 

in  behalf  of  mortgagees  and  bondholders  376-3S9a 

functions    and    duties    of    390-394 

preferred   debts    394a-394;j 

actions  against    395-398& 

receivers'  certificates    398c-398/ 

equitable  mortgagee  of  private  corporation  allowed  receiver 659 

official  liquidator  appointed   659 

CORPUS, 

when  preferred  debt  allowed  payment  out  of,  in  railway  receiver- 
ship    394; 

COSTS, 

of    attachment    against    receiver    for    not    accounting,    sureties 

liable  for  131 

liability  of  receiver  for 229 

on  unauthorized  appeal   2641? 

receiver  not  entitled  to,  when  he  has  not  obtained  leave  to  defend    267 

in  suit  by  receiver  of  corporation,  when  defendant  entitled  to 339 

on  motion  for  tenants  to  attorn  to  receiver 620 

when  receiver's  compensation  taxed  as,  against  plaintiff 796 

allowance  of,  in  receiver's  accounts   809-812 


INDEX. 


1019 


COSTS— Continued.  Section 

of  appointment,   entitled  to  priority    809 

allowance  of,  when  receiver  required  to  pay  809 

of  new  appointment   809 

allowance  of,  discretionary   809 

expenses  of  receivership  entitled  to  priority 809 

when  costs  and  expenses  charged  against  plaintiff 809a 

of  unauthorized  or  improvident  litigation   811 

taxes  on  personalty,  when  payable  as  811a 

for  appearing  on  motion  for  discharge 812 

when  receiver  may  move  for   812 

of  appeal  by  one  creditor  for  benefit  of  all 819c 

receiver  not  entitled  to,  for  appearing  on  application  for  his  dis- 
charge         846 

CO-TENANT,     (See  Tenants  in  Common.) 

of  personalty,  courts  averse  to  granting  receiver 20 

COUNSEL, 

consultation  with,  by  court  as  to  selection  of  receiver 65 

receiver  entitled  to  and  should  obtain 188 

must  show  necessity  therefor 188 

should  not  employ,  of  party ' 188 

employment  of,  by  receiver ;  should  not  employ  counsel  of  parties  216 

limitation  upon  the  rule 217 

not  ground  for  removal  823 

services   of,   to  corporation    '^1 

fees  of  805-808 

receivers  entitled  to  payments  of   805 

preference  for,  allowed   80d 

employment  should  be  authorized  805 

not  allowed  for  unsuccessful  defense  805 

defending  fraudulent  appointment  805 

for  work  requiring  no  legal  skill 805 

test  as  to  allowance   805 

allowance  is  to  receiver  and  not  to  counsel 805 

not  allowed  for  services  which  could  have  been  performed 

by  receiver   805 

nor  where  receiver  has  grossly  mismanaged  the  estate...  805 

when  allowed  for  defending  motion  for  removal   805 

allowed  for  defending  item  for  fees  in  account  805 

when  allowance  of,  not  disturbed  on  appeal  805 

when  extra  compensation  allowed    805 

should  be  allowed  only  on  notice 805 

allowed  receiver  of  lunatic's  estate  80o 

fees  to  counsel  for  parties,  when  disallowed 806 

t                        when  allowed 806 

services  by  receiver  as  solicitor  for  administrator 807 


1020  INDEX. 

COUNSEL — Continued.  Section 

fees  of,  receiver  not  allowed  counsel  fees  paid  himself 808 

as  a  preferred  claim  in  railway  foreclosures  3946 

COUNTER-CLAIM, 

allowed  for  services  rendered  to  receiver 249 

in    suit    for  notes   illegally   transferred,   amount   paid    for   notes 

not  allowed  as  a   251 

by  receiver  of  railway  against  preferred  debt  394c 

COURTS,      (See   Contempt   of   Court,   Leave   of   Court,   United 
States  Courts.) 

exercising  the  j  urisdiction 40-49a 

receivers  originated  in  English  Chancery    40 

favorite  remedy  in  Irish  Chancery   40 

what  courts  grant  receivers  in  this  country  41 

of  original  j  urisdiction  41 

of  last  resort  41 

of  probate,  not  vested  with  the  jurisdiction  42 

action  by  receiver  appointed  by,  can  not  be  maintained  . .  42 

when  may  appoint  42 

appointment  by,  required  in  term  time    43 

property  need  not  be  within  jurisdiction  of  44 

ecclesiastical  courts,  receiver  pending  contest  in 46 

of  different  states,  receivers  of,  recognized  only  by  comity.  .  47 

illustrations  of  rule  47 

prior  receivership  in  one  state  excludes  control  over  receiver 

by  courts  of  another  state  47a 

judgment  against  receiver  in  latter  state  not  conclusive 

in   former   47a 

first  appointing,  has  exclusive  control  48 

test  as  to  priority   48 

of  New  York,  when  injunction  bars  receiver   49 

receivers  in  federal,  in  suits  concerning  allotments  among  In- 
dians on  reservations  49a 

relative  powers   of  state   and   federal    50-62a 

first  acquiring  jurisdiction,  retain  it   50 

not  defeated  by  subsequent  dissolution  of  corporation  ..  50 

priority  acquired  by  receiver  on  creditor's  bill  in  state  court. .  51 

contempt  of  state  court  by  receiver  of  United  States  court..  51 

federal,  generally  recognize  prior  jurisdiction  of  state  courts  52 

the  same  in  bankruptcy  proceedings  52 

federal,  exclusive  jurisdiction  asserted  53,  54 

state,  will  not  act  in   foreclosure   when   receiver  of  United 

States  court  in  possession   54 

federal,  will  not  entertain  bill  for  account  against  receiver  of 

state  court    55 

state  and  federal,  conflict  between  as  ground  for  receiver  ....  58 


INDEX.  1021 

COURTS — Continued.  Section 

state,  can  not  enforce  payment  by  receiver  of  United  States  court  59 

when  can  not  enjoin  receiver  of  federal  court  59 

right   to  entertain  action   against   receiver  of  United   States 

;                    court 60 

!  of  federal,  when  jurisdiction  independent  of  citizenship  and 

'                    amount    60a 

actions  against  receivers  of,  removable  regardless  of  citizen- 

;                     ship  and  amount   60/? 

will  not  grant  writ  of  assistance  against  receiver  of  United 

States  court  61 

of  United  States,  receivers  of,  have  no  greater  powers  than  of 

state  courts    62 

Supreme  Court  of,  may  review  decision  of  state  court  . .  62a 

inferior,  discretion  in  selecting  receiver  rarely  interfered  with  ...  65 

grounds   of   interference    65 

may  be  interfered  with  to  prevent  injury  and  expense 66 

clerk  of,  not  ex  officio  a  receiver  71 

when  application  must  be  made  in  96 

of  state,  no  jurisdiction  over  receiver  of  national  bank 363 

receiver  of  railway  in  state  court,  when  not  interfered  with  by 

proceedings  in  bankruptcy  in  United  States  court  370 

of  state,  can  not  enforce  judgment  against  receiver  of  railway 

in  United  States  court 397 

COVENANT, 

by  receiver  officially,  no  personal  liability   272 

of  person  over  whom  receiver  is  appointed,  receiver  not  liable 

for    273,  394m 

becomes  liable  by  adopting 273a 

election  to  adopt,  of  lease    273a 

when  not  personally  liable  for,  to  pay  rent 273o 

not  bound  by,  of  former  receiver  2736 

election  to  adopt,  rests  in  discretion   272>b 

for  rent,  stipulated  or  reasonable  rental  value    273c 

receiver  can  not  impair  liability  of  original  party  on 27id 

receiver  of  railway  not  bound  by,  of  company  393c,  398a 

CREDITORS,     (See  Judgment  Creditors.) 

not  entitled  to  receiver  of  debtor's  property  before  judgment  ...  406 

of  bank,  denied  receiver  when  remedy  at  law  10 

when  allowed  receiver  in  probate  court 42 

when  jurisdiction   first  acquired   by  federal   court  on   creditor's 

bill  50 

when  by  state  court 51 

receiver  in  aid  of,  prior  jurisdiction  of  state  court  paramount 51 

of   insolvent,    eligibility   of    70,  72 

rehearing,  when  not  granted  in  creditor's  suit  92 


1022  INDEX. 

CREDITORS— CoH/;nMt'(f.  Section 

receiver  in  behalf  of,  may  be  extended  to  other  creditors  93 

receivers  usually  granted  before  answer  on  creditors'  bills 105 

receiver  extended  to  actions  by  different  creditors,  need  not  give 

new  security    120 

priority  between  receiver  and  judgment  creditor  levying  after  ap- 
pointment of  receiver 136 

claims  of,  not  presented  by  receiver  175,  note 

equities  of,  should  be  stated  by  receiver  suing  for  234 

suit  by  receiver  for,  when  set-off  not  allowed  250 

on  notes  due  debtor,  set-off   refused    252 

right  of,  to  receiver  over  corporation,  statute  strictly  construed..  289 

of  corporations,  right  to  receiver  given  by  statute  298 

may  file  bill  for  receiver  after  execution  unsatisfied  299 

may  have  receiver  over  tolls  and  franchises  of  bridge  company  300 

can  not  have  receiver  without  j  udgment   301 

when  remedy  at  law 301 

lien  of,  not  divested  by  receiver  in  limine 302,  348 

foreign  corporation  may  have  receiver  in  New  York 305 

bond   allowed   in   lieu   of  receiver    308 

receiver  represents  both  creditors  and  shareholders 314 

not  prevented  from  suing  by  receivership  349 

may  come  in  under  decree 350 

of  national  bank,  may  have  receiver   362 

of  railway,  not  entitled  to  receiver  when  judgment  may  be  en- 
forced by  ordinary  means   365 

not  entitled  to  priority  over  previous  mortgages 382 

before  j  udgment,  not  usually  allowed  receiver 406 

exception   in   partnership   cases    407 

in  case  of  lien  on  vessel  408 

in   action   to   charge   property   of   married    woman   with 

her  debts    409 

annuitant  allowed  receiver  when  annuity  in  arrears  410 

receiver  over  real  estate  in  aid  of  418 

receiver  in  aid  of,  under  English  bankrupt  law   426 

of  partnership,   allowed  to  proceed  at  law  notwithstanding  re- 
ceivership      505 

when  entitled  to  receiver  against  surviving  partner 537 

when  granted  receiver  on  bill  to  charge  debtor's  realty 567 

when  claims  of,  not  entitled  to  draw  interest 803 

CREDITORS'  BILLS.     (See  Judgment  Creditors.) 

CRIMINAL  LIABILITY.     (See  Indictment.) 

CROPS, 

ungathered,  when  receiver  refused   590 

when  allowed    590 

receiver  of,  when  mortgagee  entitled  to 646,  670 

not  entitled  to  severed  crops   646 


INDEX.  1023 

CURTESY,  ESTATE  BY,                                                                    Section 
receiver  of,  debtor  takes  title  to  451 

CUSTODIANS, 

of  funds  in  litigation,  when  similar  to  receivers  182 

D. 

DAMAGES,     (See  Bond,  Liabilities.) 

for  wrongful  appointment  of  receiver 39^ 

for  tort  of  receiver's  agent,  when  a  charge  on  fund 286a 

DANGER, 

of  loss,  as  ground  for  receiver H 

to  fund  in  litigation,  as  ground  for  relief 34 

ground  for  receiver  before  answer 105 

to  rents  and  profits,  as  ground  for  receiver  over  realty 559 

DEATH, 

of  receiver,  when  successor  not  appointed  at  instance  of  defendant    39^ 

suit  continued  by  successor 213 

of  one  of  three  directors  as  ground  for  receiver  over  corporation    293 

effect  of,  of  debtor  before  appointment  actually  made 452 

of  parties  or  of  receiver 471a 

practice  in  such  case 471a 

effect   of    471o 

of  partner,  as  ground  for  receiver 530-537 

receiver  on  death  of  both  partners 530 

not  granted  against  survivor  except  for  misconduct 531 

mismanagement  by  survivor,   ground   for    532 

refusal  by  survivor  to  close  up  business,  ground  for 532 

when  administrator  of  deceased  may  have 533 

rights  and  functions  of  receiver 534 

when  legatee  continuing  business  entitled  to 535 

appointed  notwithstanding  death  of  partner 536 

receiver  may  sue  for  money  due  firm    536 

when  appointed  on  bill  by  creditors  against  survivor 537 

of  trustee,  as  ground  for  receiver 694 

of  executor,  as  ground  for  receiver 718 

of  receiver,  effect  of,  on  settlement  of  accounts 817 

DEBENTURE-HOLDERS, 

right  of,  to  receiver 652a 

DECREE, 

not  prejudiced  by  decision  on  application  for  receiver 6 

no  receiver  on  final 6 

probability  as  to,  considered  on  application  for  receiver 8 

interlocutory,  no  appeal  from   26 

rule  in  Michigan 27 


1024  INDEX. 

DECREE— Continued.  Section 

final,  receiver  may  be  appointed  as  part  of 109 

receiver  may  be  appointed  after 110 

failure  to  require  bond,  no  ground  of  reversal 122 

court  should  not  render,  without  passing  receiver's  accounts  814 

when  does  not  operate  as  discharge  834 

of  foreclosure,  receiver  appointed  after,  in  case  of  emergency  655 

DEED, 

by  receiver,  power  to  make  implied  from  power  to  sell 190 

confirmation  of,  by  court 199 

delivery  of  corporate,  after  appointment  of  receiver  over  corpora- 

tion   290 

deposit  of,  as  security,  when  receiver  allowed 658 

DEED  OF  TRUST.     (See  Trust  Deed.) 

DEFENSE,     (See  Suit.) 

receiver  not  allowed  to  waive 264 

when  not  required  to  make  particular 264 

DEFINITION, 

of  receiver   1 

of  discretion ' 

of  remedy  at  law lO 

DEMURRER, 

to  bill,  no  objection  to   appointment   when  defendant   does  not 

appear    95 

on  overruling  of,  defendant  should  be  allowed  to  plead  or 

answer   95 

when  sustained  for  want  of  proper  parties 616 

DEPOSITARY, 

bank  not  ineligible  as,  because  a  creditor 274 

DESCRIPTIO   PERSONS, 

when  designation  of  plaintiff  as  receiver  amounts  to 244,  254&,  note 

DETINUE, 

action  of,  may  be  maintained  by  receiver 218 

DEVISEE, 

not  entitled  to  receiver  over  realty  when  remedy  at  law 555 

bill  by,  to  determine  widow's  dower,  receiver  refused  568 

contest  with  heir,  when  receiver  refused 570 

when  granted    5/0 

DILIGENCE, 

required  of  plaintifY 14 

degree  of,  required  of  receiver 797 

DIRECTORS.     (See  Corporations.) 


INDEX.  1025 

DISCHARGE,     (See  Removal.)  Section 

of  receiver,  on  answer  denying  equities  of  bill 24 

no  bar  to  suit  against  him  by  claimant  of  property 268 

of  corporation,  when 357 

of  railway,  on  payment  of  mortgage 389 

not  liable  after 398/^ 

distinction  between,  and  "vacation  of  appointment"  and  "re- 
moval"     820,  note 

in  bankruptcy,  when  no  bar  to  receiver  on  creditor's  bill 425 

of  receiver  832-848a 

power  of  court 820 

receiver  discharged  when  necessity  terminates 832 

in  case  of  lunatic's  estate 832 

effect  of  termination  of  suit 833 

does  not  necessarily  follow  termination  of  suit 833 

nor  on  reversal  of  appointment 833 

when  jurisdiction  retained  notwithstanding  dismissal  of  bill. .  833 

when  final  decree  does  not  operate  as 834 

receiver  over  infants  not  discharged  on  one  coming  of  age..  835 

receiver  can  not  appeal  from 836 

party  can  not  appeal  from 836 

punished  for  contempt  in  failing  to  comply  with 836 

defendant's  right  to,  on  satisfying  plaintiff's  demand 837 

plaintiff  not  entitled  to,  before  accounting 837 

receiver  not  entitled  to,  as  of  course,  on  his  own  application  838 

giving  bond  not  ground  for  discharge 838 

when  mortgagee  may  apply  for 839 

absolute  right  to,  on  payment  of  mortgage  debt 840 

granted  when  corporation  able  to   resume  business 841 

granted  on  denial  by  answer  of  allegations  of  creditor's  bill  842 

granted  on  plaintiff's  delay 843 

putting  purchaser  of  lands  in  possession  equivalent  to 844 

granted  on  bankruptcy  of  receiver 845 

payment  by  defendant 846 

right  of  defendant  to  move  for 846 

receiver  need  not  appear  on  hearing 846 

not  entitled  to  costs  of  appearing 846 

notice  of  846 

order  for,  not  appealable  in  Michigan 847 

no  bar  to  action  against  receiver  for  liabilities  incurred 848 

notice  of,  to  all  creditors  unnecessary 848 

effect  of,  on  appeal  from  order  of  appointment 848a 

DISCRETION, 

appointment  of  receiver  rests  in 7 

not  disturbed  on  appeal 7,  25 

definition  of  7 

Receivers — 65. 


1026  INDEX. 

DISCRETION— Confrnwrrf.  Section 

when  there  is  doubt  as  to  plaintiff's  recovery 8 

when  defendant  is  in  possession 19 

when  not  interfered  with  on  appeal 25 

of  court  in  authorizing  management  of  business 36 

of  master  in  chancery  in  selecting  receiver,  courts  averse  to  in- 
terference with   64 

of  inferior  court  in  selecting  receiver,  rarely  interfered  with  by 

appellate  court    65 

grounds  of  interference  with 65 

of  receivers  in  managing  properly 176 

in  accepting  or  rejecting  bids 176 

degree  of,  required 176 

none  in  application  of  funds 178 

as  to  sale  by  bulk  or  in  parcels 198 

in  settling  and  compromising  claims 334,  336 

of  court  in  authorizing  compromise  of  action  177 

in  instructing  receiver 188 

leave  to  sue  receiver  rests  in  254b 

in  continuing  receiver  over  corporation  344 

in  continuing  corporate  business 346o 

of  receiver  of  railway,  as  to  expenditures 392 

of  court,  in  staying  sale  by  receiver 429 

in  limiting  quantity  of  debtor's  estate  over  which  to  appoint 

receiver    429 

allowance  of  costs  rests  in 809 

DISSOLUTION, 

of  corporation  by  state  court,  when  prior  jurisdiction  of  federal 

court  not  divested  by ^^ 

when  receiver  may  maintain  action  in  foreign  court  on 241 

by  expiration  of  charter,  no  receiver  appointed  on 307 

of  corporation  does  not  result  from  appointment  of  receiver 344& 

same  as  to  national  bank 358 

same  as  to  railway  company 370& 

of  partnership,  as  ground  for  receiver 509-521 

DISTINCTION, 

between  receiver  and  trustee 1 

receiver  and  trustee  in  bankruptcy   1,  note 

active  and   passive   receiver    1.  note 

receiver  and  public  officer 2 

actions  concerning  real  property 221 

master's  and  receiver's  report  on  account 801 

"vacation  of  appointment,"  "removal"  and  "discharge"..  820,  note 

DISTRAINT.     (See  Rent.) 

DISTRIBUTION, 

receiver  can  not  appeal  from  order  of 264& 


INDEX.  1027 

DIVERSION,                                                                                         Section 
of  income  of  railway,  ground  for  preferring  current  debts 394c 

DIVIDEND, 

receiver  can  not  make,  without  order  of  court 175 

by  insolvent  insurance  company,  receiver  may  recover  back 321 

creditors  enjoined  from  suing  for 321 

set-offs  not  allowed 333 

DIVORCE, 

receiver  of  rents  pending  action  for 146 

suit  by  receiver  to  set  aside  fraudulent  conveyance  made  to  de- 
feat decree  for  alimony 221 

receiver  in  proceedings  to  enforce  alimony 438 

receiver  over  husband  pending,  does  not  divest  partnership  prop- 
erty       548 

DOWER, 

receiver's  sale  subject  to 199a 

when  receiver  granted  concerning 568 

when  receiver  may  compel  assignment  of 568 

DRAFT, 

when  not  entitled  to  payment  in  full 274a 

DUTY,     (See  Functions.) 

of  chancellor  in  appointing  receiver,  delicate  nature  of 3 

of  receiver,  over  railway 390 

in  partnership  cases 538-552 

E. 

EASEMENT, 

of  railways  in  tunnel,  receiver  for  management  of 368 

ECCLESIASTICAL  COURTS, 

receiver  pending  contest  in 46 

EJECTMENT, 

can  not  be  brought  against  receiver  without  leave 139 

permission  to  bring,  receiver  not  allowed  to  apply  for 181 

leave  of  court  necessary  before  receiver  can  bring  208 

against  receiver,  leave  to  defend 266 

when  receiver  refused  pending  appeal  from  judgment  in 557 

receivers  in  aid  of 575-577 

not  usually  granted 575 

granted  to  preserve  rents  and  profits 576^" 

stronger  ground  after  verdict  in 577 

granted  pending  certiorari  from  state  to  federal  court 577 

ELIGIBILITY, 

to  office  of  receiver 63-81a 


1028  INDEX. 

ELIGIBILITY— Continued.  Section 

as  affected  by  relationship 67 

by  interest  with  defendant 68 

of  solicitor  68 

of  one  of  plaintiffs 68 

person  unfamiliar  with  property  not  eligible 68 

distant  residence  as  affecting 69 

solicitor,  under  commission  of  lunacy,  ineligible 70 

in  the  cause,  ineligible 70 

master  in  chancery  ineligible 70 

barrister  eligible  70 

as  affected  by  being  member  of  parliament 70 

peer  of  the  realm  ineligible 70 

member  of  reorganization  committee 70 

creditor  of  insolvent 70,  72 

of  receiver  of  corporation,  officer  ineligible 72,  354 

relaxation  of  rule  72 

stockholder 72 

officer  eligible  by  statute 72 

another  corporation  eligible 73 

of  trustees  as  receivers,  generally  ineligible 74 

when  trustee  and  executor  eligible 74 

next  friend  of  infant  ineligible 75 

mortgagee  and  trustee  eligible 76 

administrator  of  deceased  partner  eligible 78 

nomination  in  the  bill 79 

nomination  by  consent  of  parties 79 

stockholder  and  director  of  plaintiff  corporation  as  receiver 80 

mortgagee  of  West  India  estates  eligible    81 

want  of,  how  waived 81a 

EMBEZZLEMENT, 

when  loss  by,  of  receiver  borne  by  plaintiff 645 

EMINENT  DOMAIN, 

action  under  right  of,  by  receiver  can  not  be  begun  without  leave 

of  court    208 

in  what  name  instituted 209 

right  of,  not  taken  away  by  appointment  of  receiver 370b 

EMPLOYEES, 

of  receiver,  interference  with,  when  enjoined 163 

receiver  may  hire,  in  management  of  business 175 

wages  of,  liability  of  plaintiff  for 389a 

when  preferred  394d 

unwarranted  discharge  of,  by  receiver  of  railway  prevented  by 

court    390,  note 

ENGLISH  CHANCERY, 

receivers  originated  in 40 


INDEX.  1029 

EQUITABLE  INTEREST,                                                                 ^^2)^ 
of  debtor  as  ground  for  receiver ^ 

ESCHEAT,  ^  . 

when  state  may  have  receiver  on,  of  real  property ^y* 

ESTOPPEL 

of  defendant,  from  denying  receiver's  right  to  sue  in  that  capacity    235 
of  judgment  creditor  estops  receiver 

EVIDENCE.     (See  Proof.) 

EXAMINATION, 

of  judgment  debtor  before  master 

EXCEPTIONS,  . 

to  master's  selection  of  receiver,  rarely  entertained o4 

grounds  of  entertaining ^ 

English  practice  on ^ 

EXCLUSION,  . 

from  partnership,  as  ground  for  receiver ^^^  ^^^ 

EXECUTION, 

appointment  of  receiver  an  equitable -''  ^ 

receiver's  possession  can  not  be  interfered  with  by 141 

unauthorized  levy  of,  on  property  held  by  receiver,  a  contempt 

,  .  163 

of  court 

not  justifiable  on  ground  of  illegal  or  unauthorized  appointment     Ibi) 
return  of  nulla  bona  before  return  day,  no  ground  for  receiver 

on  creditor's  bill •. 

levy  of,  on  partnership  property,  how  affected  by  receivership. .. .     495 
realty  subject  to  lien  of,  on  termination  of  receivership  602 

EXECUTORS, 

receiver  pending  contest  between ^ 

when  eligible  as  receivers • 

receiver  granted  against,  before  answer,  in  case  of  abuse  of  trust  1U4 

receiver  granted  against,  after  decree 110 

assignment  of  mortgage  by,  as  security  for  receivership,  held  good  125 

706-/^4 

receivers  over   

courts  averse  to  granting ^j^ 

relief  based  on  doctrine  of  quia  timet 700 

not  allowed  on  slight  ground 707 

on  information  and  belief 707 

abuse  of  trust  and  waste,  ground  for 708 

allowed  before  answer 708 

poverty  of,  no  ground  for 

insolvency  and  misconduct  ground  for 71U 

bankruptcy  ground  for 

removal  from  state  ground  for 71^ 

allowed  although  estate  in  foreign  country   713 


1030  INDEX. 

EXECUTORS— C(7«/in«r(/.  Section 

receivers  allowed  over  executors  in  foreign  country 713 

allowed  pending  controversy  in  ecclesiastical  court 714 

judgment  creditors,  when  allowed  receiver  against 715 

when  denied  receiver 716 

not  allowed  to  interfere  with  administration 716 

death  and  refusal  to  act  ground  for 718 

misunderstanding  between,  not  sufficient   718 

allowed  over  realty  when  plaintiff  equitably  interested  with 

deceased    719 

court    will    not    examine    executor's    account    on    application 

for  receiver   720 

on  removal  of  receiver  executors  again  ordered  to  act 723 

appointment  of  receiver  does  not  remove  executor 724 

of  receiver,  not  ordered  to  account 817 

when  entitled  to  petition  for  account  of  payments 817 

entitled  to  notice  of  passing  of  accounts 817 

EXEMPTIONS, 

receiver  in  creditor's  suit  takes  no  title  to  exempted  property 441 

nor  to  insurance   on    442 

nor  to  j  udgment  for  damages  for  seizing 442 

EXPENSES, 

of  receivership  entitled  to  preference 809 

when  charged  against  plaintiff 809a 

EXTRA  COMPENSATION.     (See  Compensation  of  Receiver,  Ac- 
counts.) 

EXTRAORDINARY  REMEDY, 

receivership  considered  as   3 

of  receiver  as  compared  with  injunction 10 

R 

FARM, 

partnership  in,  when  receiver  granted 504 

compensation  of  receiver  of 788 

FEDERAL  COURTS.     (See  Courts,  United  States  Courts.) 

FEES, 

of  office,  receiver  refused 21 

when  granted 22 

FELLOW-SERVANTS, 

statutes  abolishing  rule  of   395 

FELLOWSHIP.     (See  College.) 

FINAL  DECREE.     (See  Decree.) 


INDEX.  1031 

FORCIBLE  ENTRY  AND  DETAINER,  Section 

can  not  be  brought  in  receiver's  name 209 

contrary  doctrine  recognized 210 

FORECLOSURE.     (See  Mortgages,  Trust  Deed.) 

FOREIGN  CORPORATIONS.     (See  Corporations.) 

FOREIGN  COUNTRY, 

receivers  over  property  in 44 

receiver  to  enforce  decree  in 45 

contempt  for  resisting  enforcement  of  order  for  receiver  in 170 

mortgaged  property  in,  receiver  allowed 648 

FOREIGN  RECEIVER.     (See  Courts.) 

FRANCHISE, 

of  bridge  company,  judgment  creditor  may  have  receiver  over..     300 
receivership  of  street  railway  to  prevent  forfeiture  of 371 

FRANCHISE  TAX, 

liability  of  receiver  for 140a,  note 

FRAUD, 

prevention  of,  as  ground  for  receiver 11 

general  allegations  of,   insufficient 17 

ground  for  receiver  before  answer 105 

for  setting  aside  receiver's  sale \99d 

as  defense  to  suit  by  receiver  on  stock  subscription  note 205 

when  not  defense  in  action  brought  by  receiver  of  corporation 246 

general  allegations  of,  insufficient  to  warrant  receiver  over  cor- 
poration     292,  295a 

plaintiff's  participation  in,  bars  relief 295 

in  obtaining  real  property,  when  ground  for  receiver 565 

FUNCTIONS,     (See  Sales,  Suits.) 

of  receiver,  effect  of  appeal 29 

as  affected  by  supersedeas 29,  190 

not  allowed  to  pay  money  except  by  order  of  court 142 

general  nature  of   175-190a 

receiver  can  make  no  dividend  without  order 175 

receiver  not  an  assignee   175 

nor  adverse  party 175 

not  plaintiff's  agent,  but  represents  all  parties 175 

may  not  profit  at  expense  of  trust 175 

should  make  inventory 175 

may  make  admissions 175 

may  employ  assistants  in  business  175 

need  not  present  claim  of  creditor 175,  note 

discretion  as  to  management  of  property 176 

as  to  accepting  bids 176 


1032  INDEX. 

FUNCTIO'NS— Continued.  Section 

of  receiver,  degree  of  discretion  required   176 

no  discretion  in  application  of  funds 178 

must  obey  all  orders  of  court  as  to  settlement  of  demands. ..  177 

may  compromise  claims  and  actions 177,  336 

can  not  set  off  personal  claims  against  person  to  whom  he 

is  ordered  to  refund  money 178 

enlargement  of   179 

repairs  made  by  receiver,  rule  as  to 180 

receiver  not  allowed  to  originate  proceedings  under  English 

and  Irish  practice 181 

of  custodians  of  funds  in  litigation,  when  similar  to  receivers  182 

receiver  attending  court  exempt  from  arrest 183 

effect  of  receivership  as  regards  statutes  of  limitations 184 

functions  not  determined  by  abatement  of  cause 185 

may  collect  rents  until  removal 185 

court  may  vacate  or  modify  contract  by  receiver 186 

assignee  of  contract  with  receiver 186 

lease  of  offices  by  receiver 186 

relative  functions  of  different  receivers,  second  subordinate 

to  first  187 

receiver  entitled  to  instruction  and  advice  of  court 188 

practice  on  applying  for 188 

entitled  to  and  should  obtain  counsel 188 

must  show  necessity  for 188 

should  not  employ  counsel  of  party 188 

receiver  may  collect  money  not  yet  due 189 

receiver's  functions  suspended  by  appeal  and  supersedeas.  .29,  190 

should  restore  property  to  defendant 190 

court  may  make  administrative  orders  notwithstanding  appeal 

and  supersedeas   190a 

sale  by  receivers  191-199<? 

receiver  must  conform  to  mode  fixed  by  lav/ 191 

public  and  private  sale 191 

liens  not  divested  by 191,  199a 

may  be  conducted  by  master  in  chancery  or  agent  for  receiver  191 

court  has  power  to  sell  when  necessary 192 

may  be  decreed  though  interests  of  parties  not  yet  ascertained  192 

though  no  petition  therefor  filed 192 

sale  of  steamboat 192 

receiver  can  not  purchase  for  his  own  benefit 193 

to  receiver  by  himsel  f  individually 193,  note 

can  not  purchase  at  foreclosure  or  judicial  sale 194  ■ 

when  receiver  allowed  to  become  tenant  of  lands  subject  to 

receivership    195 

order  for  sale  can  not  be  questioned  collaterally 196 

sale  by  receiver  to  pay  taxes 197 


INDEX. 


1033 


FUNCTIONS— Continued.  Section 

sales  by  receivers,  discretion  allowed  receiver  in  sale  of  personalty     198 

sale  in  bulk ;  private  sale   198 

irregular  sale ;  ex  parte  sale  198 

want  of  notice  of  sale    198 

order  of  sale  appealable   198 

order  confirming  sale  of  real  estate  appealable 198 

of  real  property,  implied  power  to  make  deed 199 

confirmation  of  deed  by  court 199 

subject  to  encumbrances  and  liens 199a 

caveat  emptor \99b 

confirmation  unnecessary 199(r 

when,  not  refused 199c 

what  amounts  to 199c,  note 

fraudulent  sale  by  receiver 199^ 

must  take  place  at  time  designated  by  court 199^ 

of  corporate  property  does  not  need  corporate  seal 338 

not  set  aside  because  applied  for  by  creditor  who  was 

also  j  udge  338 

purchaser  acquires  no  right  of  action  against  former  officer    356 
when  shareholder  estopped  from  questioning  order  of  sale    356 

receiver's  functions  limited  to  state  where  appointed 239 

of  receivers  over  corporations  313-342a 

over  railways  390-394 

in  creditors'  suits 453^71o 

over  partnerships   538-552a 

over  real  property 618-638a 


GARNISHMENT, 

property  subject  to,  until  reduced  to  receiver's  possession 137 

funds  in  receiver's  possession,  not  subj  ect  to 151 

otherwise  with  leave  of  court 151 

when  leave  of  court  unnecessary 151 

assets  not  yet  in  possession,  subject  to 151 

of  funds  due  receiver,  a  contempt  of  court 164 

receiver  may  garnish  plaintiff  in  suit  in  which  he  was  appointed  230 

GOLD  MINES.  (See  Mines.) 

GOOD  WILL, 

of  partnership,  when  receiver  ordered  to  sell  with  lease 547 

GOVERNOR, 

of  state,  authorized  to  appoint  receiver   39 

GRATUITY, 

12 

no  receiver  over • '■^ 


1034  INDEX. 


H. 


HEIRS-AT-LAW,  Section 

receiver  not  appointed  over  realty  in  contest  between 554 

bill  by,  to  determine  dower,  when  receiver  refused 568 

receiver  allowed  in  action  to  enforce  trusts  of  will 569 

in  possession,  when  receiver  refused 569 

when   granted    

contest  between,  and  devisees,  when  receiver  refused 570 

when  granted 

when  denied  receiver  as  against  grantor 571 

opposition  by,  to  administration,  no  ground  for  receiver 571 

when  allowed  receiver  as  against  tenant  for  life 572 

not  allowed  receiver  as  against  mortgagee  in  possession 680 

mav  have  receiver  on  death  of  one  trustee  and  refusal  of  another 

to  act  694 

HORSES, 

when  may  be  let  by  receiver 481 

HOTEL, 

mortgage  of,  when  receiver  allowed 672a 

compensation  of  receiver  for  carrying  on  business  of 781,  note 

HOUSE, 

on   leased    ground,    defendant's    insolvency   not    ground    for    re- 

con 
ceiver  over ''"" 

HUSBAND, 

real  estate  of,  sale  by  receiver  subj  ect  to  dower I99a 

doing  business  in  wife's  name,  when  receiver  appointed  428 

receiver  over,  pending  divorce  suit,  does  not  divest  title  to  part- 
nership property  

when  denied  receiver  in  case  of  marriage  settlement 591 

receiver  against,  after  divorce 591 

purchaser  from,  when  allowed  receiver  as  against  settlement  upon 
wife    612 


when  devisee  allowed  receiver  as  agamst. 


700 


of  executrix,  mismanagement  ground  for  receiver 708 

I. 

INCUMBRANCES, 

receiver's  sale  subj  ect  to ^99o 

INDICTMENT, 

against  receiver  of  railway 393c 

INDORSEMENT, 

of  note  by  receiver,  plaintiff  claiming  through,  must  show  appoint- 
ment and  authority  231,  note 


INDEX.  1035 

INFANTS,  Section 

next  friend  of,  ineligible  as  receiver 75 

receivers  over  estates  of 725-732 

relief  based  on  doctrine  of  trusts 725 

j                 granted  in  cases  of  mismanagement 725 

granted  when  executor  has  absconded 726 

I  refusal  of  trustees  to  act,  not  granted  on  refusal  of  one  of 

j                           several   727 

I                        granted  on  refusal  of  one  of  two 121 

''                granted  over  stock  of  goods  in  possession  of  mortgagee 728 

eligibility  of  receiver  of,  next  friend  ineligible 729 

trustee  and  executor  ineligible 729 

when  eligible  729 

receiver  liable  for  interest  on  funds  of 730 

authorized  to  relieve  poor  tenants 731 

not  discharged  on  one  of  two  infants  attaining  majority 732 

INFORMATION  AND  BELIEF, 

verification  on,  insufficient 89 

for  appointment  of  receiver  over  corporation 346 

INJUNCTIONS, 

relief  by  interlocutory,  bar  to  receiver  without  notice 112 

receiver's  possession  protected  by 140 

against  interference  with  receiver's  employees 163 

against  unauthorized  suits  against  receivers 256 

courts  will  not  grant,  against  their  own  receivers 262 

remedy  is  in  receivership  cause 262 

mandatory    injunction    against   receiver    262 

1         compared  with  remedy  by  receivers 737-748 

points  of  resemblance  between IZ"] 

neither  remedy  changes  title 737 

both  rest  in  j  udicial  discretion TZl 

auxiliary  nature  of 738 

ultimate  rights  not  determined 738 

principal  difference  in  effect  on  possession 739 

in  New  York 740 

when  injunction  bars  receiver 740 

remedy  at  law  bars  either  injunction  or  receiver 741 

long  acquiescence  a  bar  to  either  remedy 742 

one  remedy  not  necessary  incident  of  other 16,  743 

distinct  nature  of 743 

receiver  denied  where  ample  protection  by 743 

neither  remedy  used  to  determine  title  to  public  office 744 

either  granted  to  property  in  foreign  country 745 

both  granted  in  conflict  between  state  and  federal  courts 746 

injunction  granted  to  protect  receiver's  possession 747 


J 


1036  INDEX. 

INJUNCTIONS— Co«7nM/rrf.                                                             Section 
compared  with  remedy  by  receiver,  railway  enjoined  from  con- 
demning land  in  receiver's  possession 747 

unauthorized   interference    with    realty    in    receiver's   posses- 
sion enj  oincd  747 

unauthorized  suits  against  receiver  enjoined 140,  747 

by  receiver  enj  oined 748 

authorized  suit  by  receiver  not  enjoined   748 

in  connection  with  receivers  over  corporations   749-754 

courts   averse  to   receivers  over  corporations  in  absence  of 

statute    749 

receiver  does  not  necessarily  follow  injunction 749 

injunction   may   follow   receiver  over  corporation   as  neces- 
sary adj  unct  750 

receiver  over  corporation  equivalent  to  injunction 750 

proceedings  in  quo  warranto,  injunction  allowed  but  receiver 

refused 751 

suit  by  receiver  to  collect  subscriptions,  sharehojder  can  not 

enj  oin   752 

creditors  enjoined  from  separate  suits 752 

receiver  of  railway,  may  enjoin  disposal  of  land  grant 753 

railway  enjoined  from  interfering  with 753 

different  mortgagees  of  tolls,  receiver  and  injunction  allowed  753 

receiver  of  national  bank  may  enjoin  illegal  taxes 753 

receiver   of  insolvent  corporation    may   enjoin    unfair   com- 
petition      753 

receiver  of  railway  may  enjoin  improper  diversion  of  earnings  754 

in  connection  with  receivers  in  creditors'  suits 755-759 

creditors  before  judgment  entitled  to  neither  remedy 755 

exception  to  rule  in  partnership  cases    756 

injunction  and  receiver  allowed  to  protect  lien  on  vessel 757 

allowed  against  married  woman  doing  business  as  trader  757 

judgment  creditors  allowed  both  remedies 758 

when  receiver  in  creditor's  suit  denied  receiver  and  injunc- 
tion in  action  to  set  aside  assignment 759 

in  connection  with  receivers  over  partnerships 760-771 

same  conditions  necessary 760 

case  must  warrant  dissolution 760 

both  refused  when  bill  fully  denied  by  answer 760 

neither  granted  in  nominal  partnership 761 

when  security  by  defendants  allowed  in  lieu  of 761 

destruction  of  confidence,  as  ground  for 762 

irreconcilable  disagreement,  ground  for 762 

insolvency  of  partner  coupled  with  fraud,  ground  for 762 

actual  abuse  necessary 763 

insolvency  of  partner  after  dissolution,  ground  for  763 


INDEX.  1037 

INJUNCTIONS— Con/mMrrf.                                                                Section 
in  connection  with  receivers  over  partnerships,  violation  of  part- 
nership articles  ground  for 764 

receiver  not  appointed  ex  parte  after  inj  unction 764 

when  allowed  in  case  of  farm 765 

foreign  mining  association 765 

receiver  does  not  necessarily  follow  preliminary  injunction..  766 

when  injunction  dependent  on  fate  of  application  for  receiver  766 

when  injunction  continued  with  receiver 766 

denial  by  answer  a  bar  to 767 

assignment  by  insolvent  members  after  dissolution,  ground  for  768 

when  allowed  on  death  of  partner 769 

receiver   appointed   when   defendant  partners   enjoined   from 

collecting  debts  770 

injunction   against  continuing  business  in  same   locality  on 

sale  by  receiver 771 

in  connection  with  receivers  over  real  property 772-780 

courts  averse  to  granting,  against  possession  under  claim  of 

title  772 

long  acquiescence  in  possession  as  a  bar  to IIZ 

refused,  as  between  lessor  and  lessee 774 

on  bill  by  heir  to  determine  dower 775 

purchaser   at   judicial    sale    allowed   injunction    and    receiver 

over  crops 776 

receiver  may  have  injunction  against  waste  Ill 

to  restrain  tenant  from  forbidden  use  of  premises Ill 

when  allowed  in  equitable  action  for  recovery 778 

against  tenant  for  li  f e 778 

contract  between  owner  and  tenant,  relief  refused 778 

remainder-man  and  tenants  denied  injunction  against  receiver 

dispossessing  them 779 

allowed  as  between  co-tenants 780 

dissolution  of,  compared  with  removal  of  receiver 826 

INNOCENT  PURCHASERS, 

rights  of,  not  determined  on  order  to  surrender  possession  to 

receiver    33 

INSANE  HOSPITAL, 

when  receiver  directed  to  sell  lease  and  good  will  of 547 

INSOLVENCY, 

of  defendant,  as  ground  for  receiver 11 

not  sufficient  ground  of  itself 18 

when  receiver  appointed  though  no  showing  of 18 

as  ground  for  collateral  attack  on  appointment  of  receiver. ..  39c 

receiver  refused  on  insufficient  affidavit  of 106 

of  corporation  not  alone  sufficient  for  receiver 292 


1038  INDEX. 

INSOLVENCY— Continued.  Section 

of   defendant    insurance   company    304 

when  not  sufficient  for  receiver  over  real  estate 559 

when  sufficient 566 

of  partnership,  as  ground  for  receiver 484 

of  individual  partner 496,  511 

of  tenant  in  common,  as  ground  for  receiver 604 

of  vendor  of  realty,  not  necessary  to  entitle  vendee  to  receiver. .  610 

of  mortgagor,  as  ground  for  receiver   666 

must  be  clearly  shown 667 

when,  immaterial 643 

as  ground  for  receiver  in  aid  of  mortgagee  of  chattels 647 

in  case  of  leasehold  mortgage 676 

of  canal  company,  ground  for  receiver  in  aid  of  bondholders....  678 

of  executor,  as  ground  for  receiver 710 

INSOLVENT  CORPORATION.     (See  Bank,  Corporation,  Insur- 
ance Company.) 

INSTRUCTIONS, 

receiver  entitled  to,  of  court 188 

discretion  of  court  in  giving,  not  disturbed  on  appeal 188 

petition  for,  defendant  not  entitled  to  notice  of 188 

INSURANCE, 

on  exempted  property,  receiver  of  debtor  not  entitled  to 442 

on  mortgaged  premises,  neglect  of,  ground  for  receiver 672 

when  not  ground  for 672 

INSURANCE  COMPANY, 

receiver  of,  when  can  not  sue  on  premium  note 204 

pleadings  in  actions  by  receivers  of,  on  premium  notes 236 

what  may  be  set  off  in  such  actions 247 

receiver  of,  can  not  dispense  with  conditions  of  policy  as  to  loss  264 

mismanagement  of  funds  of,  ground  for  receiver 304 

receiver  refused  over  foreign,  when  no  assets  within  state 304 

receiver  may  sue  on  note  given  for  policy 316 

suit  by  receiver  of,  on  premium  note,  defense  to 318 

note  surrendered  and  canceled  by,  receiver  can  not  sue 319 

dividends  improperly  paid  by,  receiver  may  recover  back 321 

creditors  enjoined  from  suing  for 321 

assessments  on  premium  notes,  receiver  may  sue  for 326 

may  sue  in  foreign  state 326 

what  receiver  must  allege  and  prove 327 

receiver  must  make  assessment  and  apportionment 328 

receiver  takes  place  of  directors 329 

sanction  and  approval  of  court 329 

receiver  acts  ministerially,  not  judicially   330 

may  make  new  assessment,  or  re-assessment 330 

approval  by  court  not  a  judicial  act 330 


INDEX.  1039 

INSURANCE  COMPANY— Continued.  Section 

assessments  on  premium  notes,  form  of,  when  general  on  all  notes  331 

proof  as  to  losses,  what  required 331 

receiver  may  sue  for,  to  pay  equitable  claims  for  losses 332 

defense  by  maker,  what  denied 332 

receiver  of,  power  in  adj  usting  losses 334 

can  not  waive  express  stipulations  of  policy 334 

allegations  of  insolvency  as  ground  for 346 

INSURANCE  POLICY, 

receiver  can  not  waive  express  stipulations  of 334 

INTEREST, 

of  plaintiff,  requisites  of,  to  warrant  receiver 12 

of  defendant,  must  be  subject  to  execution  to  warrant  a  receiver  31 

on  funds  due  from  receiver,  surety  liable  for 131 

liability  for,  when  discretionary  with  court 131 

non-payment  of,  as  ground  for  receiver  over  railway 376 

against  receiver  of  railway,  when  disallowed 394d,  394/fe 

over  mortgaged   premises 649 

effect  of  payment  of,  by  receiver  to  mortgagee 649 

on  funds  of  infant,  when  receiver  liable  for 730 

liability  of  receiver  for,  on  mingling  funds  803 

on  claim  of  creditor 803 

on  loaning  funds 804 

on  failure  to  invest  funds  as  ordered  by  court  804 

INTERLOCUTORY  ORDER, 

not  appealable   26 

appeals   from,   in   Michigan    27 

INTERPLEADER, 

bill  of,  receiver  may  bring  against  different  claimants 263 

INTERVENTION, 

allegations  in  petitions  of 254& 

practice  on  petitions  of  254c 

INVENTORY, 

a  receiver  should  make  175 

IRISH  CHANCERY, 

receiver   favorite  remedy  in    40 

IRREPARABLE  LOSS, 

must  be  shown  as  ground  for  receiver 3 

J. 

JEWELRY, 

receiver  appointed  over,  on  creditor's  bill  432 

JUDGE.     (See   Court.) 


1040  INDEX. 

JUDGEMENT,     (See  Creditors,  Judgment  Creditors.)  Section 

in  suit  by  receivers  in  one  state,  a  bar  to  subsequent  action  in 

another  state  206 

in  action  by  receiver,  bar  to  subsequent  suit  for  same  cause  of 

action  219 

against  receiver,  only  enforceable  out  of  funds  in  his  hands  as 

receiver    255 

sale  of,  by  receiver,  with  covenant,  no  personal  liability 272 

against  receiver  for  collection  of  taxes,  how  entered 340 

against   receiver  of  railway   for  inj  uries    395 

creditors  not  entitled  to  receiver  or  injunction  before  406 

except  in  partnership  cases  407 

in  case  of  lien  on  vessel  408 

in  action  to  charge  property  of  married  woman  with  her 

debts  409 

no  lien  on  debtor's  property  after  assignment  to  receiver 423 

realty  subject  to  lien  of,  on  termination  of  receiver's  functions..  602 

JUDGMENT  CREDITORS 

receivers  in  aid  of  399-471a 

principles  on  which  the  relief  is  granted 399-439& 

inadequacy  of  legal  remedy  the  leading  principle  399 

American  law  shaped  by  New  York  courts  400 

former  New  York  chancery  system 400 

defendant's  want  of  property  no  objection   400 

duty  of  j  udgment  creditor  to  apply  for 400 

no  objection  that  defendant  had  not  answered   400 

appointed    on    proceedings    supplementary    to    execution 

under  New  York  code  401 

almost  a  matter  of  course 401 

object  of  401 

remedy  a  cumulative  one   401 

creditor  must  use  diligence   402 

delay  ground  for  refusing 402 

acquiescence    in    debtor's    possession,    when    ground    for 

refusing  402 

remedy  at  law  must  be  exhausted   403 

not  granted  when  plaintiff  can  levy  execution  on  debt- 
or's property   403 

not  granted  when  debtor  would  have  paid  judgment  if 

notified 403 

granted    where    debtor's    interest    in   property   is   purely 

equitable    403 

not  granted  to  collect  municipal  tax  403a 

not    granted    on    execution    returned    nulla   bona   before 

return   day    404 

when  appointed  over  joint  property  of  two  defendants  on 

judgment  against  one    405 


INDEX.  1041 

JUDGMENT  CREDITORS— Conhnw^rf.  Section 

receivers  in  aid  of,  refused  when  not  alleged  that  execution  was 

directed  to  sheriff's  county  405 

creditor  before  judgment  not  entitled  to  injunction  or 

receiver    406 

when  entitled  to,  exception  in  partnership  cases 407 

in  case  of  lien  on  vessel   408 

in  action  to  charge  property  of  married  woman 

with  her  debts  409 

fraudulent  assignment  by  debtor  ground  for 411 

appointment  of,  does  not  determine  rights  of  assignee 

under  assignment   from  debtor   411 

allowed  on  refusal  of  assignee  to  act  412 

on  mismanagement  by  assignee 412 

assignment  after  receivership   does   not  defeat   right  to 

receiver    412 

assignment  before  receivership   412,  note 

no    objection    to,    that    property   is   claimed   by   adverse 

claimants  413 

denial  of  property  no  objection  to  reference  to  appoint..  414 
appointed,    though    debtor    has    only    an    equity    of    re- 
demption     414 

not  appointed  to  attack  fraudulent  assignment  which  may 

be  done  by  creditor   414 

reference  to  master  to  appoint  415 

practice  under  415 

examination   under    415 

courts  averse  to  granting,  as  against  third  parties  claiming  real 

estate    416 

granted  over  rents  of  debtor's  building 417 

when  granted  over  real  estate  418 

not  appointed  as  against  mortgagee  in  possession  419 

when  appointed  as  against  mortgagee  of  chattels  420 

creditors  may  maintain  action  to  set  aside  fraudulent  mort- 
gage   by    debtor    421 

real  estate  in  possession  of,  in  custody  of  court 422 

when  title  to  realty  vests  in  423 

purchaser  at  sale  by,  when  takes  title  as  against  purchaser  at 

sheriff's    sale    423 

when  subordinate  to  purchaser  at  sheriff's  sale 424 

takes  real  property  subject  to  judgment  liens  424 

when  discharge  in  bankruptcy  no  bar  to  appointing 425 

not  granted  when  it  would  interfere  with  administration  of 

debtor's    estate    427 

granted  w~here  husband  conducting  business  in  name  of  wife  428 

not  directed  to  make  payments  until  claims  allowed 428 

discretion  of  court  in  ordering  sale  by 429 

Receivers — 66. 


1042  INDEX. 

JUDGMENT  CREDITORS— Continued.                                            Section 
receivers  in  aid  of,  when  not  appointed  over  all  of  debtor's  estate  429 
may  be  extended  over  remainder  in  behalf  of  other  creditor. .  429 
payment  by,  priority  as  between  j  iidgment  creditor  and  mort- 
gagee      430 

when  allowed  after  bill  dismissed  on  demurrer 431 

nature  of  property  over  which  appointed ,  432 

may  be  appointed  to  take  charge  of  rings  and  jewelry 432 

of   interest    in    firm    432 

to  collect  rents  of  benefice 432 

of  seats  in  produce  and  stock  exchange 432 

not  appointed  when  answer  alleges  nothing  due  433 

application  for,  delayed  to  examine  regularity  of  judgment  .  .  433 

waiver  of  answer  under  oath  no  bar  to 434 

when  defendant  required  to  pay  fund  into  court   435 

courts  averse  to  appointing  ex  parte   436 

continued  to  protect  prior  creditors  notwithstanding  plaintiff 

dismisses  bill  437 

appointed  in  proceeding  to  enforce  decree  for  alimony  438 

action  by,  to  set  aside  conveyance  made  to  defeat  alimony  438 

allowed  where  only  security  for  judgment  a  life  estate 439 

Supreme  Court  of  Judicature  Act   439a 

no  preference  allowed  between  creditors  of  same  class    . .  .  439& 

of  the  receiver's  title   440-452 

appointment  does  not  divest  prior  liens   440 

receiver  acquires  not  better  title  than  debtor 440 

receiver  acquires  no  title  to  exempted  property  441 

nor  to  insurance  on  exempted  property    442 

assignment   to   receiver    443 

what  passes  to  receiver  under 444 

should    except    exempted   property    444 

right  of  action  for  tort  does  not  pass  under 444 

irregularities   in   appointment   no  justification   for  refusal   to 

assign     445 

debtors  compelled  to  execute,  though  swearing  to  no  property  446 

partakes  of  nature  of  mortgage 446 

re-assignment   not   necessary    446 

no  assignment  necessary  under  New  York  code  447 

receiver  takes   only   right   of  action   as  to  property  fraudulently 

assigned  447 

priority  over  judgment  creditor  subsequently  levying 448 

title  not  defeated  by  delay  in  taking  possession   448 

title  to  choses  in  action  as  between  receiver  and  purchaser 449 

when  not  entitled  to  trust  fund   450 

takes  title  to  estate  by  curtesy 451 

acquires  no  title  when  debtor  dies  before  appointment  452 

of  the  receiver's  functions  and  rights  of  action  453-471o 

functions  usually  fixed  by  order  of  appointment   453 


INDEX.  1043 

JUDGMENT  CREDITORS— Continued.  Section 

rights  of  action  under  New  York  chancery  system 453 

under  code  of  procedure   454 

receivers  may  sue  to  set  aside  fraudulent  assignments   454 

should  join   all    fraudulent   grantees    454 

may  remove  cloud  from  title  454 

may  not  enforce  trust   454 

when  may  not  maintain  action  to  set  aside  fraudulent  mort- 
gage      454 

limit   to   receiver's   right  of  action    455 

can  only  sue  to  extent  necessary  to  satisfy  judgments  455 

can  not  join  rights  of  subsequent  creditors 455 

estoppel  of  creditor  estops  receiver  456 

*    can  not  take  forcible  possession  of  property  assigned   457 

title  claimed  by   third  parties  not  determined   on   summary 

application    457 

•when  assignees  permitted  to  retain  possession  pending  action  458 

when  not  entitled  to  injunction  and  receiver    458 

suit  by,  to  set  aside  assignment  for  benefit  of  creditors.  .458-460 

what  receiver  must  allege  459 

effect  of  order  of  appointment 459 

when  receiver  can  not  maintain  suit  against  purchaser. .  460 

priority  as  between  different  j  udgment  creditors 461 

receivers  in  aid  of  proceedings  in  bankruptcy 462 

can    not    allow    preference    462 

rights  of  action,  can  not  enforce  subscription  to  capital  stock..  463 

defendant  can  not  set  off  judgment  against  receiver 464 

receiver  entitled  to  letters  patent    464a 

effect  of  sale  of  letters  patent  by  receiver   464a 

entitled  to  membership  in  exchange   464a 

may  sue  for  proceeds  of  note  in  hands  of  third  parties 465 

can  not  by  motion  reach  interest  of  debtor  as  devisee  under 

will    466 

may  sue  debtor  for  conversion  of  property  467 

when  can  maintain  no  action  concerning  mortgaged  chattels  467 
can    not    recover   of   debtor   money    received    subsequent    to 

appointment 467 

may  recover  usury  paid  by  debtor 468 

when  can  not  recover  for  property  sold  at  sheriff's  sale 469 

defendant  can  not  object  to   irregularities  in  receiver's  ap- 


pointment 


470 


when  directed  to  pay  rents  to  landlord  470 

no  extraterritorial   rights  of  action    471 

effect  of  death  of  parties  or  of  receiver 471a 

practice   in   such   case    471a 

not   prejudiced   by   receiver   over    debtor's    realty    in    aid   of   in- 
cumbrancer       567 


1044  INDEX. 

JUDGMENT  CREDITORS— Co;!/j««r(f.  Section 

receiver  for,  may  be  extended  to  protect  mortgagee 662 

receiver  not  granted  for,  as  against  mortgagee  in  possession  680,   687 

when  allowed  receiver  against  executor  715 

when  denied  receiver  against  administrator 716 

JURISDICTION, 

equitable    nature    of    40 

of  courts  appointing  receivers  in  this  country   41 

original  nature  of   41 

as  to  foreign  property  44 

of  court  first  acting,  exclusive  nature  of 48,  50 

relative,   of  state  and   federal  courts    50-62a 

of   United    States    courts    in    bankruptcy,    when    subordinate   to 

state  courts  51,  52 

when  asserted,  to  exclusion  of  state  courts,  over  insolvent 

corporation  53 

of  United  States  courts,  in  foreclosing  trust  deed  against  rail- 
road, when  exclusive  54 

of  state  and  federal  courts,  conflict  between,  a  ground  for  re- 
ceiver        58 

of  receiver,  as  to  extraterritorial  rights  of  action 239-244a 

of  court,  receiver  not  ordered  to  sell  pending  appeal  concerning. .     543 

JURY, 

trial  by,  when  discretionary   2S4& 

not  allowed  on  receiver's  accounts  797 

L. 

LACHES, 

bars  right  to  receiver  14 

of  receiver  in  foreclosure 14 

of  j  udgment  creditor,  when  a  bar  to  relief 402 

LAND.     (See  Real  Property.) 

LAND  GRANT, 

to  railway,  injunction  against  disposal  of 373 

receiver  granted  to  prevent  lapsing  of   386 

LANDLORD, 

can  not  distrain  for  rent  when  goods  have  passed  into  receiver's 

possession   156 

guilty  of  contempt  in  so  distraining 163 

when  receiver  directed  to  pay  sub-rents  to  470 

when  denied  receiver  as  against  lessee 562 

LAND  SURVEYOR, 

eligible   as   receiver    69 


INDEX.  1045 

LEASE,     (See  Liabilities.)  Section 

of  receivership  property  134^  note 

of  offices  by  receiver,   unauthorized    186 

receiver  not  an  assignee  of   273,  394?n 

by  receiver  of  railway  company   390a 

when  receiver  of  partnership  ordered  to  sell  with  good  will 547 

action  to  forfeit,  when  receiver  refused 562 

assignee  of,  denied  receiver 579 

LEASEHOLDS, 

receivers  over,  when  allowed   578 

landlord  may  re-enter  without  leave  of  court 581 

mortgage  of,  receiver  allowed  in  foreclosure 665 

when  allowed  before  answer  665 

allowed  when  mortgagor  insolvent 676 

LEAVE  OF  COURT, 

receiver  must  obtain,  before  instituting  suit  208 

may  be  granted  conditionally  208 

to  sue  receiver,  construction  of  order  granting  141 

receiver  may  be  garnished  by   151 

when  not  necessary 151 

action  can  not  be  maintained  without  254 

must  be  averred   254 

exceptions   to  the  rule    254 

rule  as  changed  by  act  of  congress   254,  note 

conflict  of  authority  whether  want  of,  is  jurisdictional   254a 

presumptions   as   to    254a 

want  of,  availability  of,  on  appeal  254o 

in  collateral  suit 254a 

dismissal  of  action  begun  without 254b 

granting  of,   discretionary    2546 

no  appeal  from  order  granting  2546 

revocation  of  order  granting  254^ 

when  not  revoked  254d 

order  granting,  may  be  made  conditional 254d 

actions  brought  without,  may  be  enj  oined  256 

want  of,  waived  by  appearance  of  receiver 261 

what  notice  of  application  for,  necessary 265 

not  necessary  under  act  of  congress 3956 

construction  of  the  act 3956 

to  receiver  to  defend  ejectment  against  him 266 

LEGATEE, 

of  partner,  when  entitled  to  receiver 535 

under  will,  when  denied  receiver  569 

LEGISLATURE, 

may  authorize  governor  to  appoint  receiver  39 


1046  INDEX. 

LESSEE,                                                                                                 Section 
of  real  property,  receiver  refused  in  behalf  of  lessor 562 

LETTERS   PATENT.     (See   Patent  Right.) 

LEVY, 

of  execution,  on  property  held  by  receiver,  a  contempt  of  court  . . .  163 

by  sheriff,  when  receiver's  title  subject  to 440 

on  partnership  property,  when  not  affected  by  receivership 495 

LIABILITIES,     (See  Appeal  Bond,   Bond,  Damages.) 

of  plaintiff  for  wrongful  appointment   2>9d 

of  receivers    269-286fe 

liable  directly  to  court  appointing  him   269 

liability  to  third  persons  enforced  by  court  269 

improper  payments 269 

can  not  be  called  to  account  by  another  court 269 

receiver  and   not   plaintiff  liable   for   injury   to   property   in 

his  possession    270 

liability  can  not  be  enforced  without  leave  of  court 271 

not  individually  liable  on  covenant  as  receiver 272 

when  personally  liable  on  note  given  in  carrying  on  business     272 

not  liable  on  covenant  of  person  over  whom  appointed 273 

when  liable   for   rent    273 

becomes  liable  by  adopting  covenant   273o 

election  to  adopt  lease    '. 273a 

when  not  personally  liable  for  rent   273a 

rule  further  illustrated  27Zb 

not  bound  by  contract  of  former  receiver  272)b 

election  to  adopt  rests  in  discretion  273& 

liability  for  rent,  stipulated  or  reasonable  rental  value   273c 

receiver  can  not  impair  contract  liability  of  original  party  . .  .  273d 

loss  of  funds  by  failure  of  bank    274 

bank  not  ineligible  as  depositary  because  a  creditor 274 

of  receiver  of  bank  to  pay  in  full  274a 

to  pay  check  or  draft 274a 

not  liable  for  loss  without  his  fault    275 

bills  of  exchange  of  failing  tradesman 275 

liable  for  use  of  property  in  private  business  276 

not  liable  for  speculative  profits  276 

liable  for  forcibly  taking  mortgaged  property 277 

liable  for  tort 277 

to  court,  does  not  terminate  until  discharge  278 

appointing  receiver  trustee  in  insolvent  proceedings  does  not 

relieve  him  from  liability  as  receiver   278 

receivers   of   railway    liable   to   action   in    another   state    for 

breach  of  duty  as  common  carriers 279 

for  failing  to  pay  money  into  court 280 

limit  should  not  be  placed  on  term  of  imprisonment  . . .     280 


INDEX.  1047 

LIABILITIES— Continued.  Section 

of  receivers,  not  liable  for  rent  of  premises  to  firm  281 

liable  for  payment  to  wrong  persons 282 

when   not   liable   for   loss   through   real   estate   remaining   in 

owner's  possession   283 

for  loss  of  rents  by  solicitor  assuming  to  act  as  receiver 284 

liability   extended   to   administrator  of  receiver    285 

not  released  by  dismissal  of  bill   286 

damages  for  tort  of  receiver's  agent  a  charge  on  fund 286a 

liability  for  wrongful  conversion  of  estate   2S6b 

enforced  by  supplemental  bill  in  receivership  cause 2S6b 

of  receiver  over  railway,  for  inj  uries   395 

action  against,   for   injuries    393 

j  udgment  against,  only  in  official  capacity 395 

as  common  carrier,  in  another  state    398 

when  liable  for  interest  on  infant's  funds   730 

LICENSE, 

of  market  stall,  receiver  refused  32 

LIEN,     (See    Mechanic's    Lien.) 

not  created  by  appointment  of  receiver  5 

of  plaintiff,  as  ground  for  receiver 11 

of  creditors,  not  disturbed  by  foreign  receiver  47 

not  divested  by  appointment  of  receiver   138 

possession   of  receiver   subj  ect  to    138 

of  judgment  creditor,  protected  against  receiver   138 

of  attorneys  for  services,  receiver  takes  fund  subject  to 138 

of  municipality  for  taxes,  receiver  takes  property  subject  to 138 

can  not  be  obtained  on  property  in  possession  of  receiver 138 

not  divested  by  receiver's  sale 191,  199a 

of  judgment  creditor  on  real  estate  of  corporation,  not  divested 

by  receiver  itt  limine   302,  348,  349 

of  vendor  for  land  sold  railway,  receiver  in  aid  of 367 

on  freight  and  earnings  of  vessel,  receiver  to  protect 408 

receiver  of  debtor  takes  realty  subj  ect  to   424 

not  divested  by  appointment  of  receiver  on  creditor's  bill   440 

of  judgment  creditors  of  partnerships,  how  affected  by  receiv- 
ership     "^^J 

of    judgment,    realty    subject    to,    on    termination    of    receiver's 

functions    "^■^ 

LIMITATIONS.     (See   Statute  of  Limitations.) 

LIMITED   PARTNERSHIP, 

creditors  of,  when  entitled  to  receiver  407,  508 

LIS  PENDENS, 

receiver  refused  when  notice  of,  sufficient  to  prevent  transfer  of 

real    property    ^"^ 


1048  INDEX, 

LOSS.     (See  Irreparable  Loss.)  Section 

LUMBER, 

partnership  in,  when  receiver  allowed 500 

LUNATICS, 

receivers  over  estates  of  733-736 

when  allowed 733 

required  to  surrender  to  administrator 733 

relief  discretionary 734 

refused  where  rival  claimants  734 

solicitor  under  commission  ineligible  as 735 

when  required  to  account  736 

reference  to  master  to  ascertain  condition  of  estate 736 

M. 

MANAGEMENT, 

of  business  by  receiver,  principles  regulating 36 

discretionary  with  court 36 

preferring  debts  incurred  in 36 

may  hire  employees  in 175 

of  partnership  business,  not  province  of  court 480 

to  what  extent  may  be  continued  by  receiver  pending  liti- 
gation    481 

MANDAMUS, 

when  a  bar  to  receiver 32 

refused  against  receiver  of  railway 374 

MANDATORY  INJUNCTION.     (See  Injunction.) 

MARKET, 

stall  in,  receiver  refused 32 

MARRIAGE  SETTLEMENTS, 

when  receiver  denied  in  case  of 591 

after  marriage,  when  receiver  allowed  against 612 

MARRIED  WOMAN, 

in  suit  to  charge  property  of,  with  her  debts,  receiver  granted. .. .  409 

MARSHAL, 

will  not  be  directed  to  take  property  out  of  receiver's  hands 52 

MASTER  IN  CHANCERY, 

reference  to,  to  appoint  receiver 63 

selection  of  receiver  by,  courts  averse  to  interfering  with 64 

grounds  of  interference 64 

when  required  to  revise  report 64 

ineligible  as  receiver 70 

master  and  clerk  of  court,  ordered  to  act  as  receiver 71 


I 


INDEX.  1049 

MASTER  IN  CHA'^CERY— Continued.  Section 

may  conduct  sale  for  receiver 191 

reference  to,  to  appoint,  practice  on 90 

when  appointment  complete 90 

objections  to  appointment 90 

as  to  repairs  by  receiver 180 

on  creditors'  bills,  to  appoint  receiver 415 

practice  under  415 

examination  under  415 

receiver  required  to  produce  books  of  account  before 544 

reference  to,  in  case  of  receiver  over  lunatic 736 

exceptions  to  report  of,  on  receiver's  compensation 784 

report  of,  on  receiver's  accounts 800,  801 

how  reviewed 801 

courts  investigate  principles  of,  but  not  items 800,  801 

distinction  as  to 801 

exceptions  to  801 

MATERIALS, 

furnished  railway,  creditors  not  entitled  to  priority  379 

MECHANIC'S  LIEN,     (See  Lien.) 

against  property  in  receiver's  possession 171 

not  divested  by  receiver's  sale 191,  199a 

when  not  divested  by  sale  of  railway  398^ 

receiver  denied  in  action  to  enforce 586 

MEMBER  OF  PARLIAMENT, 

eligibility  as  receiver  considered   70 

MERITS, 

of  cause,  not  decided  on  application  for  receiver 6 

MILLS, 

wharfage  in  front  of,  receiver  of  mills  entitled  to 158 

receiver  as  between  tenants  in  common  of 604 

MINES, 

receiver  on  difficulty  of  managing  by  co-tenants 606 

controversy  between  owners 606 

purchaser  of  gold  mine  at  mortgage  sale,  when  granted  receiver  614 
purchaser  of  colliery  allowed  receiver  on  bill  to  set  aside  pur- 
chase for  fraud 615 

receiver  of,  when  discharged 615 

MISMANAGEMENT, 

by  receiver  ground  for  refusal  of  compensation 790 

for  refusal  of  fees  of  receiver's  counsel 805 

MORTGAGES, 

receiver  over  mortgaged  premises,  not  dispossessed  by  assignee 
in  bankruptcy 52 


1050  INDEX. 

MORTGAGES— ro«Ymj(r(/.  Section 

prior  jurisdiction  of  United  States  courts  respected  by  state  court  54 

receiver  of  rents  appointed  after  decree  in  foreclosure 110 

when  receiver  refused  after  decree  for  redemption 110 

assignment  of,  as  security  for  receivership,  held  good 125 

lien  of  unrecorded,  when  not  valid  as  against  receiver 138 

directions  as  to  payment,  receiver  not  allowed  to  apply  for 181 

not  due,  receiver  may  collect  and  discharge 189 

receiver   holding   equity   of   redemption   can   take   no   benefit   by 

purchasing  at  foreclosure  sale 194 

to  receivers  of  bank,  may  be  foreclosed  by  successor 215 

may  be  foreclosed  by  receivers  of  another  state 243 

assignment  of,  to  receiver,  right  of  action  under,  in  foreign  state  244 
appointment  of  receiver  over  one  defendant  in  foreclosure  suit, 

no  bar  to  continuing  suit 259 

foreclosure    of   mortgage   given   by   corporation,    when    receivers 

need  not  be  made  defendants 260 

receiver  liable  as  trespasser  for  forcibly  taking  mortgaged  prop- 
erty    277 

of  railway,  receivers  in  aid  of 376-389o 

inadequacy  of  security  and  insolvency  as  ground  for 376 

appointment  not  a  matter  of  course 377 

not  granted  where  it  would  cause  irreparable  injury Zll 

proceedings  for,  regarded  as  in  rem 378 

right  of,  limited  to  property  mortgaged 378 

creditors   for  materials  and  supplies  not  entitled  to  priority  379 

receiver  over  tolls 380 

principles   governing   381 

right  to,  as  between  different  mortgagees  of  tolls   ..382,  385 

mortgagees  pari  passu,  not  allowed  preference 383,  385 

granted  in  behalf  of  state  holding  mortgage 384 

validity  of  bonds  not  determined  on  application  for 387 

relative  jurisdiction  of  state  and  federal  courts 388 

right  to  discharge,  on  payment  of  mortgage 389 

may  pay  what  debts 391 

to  delay  creditors,  no  ground  for  receiver  before  judgment 406 

fraudulent,  by   debtor,   creditors   may  set  aside  notwithstanding 

receiver    421 

of  chattels,  when  receiver  has  no  right  of  action 467 

receivers  in  aid  of  foreclosure  of   639-691a 

principles  governing  the  relief 639-665a 

the  j  urisdiction  cautiously  exercised 639 

only  granted  in  strong  case 639 

legal  mortgagee  with  right  of  entry  not  entitled  to 640 

may  have,  when  can  not  take  possession 641 

refusal  of  trustee  to  take  possession 641 

when    receiver    refused    641o 


INDEX.  1051 

MORTGAGES— Contimted.  Section 

receiver  in  aid  of  foreclosure  of,   rents  and  profits,  mortgagee 

not  entitled  to  receiver  of,  when  security  adequate   . .  642 

test  as  to  adequacy  of  security 642 

not  entitled  to,  when  mortgage  not  due 642 

rents  and  profits  of  railway 642 

refused  when  property  already  in  custodia  legis 642 

refused  when  improvements  destroyed  by  fire 642 

entitled  to,  when  security  inadequate  and  mortgagor  in- 
solvent     643 

mortgagee  entitled  to  rents  in  receiver's  hands  to  make 

up  deficiency    643 

express  pledge  of  rents 643 

when  insolvency  of  mortgagor  immaterial 643 

insurance  and  taxes 643 

past-due  rents  643 

when  entitled  to  unpaid  rents 644 

liability  for  waste  of,  by  receiver 645 

crops  on  mortgaged  premises,  receiver  over 646 

receiver  not  entitled  to  severed  crops   646 

when   refused  as  to  crops    646 

crops    grown   by    receiver    646 

when  appointed  as  to  mortgage  of  chattels 647 

attachment  sale  of  chattels  invalid  as  against  prior  mortgagee  647 
may   be    appointed    though    mortgaged    property    in    foreign 

country    648 

allowed  when  interest  in  default 649 

when  allowed  before  default  in  case  of  railway  company 371 

effect  of  payment  of  interest  by  receiver  to  mortgagee 649 

receiver  represents  all  parties  in  interest 650 

assignees  in  bankruptcy  of  mortgagor 650 

mortgagee  appointed,  duties  of 651 

order  to  lease  premises 651 

mortgagee  authorized  to  appoint  by  mortgage 652 

receiver  mortgagor's  agent  in  such  cases 652 

effect  of  mortgagor  attorning  to  receiver 652 

English  statute  authorizing 652 

Supreme  Court  of  Judicature  Act 652a 

rights  of  debenture  holders 652a 

not  appointed  over  property  of  soldiers  when  prohibited  by 

statute    653 

appointed  in  behalf  of  mortgagor  to  keep  down  interest 654 

mortgagee  in  possession  not  divested  by  receiver 654 

when  receiver  appointed 654 

may  be  appointed  after  decree  in  case  of  emergency 655 

when  refused  after  decree 655 


1052  INDEX. 

MORTGAGES— Conh'inicd.  Section 

mortgagee  not  party,  can  not  divest  receiver's  possession  by  notice 

to  tenants   656 

mortgagor  not  entitled  to  rents  paid  into  court 656 

mortgagor  entitled  to  pay  debt  and  have  receiver  discharged....  657 

entitled  to  discharge  on  sale  for  full  amount  due 657 

when  owner  of  equity  of  redemption  entitled  to  rents  collected 

by  receiver  657 

equitable  mortgages,  relief  granted 658 

deposit  of  title  deeds  as  security 658 

holders   of  municipal  bonds   secured   by   rates  and  assessments, 

not  entitled  to 658 

equitable  mortgagee  of  private  corporation  allowed  receiver 659 

official  liquidator  appointed 659 

petition  for,  should  show  who  is  in  possession 660 

reasons  for  660 

on  decree  pro  confesso  amount  due  should  be  shown 660 

railway  mortgages,  receivers  granted  on  same  principles 661 

inadequacy  of  security  and  insolvency,  ground  for 661 

receiver  in  behalf  of  judgment  creditor  extended  in  behalf  of 

mortgagee  662 

need  not  be  appointed  over  entire  estate 663 

defense  of  usury  sworn  on  information 664 

mortgage  of  leasehold,  receiver  allowed 665 

when  allowed  before  answer 665 

allowed  against  administrator  of  mortgagor 665a 

receiver  of  rents  pending  appeal  from  foreclosure  decree....  665« 

inadequacy  of  security  and  insolvency  of  mortgagor 666-678Z> 

inadequacy  principal  ground  for 666 

elements  of  inadequacy 666 

general  rule  that  inadequacy  and  insolvency  must  be  shown  666 

satisfactory  proof  required 667 

inadequacy  confined  to  particular  mortgage  in  question 667 

doctrine  of  the  Irish  Chancery 668 

in  New  Jersey,  the  general  rule  not  recognized 669 

fraud  and  bad  faith  ground  for 670 

change  or  depreciation  in  property 670 

transfer  to  insolvent  person  ground  for 670 

assignment  to  creditors,  when  not  ground  for 670 

the  doctrine  in  Mississippi 671 

the  doctrine  in  Minnesota 671o! 

non-payment  of  taxes  ground  for 672 

of  insurance,  ground  for 672 

when  not  ground  for 672 

contest  whether  property  covered  by  mortgage  ground  for. . .  672 

of  hotel  property 672(r 

doctrine  in  Nevada,  general  rule  recognized 673 


INDEX.  1053 

MORTGAGES — Continued.  Section 

Inadequacy  of  security   and   insolvency  of  mortgagor,   doctrine 
in    Nevada,    mortgagees    purchasing    at    foreclosure    sale 

allowed    receiver    673 

doctrine  in   California,  mortgagee  not  allowed  receiver  for 

inadequacy  and  insolvency 674 

doctrine  in  Iowa 674 

receiver  not  allowed  in  South  Carolina 674a 

when  allowed  though  only  portion  of  debt  due 675 

not  allowed  if  doubtful  as  to  amount  due  and  inadequacy 

denied  by  answer 675 

insolvency   ground    for   receiver   in   case   of  mortgage   over 

leasehold   676 

mortgage  of  chattels 676 

no  objection  that  premises  are  in  possession  of  tenant  ....  677 

bondholders  of  canal  company  allowed  receiver  on  insolvency  678 

when  allowed  in  behalf  of  wife 678a 

exemption  of  rents 678b 

receivers  as  between  different  mortgagees 679-691a 

prior  mortgagee  in  possession,  not  granted  as  against 679 

not  granted  on  creditor's  bill  as  against 680 

on  bill  by  heirs-at-Iaw 680 

granted  when  nothing  appears  due  mortgagee 681 

prior  mortgagee  not  in  possession,  receiver  allowed  in  aid  of 

subsequent    mortgagee    682 

consent  of,  not  necessary 682 

can  only  prevent  by  asserting  right  and  taking  possession  682 

granted  annuitants  as  against 683 

need  not  be  made  parties 683 

receiver  granted  though  mortgagor  out  of  jurisdiction. . .  684 

appointment  without  prejudice  to  prior  interests 685 

for  whose  benefit  made 685 

no  objection  that  other  mortgagees  are  satisfied 686 

that  plaintiff  represents  only  one-ninth  of  debt 686 

not  appointed  for  judgment  creditor  as  against  puisne  mort- 
gagee in  possession 687 

rents,  when  j  unior  mortgagee  entitled  to 688 

when  prior  mortgagee  entitled  to 688 

effect  of  extending  receiver 688 

subrogation     688 

different  doctrine  in  Virginia 689 

assigned  to  junior  mortgagee,  prior  mortgagee  can  not 

have  receiver  of 690 

receiver  of,  allowed  on  foreclosure  by  junior  mortgagee  691 

tenants  required  to  attorn  to  receiver 691 

consolidation  of  actions  to  foreclose  different  mortgages 691a 


1054  INDEX. 

MORTGAGEE,     (See  Mortcaces.)  Section 

when  eligible  as  receiver 76 

of  West  India  estates,  eligible 81 

appointed  without  security 118 

in  possession,  receiver  refused  as  against,  on  creditor's  bill 419 

of  chattels,  receiver  appointed  in  behalf  of  creditors  against....  420 

priority  of  payment  as  against  judgment  creditor 430 

entitled  to  rents  in  receiver's  hands  to  make  up  deficiency 643 

right  of,  to  unpaid  rents 644 

duty  of,  when  appointed  receiver 651 

in  possession,  not  divested  by  receiver 654 

may  have  receiver  for  judgment  creditor  extended  to  his  mortgage  662 

receivers  as  between  different  mortgagees  679-691o 

prior,  in  possession,  receiver  not  granted  against 679 

not  in  possession,  receiver  allowed  in  aid  of  subsequent 

mortgagee  682 

of  goods  of  infant,  receiver  against 728 

when  entitled  to  apply  for  receiver's  discharge 839 

MORTGAGOR,     (See  Mortgagee,  Mortgages.) 

when  receiver  appointed  in  behalf  of  one  of  several 654 

entitled  to  pay  debt  and  have  receiver  discharged 657 

MOTION, 

irregular  to  appoint  receiver  without 84 

affidavits  in  support  of 84 

rehearing  of,  when  allowed 91,  92 

when  not  allowed  in  creditor's  suit 92 

demurrer  to  bill,  when  no  objection  on  hearing  of 92 

may  be  entertained,  although  plea  to  amended  bill  undisposed  of  95 

to  substitute,  regularity  of  proceedings  can  not  be  questioned....  97 

for  receiver  before  answer,  heard  on  affidavits 107 

defendant's  affidavit  admissible  against 107 

to  take  action  by  receiver,  not  usually  allowed  under  English  and 

Irish  practice  181 

MUNICIPAL  CORPORATION, 

enjoined  from  interfering  with  receiver's  possession  of  wharfage  158 

creditor  of,  not  entitled  to  receiver  to  collect  tax 403a 

MUTUAL  BENEFIT  ASSOCIATION.     (See  Corporations.) 

N. 

NAME.     (See  Suit.) 

NATIONAL  BANKS, 

action  by  receiver  of,  allegations  required  as  to  his  appointment  237 

receivers  over   358-364a 

appointed  by  comptroller    358 

effect   of    358 


INDEX. 


1055 


NATIONAL  BANKS— Continued.  Section 

receivers  over,  title   of    359 

can  not  avoid  pledge  of  notes 359 

assets  exempt  from  taxation 359 

regarded  as  agent  of  comptroller 360 

no  control  over  bonds  deposited  with  United  States  treasurer    360 

rights  as  to  bringing  suits 360 

power  to  contract  or  sell 360 

may  enforce  individual  liability  of  shareholders 360o 

right  of  action  against  directors  for  mismanagement 360^ 

suits  by,  what  must  be  averred 361 

what  must  be  proven 361 

appointment  of,  by  comptroller,  not  exclusive  of  jurisdiction 

of  equity   362 

judgment  creditor  may  have 362 

jurisdiction  of  state  and  federal  courts  over 363 

property  in  hands  of,  can  not  be  sold  by  creditor 364 

subj  ect  to  same  set-ofifs  as  bank 364a 

NEGLIGENCE, 

of  receiver  ground  for  refusing  compensation 790 

NEWSPAPER, 

publication  of,  by  receiver 481 

receiver  in  aid  of  foreclosure  of  mortgage  on 639,  note 

NEW  YORK, 

code  of  procedure,  receiver  under 23 

compared  with  injunction 49 

receivers  on  creditors'  bills,  under  former  chancery  system 400 

under  code  of  procedure 401 

NON-RESIDENT, 

not  ineligible  as  receiver "" 

condition  of  bond  of   ^ 

surety  on  receiver's  bond  may  be 126 

NORTH  CAROLINA, 

code  of  procedure,  effect  of  23 

NOTES.     (See  Commercial  Paper.) 

NOTICE, 

of  application  for  receiver 111-117 

courts  averse  to  interference  without HI 

want  of,  j udicial  error Il2 

ground   for  reversal    112 

how  taken  advantage  of 112 

how  waived  or  cured 1^2 

presumed  on  appeal 112 

interference  without,  grounds  of 113 

facts  must  clearly  appear 113 


1056 


INDEX. 


NOTICE-Contiuucd.  S^^^^^^ 

of  application  for  receiver,  service  of  process  considered  with  . .     114 

notice  served  immediately  on  filing  bill,  under  English  practice     114 

necessary  to  appointment  over  insolvent  corporation 115 

New  York  chancery  practice  as  to 115 


service  of 


116 


when  sufficient  on  co-defendant 1 16 

unnecessary,  when  parties  appear  by  counsel  to  oppose  motion...  116 

when  defendant  has  absconded 117 

when  he  has  left  state  and  it  is  necessary  to  collect  rents 117 

when  a  trustee  defendant  is  beyond  jurisdiction 117 

non-resident  defendants  117 

in  case  of  partnership,  when 117 

in  case  of  foreclosure,  when 117 

of  appointment,  formal  notice  not  necessary  to  fix  liability  for 

contempt    156 

of  filing  of  intervening  petition 175^  note 

of  petition  for  instructions,  defendant  not  entitled  to 188 

of  sale  by  receiver ipg 

of  allowance  of  receiver's  compensation 796 

of  application  for  leave  to  sue  receiver,  to  whom  given 265 

of  that  of  his  counsel g05 

receiver's  executor  entitled  to,  of  passing  of  receiver's  accounts  817 

want  of,  of  appointment  of  successor  not  ground  for  removal 821 

of  motion  to  remove  receiver 824 

to   discharge   receiver 846 

to  all  creditors  unnecessary 848 

NUISANCE, 

by  receiver,  when  enjoined 262 

O. 

OATH, 

to   receivers   under   statute,   omission   of  does   not   vitiate   pro- 
ceedings     gg 

when  taking  of,  presumed 99 

OBJECT, 

of  receivership 4 

OFFICE, 

controversies  concerning,  not  determined  in  equity 21 

contest  over,  receiver  refused 21 

fees  of,  receiver  refused 21 

when  granted 22 

salary  of,  receiver  refused 22 

OFFICER  OF  COURT, 

receiver  considered  as  an j 


INDEX.  1057 

OFFICERS,  Section 

of  corporations,  eligibility  of,  as  receivers  72 

when  competent  as  receivers 354 

of  state,  enjoined  from  disposing  of  railroad  land  grant 373 

equity  averse  to  receiver  when  trust  vested  in 696 

OFFSET.     (See  Set-off.) 

P. 

PARLIAMENT.     (See  Member  of  Parliament.) 

PARTIES, 

receiver  over  corporation,  latter  not  proper  party  plaintifif 225 

receiver  holding  equitable  title  necessary  party  to  bill  to  redeem 

by  mortgagor  against  mortgagee 258,  note 

receiver  as  party  to  appeal 258 

receiver  of  corporation  as  party  defendant 260 

corporation  necessary  party  to  proceeding  for  receiver  over  it 290 

receiver  need  not  be  party  to  subsequent  proceeding  for  another 

receiver  over  corporation 291 

receiver  of  railway  not  proper  party  to  action  for  injuries  suffered 

prior  to  appointment 395 

where  demurrer  sustained  for  want  of  proper 616 

PARTITION, 

receiver  allowed  in  action  for 607 

PARTNERSHIPS, 

interlocutory  appointment  of  receiver  over,  not  appealable 26 

when  appealable   27 

non-resident,  receiver  refused  against 44 

when  bill   for  dissolution  and  receiver  an  act  of  bankruptcy 56 

assignee  in  bankruptcy  of,  when  allowed  receiver  as  against  as- 
signment      57 

administrator  of  deceased,  eligible  as  receiver 78 

receiver  may  be  appointed  as  part  of  final  decree 109 

real  estate  of,  when  sold  subject  to  judgment  against  partner 199fl 

receiver  of,  can  not  be  garnished  as  to  assets  in  his  hands 151 

can  not  maintain  action  of  trover  in  his  own  name 209 

allowed  to  sue  in  his  own  name  for  money  due  the  firm 210 

rent  due  from,  can  not  be  set  ofif  in  action  by  receiver  of  the  firm  253 

when  receiver  not  liable  for  rent 281 

creditors  of,  when  allowed  receiver  and  injunction  before  judg- 
ment     407 

receivers  over   472-552a 

principles  governing  the  relief 472-50Sa 

the  j urisdiction  well  established 472 

doctrine  of  Lord  Eldon 472 

probability  of  dissolution  a  controlling  element 472 

Receivers — 67. 


1058  INDEX. 

PARTNERSHIPS— Co;iM««rrf.  Section 

courts  proceed  cautiously 473 

beneficial  nature  of  the  j  urisdiction 473 

receivers  over,  principles  governing  the   relief,   same  conditions 

necessary   as    for   inj  unction    474 

actual  abuse  must  appear 474 

quarrel  not  sufficient 474 

court  does  not  determine  ultimate  rights  of  partners  on 

application  for 475 

duty  of  court  only  to  preserve  property  pendente  lite 475 

existing  partnership  necessary 476 

receiver  refused  when  partnership  disputed 476 

not  granted  in  nominal  partnership 476 

employee  can  not  have 

right  to  participate  in  profits  the  test 477 

burden  of  proving  partnership  on  plaintiff 477 

relief   not   granted   in   case   of   executory   agreement   to 

form  partnership 477 

when   defendant   permitted   to   give   security   in    lieu    of 

478 
receiver    ^'° 

when  court  satisfied  of  existence  of  partnership,  mere 

denial  by  defendant  no  bar  to  relief 479 

management  of  business  not  province  of  court 480 

may  be  continued  by  receiver  pendente  lite  to  pre- 
serve good  will 4ol 

operating  steamboat 481 

hire  of  horses  and  carriages 481 

publication  of  political  paper 481 

borrowmg  money  ^°^ 

court  only  interferes  in  clear  cases 482 

conflict  of  interest  must  be  shown 482 

effect  of  denials  in  answer 482 

breach  of  duty  or  violation  of  agreement  must  be  shown  483 

irreconcilable  disagreement,  ground  for  relief 483 

destruction  of  mutual  confidence 484 

insolvency  of  firm 484 

want  of  co-operation  no  ground  for 485 

unprofitable  business  no  ground  for 485 

receiver  not  a  matter  of  course 486 

not  granted  when  bill  alleges  no  facts  showing  necessity 

for 486 

defendant  resolved  to  ruin  business,  ground  for 487 

when  granted  though  doubtful   whether  property  in  de- 
fendant's possession  is  firm  property 488 

retiring  partner,  when  entitled  to 489,  493 

violation  of  agreement  for  dissolution 489 

exclusion  from  books 489 

fraud  by  continuing  partner 493 


INDEX.  1059 

PARTNERSHIPS-Co»//»»^rf.  Section 

receivers  over,  principles  governing  the  relief,  embittered  feeling  489 

partner  in  possession  not  entitled  to 490 

not  granted  when  equities  of  bill  denied  by  answer 491 

not  granted  over  property  claimed  by  plaintiff  individ- 
ually    492 

receiver  on  creditor's  bill,  extended  to  what  property. ...  494 

appomtment  of,  prevents  one  partner  giving  preference  495 

valid  liens  of  creditors  not  interfered  with 495 

execution  creditor  not  deprived  of  rights  under  prior  levy  495 

failure  to  contribute  to  capital  stock 496 

sale  of  interest  in  firm 495 

insolvency  and  refusal  to  pay  firm  indebtedness 496 

large  sums  of  money  in   defendant's  hands  no  ground 

for  relief  in  absence  of  danger 497 

misapplication  of  funds 497 

agreement  to  arbitrate  differences 497 

when   refused  over  shares   of  stock  constituting  assets 

of  firm  49g 

continuing  business   with   firm   funds  after  dissolution, 

ground  for  4pp 

violation  of  agreement  in  lumber  business  as  ground  for  500 

when  issue  as  to  partnership  directed  to  be  tried  at  law  501 

when  issue  as  to  plaintiff's  right  to  profits  tried....  501 

courts  averse  to  appointing  ex  parte 502 

foreign  partnerships,  when  allowed 503 

when  allowed  in  case  of  farm 504 

does  not  prevent  creditors  from  proceeding  at  law 505 

when  injunction  continued  as  auxiliary  to 506 

assignees  of  partners,  when  entitled  to 507 

limited  partnerships,  when  receiver  allowed ,'  508 

^  effect  of  denial  of  motion  in  former  suit 508a 

dissolution  of  firm  as  ground  for '  .509-521 

English  rule  allowing  receiver  only  when  plaintiff  en- 
titled to  dissolution caq 

English  rule  followed  in  this  country ]  /  510 

courts  do  not  interfere  to  continue  business 510 

receiver  does  not  necessarily  follow  injunction 510 

when  injunction  necessary  adjunct  of 510 

inability  to  agree  after  dissolution 5IO 

right  to  dissolution  not  ground  per  se  for 511 

partnership  determinable  by  consent  or  at  will,  receiver 

not  of  course 5ji 

relief  refused  when  defendant  has  advanced  entire  capital  511 
insolvency  of  defendant  and  right  to  dissolution  ground 

^^'^ 511 


1060  INDEX. 

PARTNERSHIPS— ConhHMed.  Section 

receivers  over,  dissolution  of  firm  as  ground  for,  purchaser  at 

sheriff's  sale  of  partner's  interest,  when  denied   512 

departure  from  agreement,  when  ground  for 513 

partners  in  theater,  when  receiver  appointed 513 

relief   denied   when   it   would   destroy   business    without 

benefit  to  either  party 514 

receiver  granted  when  both  partners  desire   dissolution 

and  plaintiff  is  excluded 515 

refused  when  answer  denies  equities  of  bill 515 

on  dissolution  of,  when  granted  against  continuing  part- 
ner, though  entitled  to  exclusive  possession 516 

dissolution   by   insolvency  and   assignment  by   insolvent 

partners  ground  for 517 

general  assignment  by  continuing  partner  for  benefit  of 

all  creditors  not  ground  for. 518 

when    appointed    as    of   course    on   disagreement    as    to 

closing  up  business 519 

debts  to  be  paid  ratably  and  without  preference.. 519 

may  be  appointed  on  final  judgment  for  dissolution 520 

failure  to  give  bond,  effect  of 520 

usually  granted  on  interlocutory  application 521 

injunction  frequently  granted  as  adjunct 521 

exclusion  from  firm  as  ground  for 522-529 

exclusion  strong  ground  for 522 

doctrine  of  Lord  Eldon 522 

assignment  for  purpose  of  excluding  partner  ground  for....  523 

assignee  can  not  defeat  application 523 

exclusion  from  profits,  ground  for 524 

not  necessary  that  fund  should  be  in  peril 525 

when  receiver  continued  on  ground  of  exclusion 525 

exclusion  of  purchaser  of  partner's  interest  ground   for  re- 
ceiver     526 

doctrine  of  exclusion  applied  to  assignees  of  bankrupt  partner  527 

exclusion  from  profits  in  vessel 528 

exclusion  from  books 529 

refusal  to  settle  or  to  pay  firm  debts 529 

fraudulent  appropriation  of  funds 529 

death  of  partner  as  ground  for 530-537 

receiver  on  death  of  both  partners 530 

not  granted  against  survivor  except   for  mismanagement   . .  531 

granted  for  improper  conduct  of  survivor 532 

refusal  by  survivor  to  close  up  firm  business  ground  for....  532 

when  administrator  of  deceased  entitled  to 533 

administrator  may  be  appointed 533 

form  of  decree 533 


INDEX.  1061 

PARTNERSHIPS— Co«/mM^rf.  Section 

death  of  partner  as  ground  for,  survivors  required  to  deliver  to  533 

enj  oined  from  collecting  debts 533 

rights  and  functions  of  the  receiver 534 

;                when  legatee  of  deceased  partner  entitled  to 535 

receiver  appointed  notwithstanding  death  of  partner 536 

may  sue  for  money  due  firm 536 

when  appointed  on  bill  by  creditors  against  survivor 537 

receivers  over,  functions  and  duties  of 538-552a 

duty  of,  to  collect  debts 538 

entitled  to  assets 538 

will  not  be  enjoined  from  management  of  fund 538 

not  directed  to  take  property  when  doubtful   whether  part- 
nership property  538 

on  application  for,  court  will  not  determine  disputes  as  to 

ownership   538 

receiver  takes  whole  equitable  title  without  assignment 539 

may  bring  action  to  obtain  possession 539 

succeeds  to  equitable  rights  and  remedies  of  firm 539 

rights   of  action 539 

when  receiver  can  not  recover  individual  property  of  partner  539 

extent  of  receiver's  title 539a 

when  receiver  can  not  set  aside  fraudulent  conveyance  by 

partnership   539^ 

selection   of    54O 

partner  may  act  as,  without  pay 540 

partner    appointed    receiver   no    longer    sustains    relation    of 

partner  54O 

entitled  to  money,  choses  in  action  and  assets  in  hands  of 

survivors  54I 

decree  for  delivery  of,  enforced  by  attachment 541 

can  not  withhold  partnership  funds  as  due  to  him  personally  542 

not  directed  to  sell  pending  appeal  as  to  jurisdiction  of  court  543 

required  to  produce  books  of  account  before  master 544 

payment  of  debts  by,  sufficient  excuse  for  not  paying  money 

into  court  .  , 545 

appointed  to  collect  debts  which  partners  are  enjoined  from 

collecting 545 

may   be    required    to   pay   plaintiff   his   proportion   of   debts 

collected     545 

when  required  to  sell  lease  and  good  will  of  insane  hospital  547 

either  party  may  become  purchaser 547 

remaining  parties  enjoined  from  continuing  business  in 

same  locality    547 

appointment  over  husband  in  divorce  suit,  does  not  divest  title 

to  partnership  property 548 


1062  INDEX. 

FARTNERSHIFS— Continued.  Section 

receivers  over,  duties  of,  in  brewing  business  549 

retiring   partner  compelled   to   pay  firm   notes   may   recovei 

of  receiver  of  new  firm 550 

purchaser   of   partner's    interest    after   receivership    can    not 

interfere  with   551 

funds  in  hands  of,  not  subject  to  attachment  or  garnishment    552 
when  not  required  to  pay  deposit  in  full 552a 

PARTY, 

to  the  cause,  ineligible  as  receiver  70 

PATENT  RIGHT, 

receiver  granted  in  suit  for  infringement  of 34 

receiver  entitled  to  rights  under 174a 

PAYMENT, 

of  money,  receiver  not  granted  for 35 

effect  of,  by  surety  to  solicitor 132 

receiver  not  directed  to  make,  until  claims  determined 428 

by  receiver  of  partnership,  to  be  made  ratably 519 

effect  of 545 

PEER, 

ineligible  as  receiver  70 

PENSION, 

receiver  refused  over 31 

when  allowed 705 

PERSONAL  INJURIES, 

judgments  and  claims  against  railway  for,  prior  to  receivership 

not  preferred    394« 

action  for,  prior  to  receivership  will  not  lie  against  receiver.  .395,  397& 

PERSONAL  PROPERTY, 

tenants  in  common  of,  courts  averse  to  allowing  receiver 20 

sale  of,  by  receiver,  discretion  as  to  sale  in  bulk  or  by  parcels  198 

distinction  between  realty  and  personalty  as  to  appointing  receiver  554 

PETITION, 

receiver  not  granted  on 83 

PLEA, 

pending,  to  amended  bill,  no  bar  to  motion  for  receiver 95 

PLEADINGS, 

general  allegations  in,  when  not  sufficient 17 

in  actions  by  receivers,  appointment  should  be  alleged  issuably  231 
strictness  of  earlier  rule  as  to  particulars  necessary  to  be 

alleged   232 

averment  of  appointment  in  general  terms  now  sufficient....  233 


INDEX. 


1063 


PLEADmOS— Continued.  Section 

in  actions  by  receivers,  receiver  should  state  equities  of  judgment 

creditors  whom  he  represents   234 

when   defendant   estopped    from   denying   receiver's   right   to 

sue  in  that  capacity 235 

in  action  by  receiver  on  premium  notes 236 

in  action  by  receiver  of  national  bank 237 

PLEDGE, 

of  notes  by  bank,  receiver  can  not  avoid 359 

POLICY  OF  INSURANCE.     (See  Insurance  Company.) 

POSSESSION, 

of  defendant,  divested  by  appointment  of  receiver 3,  15 

of  receiver,  that  of  court 4 

disturbance  of,  a  contempt 4 

acquiescence  in,  as  a  bar  to  receiver 14 

receiver  cautiously  granted  against 19 

of  receiver,  when  protected  by  foreign  court 47 

of  receiver  of  state  court,  respected  by  federal  court 52 

when  denied  by  federal  court 53 

of  receiver  of  federal  court,  respected  by  state  court 59 

not  disturbed  by  writ  of  assistance  from  state  court 61 

nature  of  receiver's  possession 134-1 62rt 

importance  of  determining 134 

receiver's  possession  that  of  court 134 

not  adverse  to  either  party 134 

not  interrupted  by  change  in  receiver 134 

\                 defendant  in  ejectment  can  not  rely  on,  of  receiver 134 

regarded  as  possession  of  prevailing  party,  to   what  extent  135 

when  regarded  as  possession  of  plaintiff 135 

when  regarded  as  possession  of  mortgagee 135 

does  not  affect  operation  of  statute  of  limitations 135 

vests  back  to  original  order  of  appointment 136 

but  not  beyond ^36 

effect  of  appeal  on 136 

property  subject  to  garnishment  in  Maryland  until  reduced 

to  receiver  s  possession ^-J' 

receiver  acquires,  subj  ect  to  existing  liens 138 

lien  of  taxes 138 

can  not  be  disturbed  without  leave  of  court 139 

practice  as  to  obtaining  leave  of  court 139 

court  may  enjoin  unauthorized  interference  with 140,  747 

relief  may  be  by  petition  in  receivership  cause  even  as  against 

140 
stranger     '■^^ 

property  in,  not  subj  ect  to  seizure  for  taxes 140a 

inj  unction  against  tax 14^^ 


1064  INDEX. 

POSSESSION— Cotttinued.  Section 

nature  of  receiver's  possession,  property  in,  how  taxes  collected..   140a 

liability   to   taxation 140a    ^Qte 

can  not  be  interfered  with  by  execution  or  attachment 141 

receiver  not  allowed  to  pay  money  except  by  order  of  court     142 
can  not  be  interfered  with  on  ground  that  appointment  was 

improper 143^  165 

persons  desiring  possession  must  apply  to  court  143 

receiver  entitled  to  aid  of  court  to  obtain  possession   144 

practice    in    obtaining    possession    of    real    property    by    re- 
ceiver    144^  147 

order  for  surrender  to  receiver  may  be  enforced  by  attach- 
ment        144 

defendant's    attorney   required   to   deliver   trust   property   to 

receiver    ^44 

court    reluctant    to    take   possession   by    receiver    as    against 

purchasers  in  good  faith  who  are  not  parties  145 

when    receiver    must    institute    independent    suit    to    recover 

property  in  possession  of  stranger  145,  149 

persons  claiming  real  estate  held  by  receiver  will  be  heard 

by    the    court    14g 

receiver    allowed    to    take    steps    to    procure    possession    of 

property    j4g 

receiver  not  allowed  writ  of  assistance  as  against  stranger 

claiming    under    superior   title    I49 

duty  of  court  to  protect  receiver's  possession ISO 

practice  when  receiver  forcibly  takes  possession  from  party 

holding  under  claim  of  right   150 

funds  in  receiver's  possession  not  subject  to  garnishment 151 

exceptions  to  rule   I5I 

subject  to  garnishment  by  leave  of  court  151 

assets  not  in  possession  subject  to  garnishment   151 

precedence  in  possession  as  between  different  receivers   152 

possession  as  between  receiver  and  assignee  in  bankruptcy  . .     153 
right  of  common  not  allowed  as  against  possession  of  re- 

.«iver   154 

right    to    possession    as   between    receiver   of   an   auctioneer 

and  customer I55 

goods  in  receiver's  possession,  when  not  subject  to  distraint 

^o'"    rent    155 

receiver    over    property    of    decedent,    not    entitled    to    fund 

by  creditor  as  security  I57 

when   receiver  entitled  to  possession   of  wharf  in    front   of 

"i|"s  ^ 158 

receiver's  possession  of  commercial  paper,  not  that  of  bona 
Ade  holder I59 


INDEX.  1065 

POSSESSION — Continued.  Section 

nature    of    receiver's    possession,   placing   property    in    receiver's 

possession  relieves  defendant   from  responsibility   160 

receiver  may  retain  possession  pending  appeal  161 

receiver's  possession  that  of  trustee  for  person  entitled  un- 
der   final    decree    162 

when   receiver  required   to  deliver  possession  to  trustee  of 

defendant  under  insolvent  laws   162 

receiver  required  to  restore  fund  on  reversal  of  his  appoint- 
ment     162 

right  of,  when  property  taken  beyond  state  162a 

interference    with   receiver's  possession    163-174& 

unauthorized    interference   a   contempt   of  court,   punishable 

by    attachment    163 

landlord  guilty  of  contempt  in  seizing  property  under  dis- 
tress   warrant    163 

duty  of  court  to  protect  receiver  against 164 

by  another   receiver  subsequently  appointed,  punished   as  a 

contempt   164 

liability  for,  not  dependent  upon  propriety  of  appointment  143,  165 

not  dependent  upon  formal  notice  166 

no  liability  for,  when  appointment  of  receiver  is  void.  .166c,  168,  203 

collection  of  rents    167 

refusal  of  defendant  to  surrender  property  to  receiver 168 

refusal   of  purchaser  at   sheriff's   sale   to   surrender  posses- 
sion to  receiver  168 

not  a  contempt  where  order  is  void  168 

when  refusal  not  a  contempt  168 

court  itself  the  only  competent  judge  as  to  contempt 169 

contempt    in    resisting    enforcement    of    order    for    receiver 

over  property  in  foreign  country  170 

when  not  a  contempt 170 

actual  disturbance  of  possession  necessary  to  contempt   ....  171 

levy  and  sale  by  sheriff  considered  171 

receiver's  title  not  determined  on  proceedings  for  contempt..  172 

claimant  required  to  pay  for  property  taken  out  of  state 172 

courts  averse  to  punishing   receiver   for  contempt  in   inter- 
ference   with    other    receiver    173 

attachment  against  receiver  for  refusing  to  surrender  posses- 
sion     174 

interference  with  rights  of  receiver  under  patent   174a 

judgment  in  contempt  proceedings,  form  of 174& 

receiver  of  corporation  may  remove  cloud  upon,  by  ancillary  bill  342a 

inj  unction    342a 

of  real  property,  receiver  rarely  granted  against  557 

acquiescence   bars    receiver    560 

by  lessee,  receiver  rarely  granted  against   562 

fraud  in  obtaining  possession,  ground  for 565 


1066  INDEX. 

POVERTY,  Section 

of  executor,  no  ground  for  receiver 709 

POWER, 

of  appointing  receiver,  high  nature  of 3 

inherent  in  courts  of  equity  " 

when  may  be  invoked " 

PRACTICE, 

general  rules  of 82-102 

divergent  in  different  states  82 

receiver  appointed  only  on  bill    o-^ 

not  appointed  on  application  of  defendant  83 

bill  need  not  contain  specific  prayer  for  receiver 83 

appointment  may  be  made  on  final  hearing  83 

court  may  appoint  ex  suo  motu   83a 

motion  necessary    84 

affidavits,  copies  should  be  served  84 

in  behalf  of  plaintiff,  admissible  after  answer   85 

of  defendant,  admissible  before  answer   85 

admissible  to  explain  doubtful  passage  in  answer 85 

must  be  entitled  in  cause  85 

multifarious  bill  no  obj ection  to  motion 86 

insufficient  record  no  objection   86 

order  should  state  over  what  property  receiver  is  appointed  87 

facts  need  not  be  stated  in  pleadings 88 

may  be  set  forth  in  affidavits   88 

facts  on  which  receiver  is  asked  may  be  presented  in 88 

conclusions  insufficient  88 

copies  of,  when  should  go  to  appellate  court 88 

should  be  distinct  and  precise  89 

insufficient  when  on  information  and  belief  89 

when  not  necessary  as  to  insolvency  of  bank 89 

verification  may  be  waived  89 

reference  to  master  to  appoint,  practice  on 90 

when  appointment  complete    90 

practice  in  obj  ecting  to  90 

leave  granted  to  renew  motion   91 

receiver  may  be  appointed  on  rehearing  on  new  proof 91 

rehearing,   allowed   after  appointment    92 

when  not  granted  in  creditor's  suit  92 

extending  receiver,  for  protection  of  other  parties  93 

regarded  as  a  new  appointment    93 

appointment  by  consent,  under  Irish  practice  94 

when  consent  not  made  a  rule  of  court   94 

demurrer   to   bill,   no   objection   to   appointment   when   defendant 

does    not    appear    95 

on  overruling  of,  defendant  should  be  allowed  to  plead  or 

95 

answer   ^*' 


INDEX.  1067 

PRACTICE-Confinued.  Section 

motion  entertained,  although  plea  to  amended  bill  undisposed  of  95 

when  application  must  be  heard  in  court  % 

when    in   chambers    g^ 

regularity   of  proceeding   can   not   be   questioned   on   motion   to 

substitute  receiver  07 

receiver  may  be  appointed  although  application  was  for  an  in- 

j  unction     no 

omission  of  receiver  to  be  sworn  not  fatal 99 

when  taking  of  oath  presumed 99 

order  of  appointment  should  not  include  application  of  proceeds 

°^  '^^l  •;;••: lOO 

bill  may  be  dismissed  although  receiver  appointed 101 

appointment  may  be  made,   unless  defendant  satisfies  plaintiff's 

demand    ,  ^^ 

time  of  appointment   103-110 

formerly  only  after  answer 103 

modern  practice,  before  answer  IO3 

grounds  of  interference  before  answer 104,  105 

granted  before  answer  in  this  country '  io5 

strong  ground  required  for  receiver  before  answer 106 

motion  before  answer  heard  on  affidavits   107 

defendant  heard  by  affidavit  in  reply   IO7 

appointment  will  not  date  back  by  relation  ,,[  108 

may  be  made  at  final  hearing  '  ]  ]  ]  109 

the  same,  although  bill  does  not  pray  receiver 109 

may  be  made  after  final  decree  .\'  ]  HO 

pending  appeal    HO 

notice    of    application    *  111-117 

courts  averse  to  interference  without   HI 

error  to  appoint  receiver  without  H2 

where  protection  by  injunction  is  sufficient  112 

want  of,  ground  of  reversal   H2 

how    taken    advantage    of    H2 

how  waived  or  cured  H2 

appeal  because  of H^ 

grounds  of  interference  without H3 

facts  on  which  application  is  made  ex  parte  should  clearly 

appear    213 

service  of  process  considered H4 

notice  necessary  to  appointment  over  insolvent  corporation  115 

practice  of  New  York  Court  of  Chancery  as  to  115 

service  of  Hg 

when  sufficient  on  co-defendant  II5 

not    necessary,    when    parties    appear    by    counsel    to    resist 

motion     H^ 

unnecessary  when  defendant  has  absconded  117 


1068  INDEX 

FRACTICE— Continued.  Section 

notice  of  application,  unnecessary,  when  defendant  has  left  state 

and  receiver  is  necessary  to  collect  rents  117 

against  trustee  defendant  beyond  jurisdiction  of  court..  117 

on  vacating  bond  as  to  one  surety   127 

on  claiming  property  or  fund  held  by  receiver 139 

on  obtaining  possession  of  real  property  by  receiver 144 

on  proceedings  in  attachment  for  interfering  with  collection  of 

rents  by  receiver 167 

on  application  by  receiver  for  advice  of  court  188 

on  obtaining  leave  by  receiver  to  bring  suit  208 

in  continuing  suit  by  successor  of  receiver 213 

in  appointing  receiver  over  insolvent  corporation  346 

PRECEDENCE, 

in  possession,  as  between  different  receivers 152 

PREFERENCE, 

by  insolvent,  when  set  aside  on  application  of  receiver 314,  320 

when  not  given  to  prior  unsecured  debts  of  railway 391,  394/i 

as  between  different  classes  of  receivers'  certificates   . . .     39Sd,  398; 

receiver  of  partnership  prevents,  to  creditor   495 

allowed  to  counsel  fees  805 

to  costs  and  expenses  of  receivership  809 

PREFERRED  DEBTS,     (See  Railways,  Receivers'  Certificates.) 

incurred  in  management  of  business   36 

claim  of  state  for  taxes  as  140a,  note,  394&,  SUa 

in  case  of  private  corporations    2l2c,  3\2d 

in  case  of  railways 394a-394H 

incurred  in  management  of  partnership  business   481 

PRELIMINARY  INJUNCTION.     (See  Injunction.) 

PREMIUM  NOTE, 

when  receiver  can  not  sue  on 204 

pleadings  in  action  by  receiver  on   236 

set-offs  in  actions  by  receivers  on  247 

defense  to  suit  on   318 

assessments  on,  receiver's  right  of  action  for  326 

what  receiver  must  allege  and  prove 327 

liability  not  increased  by  receivership   328 

receiver  must  make  assessment  and  apportionment  328 

receiver  takes  place  of  directors  329 

sanction  and  approval  of  court   329 

receiver  acts  ministerially,  not  judicially   330 

may  make  second  assessment 330 

approval  by  court  not  j  udicial  act  330 

form  of,  when  general  on  all  notes   331 

proof  of  losses,  what   required    331 

receiver  may  sue  on,  to  pay  equitable  claims 332 

defense  by  maker,  what  not  allowed 332 


INDEX.  1069 

PRESIDENT,  Section 

of  corporation,  when  eligible  as  receiver o... .       72 

PRINTING  OFFICE, 

receiver  refused  as  between  joint  owners  20 

PRIORITY, 

in  possession,  as  between  different  receivers   152 

as  between  j  udgment  creditors   439b,  461 

PRIVATE  SALE.  (See  Sale.) 

PROBATE  COURTS.  (See  Courts.) 

PROBATE  OF  WILL.  (See  Will.) 

PROCESS, 

service  of,  qucsre  as  to  necessity  for,  before  appointing  receiver     114 
on  agent  of  corporation  in  hands  of  receiver  260 

PROFITS, 

receiver  can  not  make,  at  expense  of  trust  175 

in  partnership  cases,  right  to,  as  test  for  receivership  477 

when  issue  to  be  tried  by  j  ury 501 

exclusion   from,   ground   for   receiver    524,  528 

PROHIBITION, 

remedy  by,  against  unauthorized  appointment  43 

PROMISSORY  NOTES.     (See  Commercial  Paper.) 

PROOF, 

degree  of,  on  interlocutory  application   o 

of  receiver's  appointment  by  foreign  court 162a,  note,  241,  note 

in  action  against  principal   238 

degree  of,  required  at  trial   238 

receiver  need  not  produce  transcript  of  all  proceedings  in  which 

he  was  appointed    238 

degree  of,  required  to  show  inadequacy  and  insolvency  in  cases  of 

mortgages   667 

PROTECTION, 

of  court,  against  interference  with  receiver's  possession  164 

receiver  entitled  to,  in  performance  of  duties  179 

extended  to  custodians  occupying  relation  of  receivers 182 

PROVISIONAL  REMEDY, 

receivership  considered   as   a    6,     49 

PUBLICATION, 

of  newspaper,  by  receiver    481 

PUBLIC  OFFICE.     (See  Office.) 

PUBLIC  OFFICER, 

distinguished  from  receiver  2 


1070  INDEX. 

PURCHASE.     (See  Sale.)  Section 

PURCHASER,     (See  Innocent  Purchasers.) 

at    receiver's    sale,   acquires    no   right    of   action  against   former 

officer   of  corporation    356 

of  partner's  interest,  when  denied  receiver   512 

when    allowed    receiver    526 

can   not   interfere  with   receiver    551 

receivers  as  between  vendors  and  purchasers  of  realty 609-617 

allowed  vendor  on  bill  for  specific  performance  609 

vendee  on  same   610 

allowed  vendor  on  bill  against,  to  recover  possession  for  non- 
payment    61 1 

purchaser  allowed  receiver  on  bill  to  perfect  title 612 

when   purchaser   at   sheriff's   sale   allowed    receiver   and   in- 
junction    613 

of  gold  mine  at  mortgage  sale,  when  granted  receiver 614 

of  colliery,  entitled  to  receiver,  on  bill  to  set  aside  purchase  for 

fraud    615 

receiver    not    allowed    over    realty    against    purchasers    not 

made    parties     616 

when    receiver   required   to    return   purchase-money    on    an- 
nulling purchase    617 

at  receiver's  sale,  title  acquired  by  636 

what  sufficient  to  see   636 

not  affected  by  errors  636 

brother  of  receiver  may  become,  of  claims  against  estate  ....  175,  note 

Q. 

QUASI-ASSIGNEE, 

receiver  as,  may  maintain  action  in  foreign  court 241o 

to  enforce  double  liability  of  stockholder  of  corporation  ....  317c 
QUO  WARRANTO, 

receiver  refused,  pending  controversy  in   21 

against    corporation,    receiver   not    allowed   before   judgment   of 

forfeiture    307 

injunction    allowed    pending    307 

when    receiver    allowed    312^ 

R. 

RAILROADS.     (See  Railways.) 

RAILWAYS, 

appointment  of  receiver  over,  when  not  appealable   26 

in  different  states,  receiver  over   44 

receiver    in    state    court,    bill    for    account    not    entertained    by 
United  States  court   55 


INDEX.  1071 

RAILWAYS— Continued.  Section 

receiver  of  United  States  court,  not  subject  to  control  of  state 

court 59 

action  against  in  state  court 60 

enjoined  from  condemning  land  held  by  receiver 140 

interference  with  operation  of,  by  receiver,  where  a  contempt  . .     164 

receivers  over,  principles  governing  the  jurisdiction   365-375a 

courts    reluctant    to    appoint    365 

not   appointed   for  creditor  who  can   enforce   his  judgment 

by    ordinary    means    365 

consolidation  of  companies  365 

appointed  on  bill  by  shareholder  to  set  aside  void  lease 366 

granted  to  protect  vendor's  lien   367 

granted  for  management  of  common  easement   368 

in  case  of  tunnel    368 

when  refused  on  bill  to  recover  for  illegal  shares  of  stock    369 
appointed    by    state    court,    when    not    interfered    with    by 

United   States  court  in  bankruptcy   370 

jurisdiction  as  between  state  and  federal  courts  370 

two  receivers  not  desirable 370a 

contract  of  one  binding  upon  the  other 370a 

receivership  does  not  dissolve  corporation   370b 

nor  suspend  power  to  maintain  condemnation  proceedings  370b 

injunction  against  company  binds  receiver   370b 

taxes   enforced    370b 

appointed  on  failure  to  operate  road 371 

before  default   371 

when  relieved   371 

receiver  appointed  over  street  railway  to  prevent  forfeiture  of 

franchise    371 

vendor's  rights  not  disturbed  by  372 

distraint  for  rent  notwithstanding   372 

may  enjoin  state  officers  from  disposing  of  land  grant 373 

stockholders'  meeting  373 

appointed  by  state  court,  United  States  court  will  not  enter- 
tain bill  for  account  against 374 

mandamus  refused    w 374 

order  for,  vacated,  road  restored  to  owner   375 

surplus  funds,  when  applied  on  j  udgment   375 

ancillary    receiverships     375a 

in  aid  of  mortgagees  and  bondholders  376-389a 

relief  based  on  same  principles  as  in  foreclosure  of  mort- 


gages 


376 


inadequacy  of  security  and  insolvency  ground  for 376 

neglect  to  apply  earnings  as  ground  for  376 

non-payment  of  interest  and  inadequacy  of  security  as  ground 

for  376 


1072  INDEX. 

RAILWAYS— CoM/mwrt/.  Section 

receivers  over,  in  aid  of  mortgagees  and  bondholders,  not  matter 

of  course  on  default  377 

not  granted  where  it  would  cause  irreparable  injury   377 

when  not  granted  over  entire  system  377 

proceedings  for,  regarded  as  in  rem  378 

right  of,  extends  only  to  property  mortgaged 378 

may  lease  other  lines  378 

right  to  take  possession  on  default  379 

refusal  of  trustee  to  take  possession   379 

appointed  after  decree  of  foreclosure  379 

receiver    over    tolls    380 

when  bondholders   entitled    to    381 

right  to,  as  between  different  mortgagees    382,    385 

mortgagees  pari  passu,  not  allowed  preference  383 

granted  in  behalf  of  state  holding  mortgage   384 

granted  to  prevent  land  grant  from  lapsing   386 

validity  of  bonds  not  determined  on  application  for   387 

relative  jurisdiction  of  state  and  federal  courts   388 

court  first  acquiring  jurisdiction  will  retain  it  388 

jurisdiction  of  United  States  court  over  consolidated  road..  388fl 

when  president  and  directors  regarded  as  receivers  388& 

discharge  of,  on  payment  of  mortgage  389 

liability   of  plaintiff  in   foreclosure   for   wages   of   receiver's 

employees    389o 

functions  and  duties  of  390-394 

duties  usually  prescribed  by  order 390 

what  usually  embraced  in  390 

when  authorized  to  complete  road   390 

condemnation  to  acquire  land  for  completion 390 

discharge  of  employees  390,  note 

contracts  subject  to  control  of  court 390a 

may  contract  for  transportation  beyond  line    390a 

may  make  lease  of  company's  property  390c 

may  take  lease  of  another  road    390a 

can  not  prevent  construction  of  rival  line  390a 

unjust  discrimination  not  allowed    390a 

pooling  contract,  when  enforced   390a 

when  not  allowed  to  pay  prior  debts 391 

nor  to  adopt  contract  which  would  result  in  preferring  prior 

debts  391 

discretion  of,  as  to  expenditures   392 

what  outlays  allowed  in  accounts  392 

entitled  to  protection  of  court  393 

court  will  enjoin  diversion  of  earnings  from 393 

receiver's  joint  use  of  another  line  protected  by  injunction  ..  393 

strikers  punished   for  contempt    393a 

revision  of  wages  by  court 393b 


INDEX.  1073 

RAILWAYS— Continued.                                                                  Section 
functions  and  duties  of,  receiver  not  bound  by  joint  traffic  agree- 
ment of  company 393c 

nor   by   contract   to   carry   passengers    393c: 

criminal  liability  of  receiver  for  failure  to  comply  with  state 

statute    393c 

must  enforce  rights  of  action  by  appropriate  remedies  394 

must  bring  suit  at  law  to  enforce  subscription   394 

rights  limited  to  property  covered  by  mortgage  394 

preferred  debts  394a^394n 

preference  to  unsecured  debts  indefensible  on  principle   . . .  394a 

receiver's  expenses  a  prior  charge   394b 

extension   of   line    394& 

damages 394& 

rentals    394& 

supplies    394& 

distribution  among  divisions   394b 

taxes  on  gross  earnings  394& 

purchase  of  rolling  stock  394& 

expenses  of  reorganization  committee  394b,  note 

diversion  of  income  ground  of  preference 394c 

what  not  a  waiver  of  right  to  a  preference  394c 

counter-claim  by  receiver   394c 

preference  independent  of  diversion  394d 

materials  furnished  company  and  used  by  receiver 394d 

traffic  balance   394d 

arrears   for  operating  expenses    394d 

wages  of  employees  threatening  to  strike 394d 

salary  of  attorney   394d 

balance  for  terminal  rental   394d 

repair  work  on  bridge 394c? 

claim  for  cross  ties    394d 

coupling  links,  pins  and  steel  tank 394d 

claim  for  maintaining  passenger  waiting  rooms  394d 

materials  for  necessary  freight  cars    394d 

damages  to  abutting  property  owner    394d 

loss    of   cars    394d 

rail  joints  and  track  bolts    394d 

when  interest  not  recoverable    394d,  394k 

mortgagee  must  submit  to  equitable  conditions  394c 

assignee  of  debt  protected  394c 

claims  for  rolling  stock,  when  preferred   394/ 

car-trust    leases    394/ 

receiver  may  elect  to  be  bound  by   394/ 

sale  of  rolling  stock  under  foreclosure   394/ 

use  of  rolling  stock  by  receiver   394/ 

right  of  appeal  by  purchaser  394/ 

judgment  creditors,  when  allowed  priority 394^ 

Receivers — 68. 


1074  INDEX. 

RAILWAYS— Confinued.  Section 

preferred  debts,  general  creditors  not  preferred  394/» 

illustrations  of  claims  which  have  been  denied  preference..  394/» 
judgments  and  claims  for  personal  injuries  prior  to  receiver- 
ship not  preferred    394» 

when  payment  allowed  out  of  proceeds  of  sale  394; 

statutory  liens  preserved    394k 

interest,  when  disallowed  against  receiver 394d,  394^ 

construction    claims     394/ 

boarding-house   keepers    394/ 

grocers    394/ 

completion   of   building    394/ 

receiver's  liability  as  to  leased  lines    394m 

taxes  on  leased  line  394m 

paramount  lien  enforced  by  resale   394w 

actions  against   receivers  of    395-398& 

liable  to  same  extent  as  railway  395 

action  need  not  be  at  receiver's  domicile  395 

will  not  lie  for  personal  injuries  suffered  prior  to  appoint- 
ment     395,  397& 

when  will  not  lie  against  ancillary  receiver   395 

statute  abolishing  fellow-servant  rule   395 

leave  of  court  necessary  to  sue   395a 

practice  by  petition    395a 

leave  unnecessary  under  act  of  congress   395b 

illustrations  of  application  of  act   39Sb 

removal  of  cause  by  receiver  to  federal  court   395c 

New  York   decisions   unsettled    395d 

liability  for  inj  uries    395d 

rent  of  leased  lines  395c/ 

company  not  liable  for  negligence  of  receiver's  servants  ....     396 
liability  of  company  for  failure  to  comply  with  penal  stat- 
utes   of   state    396 

statutory  liability  of  company,  notwithstanding  receivership    397 

j  udgment  for,  how  enforced 397 

action    against    company    after    surrender    of    receiver's 

possession    397o 

liability  of  receiver  official  not  personal   397& 

may  be  enforced  against  successor 397b 

not  liable   for  negligence   of  company  prior  to   his 

appointment    395,  397& 

liable  generally  as  common  carriers  398 

suit  in  other  state  398 

for  right  of  way  398a 

not  liable  on  contract  with  express  company 398o 

not  liable  on  covenant  of  company  393c,  398a 


INDEX. 


1075 


fLAIUWAYS— Continued.                                                                  Section 
actions  against  receivers  of,  liability  on  covenant  of,  after  dis- 
charge      398b 

liability  of  purchasers   398& 

receivers'  certificates    398c-3yo; 

unsupported  by  principle  3"°'- 

warranted  by  authority   398c 

not  invalidated  because  bill  is  demurrable  398(; 

purposes   for  which  issued    398o 

order  strictly  construed   398a 

preference  as  between  different  classes  of  certificates  . .  398d,  398; 

not    commercial    paper    398^ 

innocent  purchasers  not  protected    398^ 

when  bondholder  estopped  from  questioning  398/ 

when  not  estopped  398/ 

order  appealable  398/ 

sale  subj  ect  to   398g 

purchasers    concluded    398g 

when  issued  for  construction  398/? 

purchasing  company  liable   for    39oh 

case  of  Illinois  Midland  Railway  398j 

priority  as  between,  for  compensation  of  receiver  and  that  of 

trustee    398/ 

same  as  to  counsel  fees  398; 

compensation  of  receiver  of '87 

considerations  governing  787 

RATES, 

receiver  refused  over  3^ 

REAL  ESTATE.     (See  Real  Property.) 

REAL  PROPERTY, 

receiver  appointed  to  collect  rents  of,  after  decree 110 

receiver  extended  over,  new  security  required  123 

practice  in  obtaining  possession  of,  by  receiver 144,  147 

in  receiver's  possession,  claimants  will  be  heard  by  court 146 

rights  of  common  not  allowed  to  be  exercised  as  against  posses- 
sion of  receiver ^''^ 

motion  to  let,  should  not  come  from  receiver 181 

when  receiver  not  allowed  to  purchase  at  sale  of 193 

when  receiver  allowed  to  become  tenant  of  lands  subject  to  re- 
ceivership      ^"^ 

sale  of,  by  receiver,  power  to  give  deed  implied  199 

confirmation  of  conveyance  by  court  199 

ejectment  for,  receiver  must  obtain  leave  to  bring   208 

receiver   of,   can   not   maintain   action   of   forcible   entry   and   de- 


tainer in  his  own  name 


209 


contrary  doctrine  recognized  210 


1076  INDEX. 

REAL  PROPERTY— Continued.                                                         Section 
distinction  between  actions  by  receiver  concerning  title,  and  con- 
cerning injury  to  or  possession  of  real  estate 221 

action  by  receiver  to  set  aside   fraudulent  conveyance  made  to 

defeat  decree  for  alimony   221 

to  recover  balance  of  purchase-money  223 

assignment  of,  receiver's  right  of  action  under 244 

loss  to,  remaining  in  owner's  possession,  who  in  fault 284 

long  acquiescence  in  situation  of  title,  bar  to  receiver 295 

of  corporation,  not  divested  by  receiver  pendente  lite 302 

vests  in  receiver  on  dissolution  of  corporation  in  New  York  303 

lien  of  judgment  creditor  on,  as  affected  by  receivership   ..  349 
of  debtor,  claimed  by  third  party,  courts  averse  to   interfering 

by  receiver  on  creditor's  bill 416 

debtor  can  not  create  trust  in,  to  prejudice  of  creditors 417 

when  receiver  appointed  over,  in  behalf  of  creditors  418 

in  receiver's  possession,  regarded  as  in  custody  of  court  422 

of  debtor,  receiver  takes  subj  ect  to  j  udgment  liens 424 

when  title  vests  in  receiver 447 

receivers  over  553-638a 

principles  on  which  the  relief  is  granted 553-602fl 

jurisdiction  well  established  but  cautiously  exercised   ..  553 
English  doctrine  denying  receiver  except  in  aid  of  equit- 
able title   554 

distinction  in  cases  of  realty  and  personalty 554 

not  appointed  as  between  conflicting  claimants  to  pos- 
session      554 

outstanding  terms  no  additional  ground  for 554 

not  granted  when  remedy  at  law  555 

devisee  not  entitled  to,  when  he  can  obtain  redress  at  law  555 

•                     appointment  does  not  affect  title  of  either  party 556 

obj  ect  of  the  appointment 556 

for    whose   benefit    made    556 

does  not  prevent  statute  of  limitations  from  running  ....  556 
general  rule  denying  receiver  against  defendant  in  pos- 
session under  claim  of  title   557 

when  receiver  refused  pending  appeal  from  judgment 

in   ejectment    557 

exceptions  to  the  rule   558 

probability  of  plaintiff  prevailing  558 

danger  to  rents  and  profits   558 

refused  when  defendant  claims  legal  and  equitable  title  559 

refused  when  only  ground  is  defendant's  insolvency  ....  559 

effect  of  long  acquiescence  in  defendant's  possession  . . .  560 
not  appointed   when  notice  of  lis  pendens  will  prevent 

transfer  pendente   lite    561 

not  granted  against  possession  of  lessee 562 


INDEX.  1077 

REAL  FROFERTY—Confinucd.  .  Section 

receivers  over,  principles  on  which  relief  is  granted,  danger  to 

property  must   be   shown    563 

when  refused  in  case  of  dissension  in  religious  society. .  563 

in  possession,  may  be  continued  pending  compromise  ...  564 

fraud  in  obtaining  possession  ground  for 565 

granted   when  plaintiff  shows  legal  and   equitable  title, 

and  defendant  none  566 

prevention  of  vexations  litigation  ground  for 566 

defendant's  abuse  of  trust  and  insolvency  ground  for  . .  566 
receiver  of  rents  and  profits  pending  litigation  in  another 

state    566 

when  granted  on  bill  by  creditors  to  charge  debtor's  realty  567 
in    aid    of    incumbrancer,    will    not    prejudice   judgment 

creditors  in  possession  567 

granted  when  plaintiff  shows  probable  title  and  danger 

to  rents   567 

when  granted  to  protect  dower  interests  568 

when  receiver  may  compel  assignment  of  dower 568 

for  protection  of  heirs  and  devisees  568-572 

granted  to  enforce  trusts  of  will  569 

when  granted  against  heir-at-law  in  possession   ...  569 

when  denied  legatee  under  will    569 

contest    between    heir    and    devisee,    when    receiver 

refused 570 

when    granted     570 

when   refused   heirs   on  grantor's  taking  possession 

after  life  estate    571 

opposition  by  heirs  to  administration,  no  ground  for  571 

when  granted  against  tenant  for  life  572 

devise  to  wife   572 

settlement   upon   daughter    572 

vendor  seeking  to  rescind  imprudent  contract  of  sale  not 

entitled  to  573 

when  granted  in  behalf  of  annuitants   574 

granted  over  clergyman's  benefice 574 

annuitant  denied  receiver  when  he  can  distrain 574 

pending  contest  as  to  will  574 

in  actions  of  ejectment  and   to   recover  lands    575-577 

not  granted  in  absence  of  equitable  grounds 575 

granted  to  preserve  rents  and  profits   576 

stronger  ground  for,  after  verdict   577 

granted  pending  certiorari  from  state  to  federal  court  577 

appointed   over    leasehold    interests    578 

landlord  may  re-enter  without  leave  of  court 581 

assignee  of  lease  not  entitled  to 579 


1078  INDEX. 

REAL  PROPERTY— Cow//«Hcrf.  Section 

receivers  over,  principles  on  which  relief  is  granted,  insolvency 
of  defendants  no  ground  for  receiver  of  house  on  leased 

ground     580 

when  defendant  to  be  served  with  notice  of  motion  to  dis- 
charge      581 

extending  same  receiver  to  subsequent  applications  ....     582,  583 

new    security    required    582 

when  not  done  before  answer   582 

extension  deemed  new  appointment   583 

effect  of,  on  rents 583 

dissensions  among  trustees,  when  ground  for   584 

denial  of  trust  not  necessarily  ground  for 584 

granted  in  aid  of  equitable  incumbrances  585 

to  enforce   rent-charge    585 

not  allowed  in  mechanic's  lien  suit 586 

when  granted  in  aid  of  proceedings  in  bankruptcy 587 

conflicting  claims  to  trust  property  ground  for 588 

nature  of  defendant's  interest  in  realty 589 

when  refused  over  crops 590 

when  allowed 590 

in  cases  of  marriage  settlements 591 

difficulty  in  enforcing  remedy  to  collect  rents  no  ground  for  592 

acquiescence  in  defendant's  possession  a  bar  to 593 

granted  when  property  escheated  to  state 594 

refused  when  defendant  consents  to  pay  rents  into  court 595 

only  party  to  cause  may  object  to 596 

remainder-man   and   tenants    can   not   enjoin    receiver    from 

turning  them  out 596 

how  possession  obtained  by 597 

loss  through  owner  remaining  in  possession 597 

appointed  before  answer  in  emergency 598 

over  corporation,  title  to  realty  not  divested  in  limine 599 

divested  on  dissolution 599 

order  should  point  out  particular  property 600 

may  be  appointed  over  part  of  property 600 

ordered  to  deliver  funds  to  plaintiff  obtaining  final  judgment  601 
on   termination  of  functions  realty  again   subject  to  lien  of 

j  udgment     602 

receiver  allowed  against  plaintiff  suing  in  forma  pauperis. . .  602a 

tenants  in  common 603-608 

courts  averse  to  granting  receiver 603 

when  refused  603 

exclusion  by  co-tenant  ground  for 604 

insolvency  604 

receiver  allowed  over  moiety 60S 

allowed  in  default  of  defendant  giving  security 605 

equitable  tenants  in  common. 60S 


INDEX.  1^^^ 

REAL  VRO-PERTY-Continncd.  ^^^^'^ 

tenants  in  common,  allowed  in  case  of  colliery wo 

goldmine   ^_ 

action  for  partition   '/■'"■a 

notice    to    under-tenants    not   to    pay    rent    to    plamtiffs    no 

,   ,  oU» 

g'-^""^  ^"^r ..609-617 

vendors  and  purchasers  • 

when  vendor   entitled  to   receiver   on  bill   for   specific   per- 

,  ouy 

formance  -^^ 

when  vendee  entitled 

insolvency  of  vendor  unnecessary 

vendor   entitled  to,   in  suit  to  recover  possession   for  non- 

611 

payment  , .  ^ 

when  allowed  purchaser  on  bill  to  perfect  title o j^ 

when  purchaser  at  sheriff's  sale  entitled  to oli 

purchaser  of  gold  mine  at  mortgage  sale  allowed  receiver. ..     614 
purchaser  of  colliery   entitled  to,  on  bill  to  set  aside  pur-    ^^^ 

chase  for  fraud 

when  receiver  of  mine  discharged ° 

receiver  should  not  carry  on  business oj 

not  allowed  over  realty  as  against  purchasers  not  parties. .. .     616 
when   receiver    required   to    return   purchase-money    on   an- 

nulling  purchase  Z' ['.MS^SSa 

functions  of  receiver 

right  to  rents g 

tenants  required  to  attorn  to 

right  to  rents  in  arrear • 

motion  for  tenants  to  attorn,  when  ordered  to  stand  over. ...     6^U 

costs  on  • -„- 

eflfect  of  order  on  tenants  to  pay  receiver o^J 

payment  to  third  person 

right  to  distrain,  no  settled  practice •  •  •     "^ 

not  allowed  to  distrain  when  plaintiff  still  proceeds  at  law    6Z3 

must  notify  tenants  of  appointment  before  suit  for  rent W4 

attachment  for  refusal  to  pay  rent  to • 

must   be    discharged   before    receiver   can    distrain,   and 

626 

znce  versa  _ 

rights  of  third  persons  not  determined  on oZ/ 

not  issued  pending  abatement  of  suit  by  death 627 

effect  of  authorizing  defendant  to  collect  rents 628 

not  appealable   ^ 

receiver  should  invest  rents 

rights  of  claimants  of 

who  entitled  to  rents  of  corporate  property 

receiver  continued   for  collection  of,   until  conveyances  ex- 

6ol 

ecuted ,.^2 

should  pay  rent  due  landlord 


1080  INDEX. 

REAL  PROFERTY—Confmucd.  Section 

functions  of  receiver,  right  to  make  repairs ....  180,    633 

duty  of,  when  waste  committed 634 

inj  unction   634 

may  file  bill  to  sell  free  from  liens 635 

purchaser  at  receiver's  sale,  rights  of 636 

what  sufficient  to  see 636 

purchaser  not  affected  by  errors   636 

may  enjoin  use  of  premises  for  forbidden  purposes 637 

permission  of  court  to  lease  premises 638 

lease  not  binding  on  infant  remainder-man 638 

rent  due  third  parties 638a 

dilapidations     638a 

receiver  ordered  to  surrender  to  new  trustees 704 

RECEIVERS'  CERTIFICATES, 

in  cases  of  private  corporations 312& 

in  railway  foreclosures 398c-398y 

unsupported  by  principle 398c 

not  invalidated  because  bill  is  demurrable 398c 

sustained  by  authority 398c 

purposes  for  which  issued 398^ 

preference  as  between  different  classes  of  certificates 398c/,  398; 

not  commercial  paper 398^ 

innocent  purchasers  not  protected 398^ 

when  bondholder  estopped  from  questioning 398/ 

when  not  estopped 398/ 

sale  subject  to 398g 

when  purchaser  liable  for 398/t 

case  of  Illinois  Midland  Railway 398/ 

priority  as  between,  for  compensation  of  receiver  and  that  of 

trustee    398/ 

same  as  to  counsel  fees 398/ 

RECOGNIZANCE, 

usually  required  of  receiver  before  entering  on  duties 118 

two  sureties  required  under  English  practice 118 

of  receiver  alone,  when  allowed 119 

may  be  filed  nunc  pro  tunc 121 

liability  of  sureties  on 127-133 

may  be  vacated  as  to  one  surety 127 

practice  on  so  vacating 127 

on   death  of  one  surety  on,  new  one   required    128 

liability  on,  when  absolute 129 

when  action  may  be  sustained  on 129 

suit  on,  after  death  of  receiver 130 

judgment  on,  enjoined  after  full  amount  due  is  paid  by  surety  131 


INDEX.  1081 

REDEMPTION,  Section 

from  receiver's  sale,  not  allowed 199c 

REFERENCE.     (See  Master  in  Chancery.) 

REGISTER  OF  COURT, 

not  allowed  to  appoint  receiver 43 

REHEARING, 

receiver  may  be  appointed  on 91 

additional  proof  requisite  on 91 

may  be  allowed  after  appointment 92 

when  not  granted  in  creditor's  suit 92 

RELATIONSHIP, 

effect  of,  in  selecting  receiver 67 

as  to  removal 821 

RELIGIOUS  SOCIETY, 

dissension  in,  when  receiver  refused 563 

REMAINDER-MAN, 

can  not  enjoin  receiver  from  turning  him  out 596 

infant,  not  bound  by  lease  by  receiver 638 

REMEDY  AT  LAW, 

a  bar  to  appointing  receiver 10 

defined   10 

difficulty  of,  no  ground  for  receiver 10,  592 

when  need  not  be  exhausted 10 

laches  in  resorting  to,  no  ground  for  receiver 10 

when  no  bar  to  injunction  on  behalf  of  receiver  against  tax....  140a 

bar  to  receiver  in  aid  of  creditor  of  corporation 301 

must  be  exhausted  before  receiver  appointed  on  creditor's  bill  403 
must  be  pursued  by  receiver  of  debtor  to  recover  property  claimed 

by  third  persons 457 

bars  receiver  over  real  property 555 

REMOVAL,     (See  Discharge.) 

of  receiver,  for  cause 820-831a 

power  of  court  considered 820 

distinction  between,  and  "vacation  of  appointment"  and  "dis- 
charge"   820,  note 

rests  in  discretion 821 

relationship  to  parties,  not  ground  for 821 

when  ground  for,  with  other  circumstances 821 

when  not  ground  for 821 

want  of  notice  of  appointment  of  successor  not  ground  for  821 

not  removed  to  make  way  for  agents  of  parties 822 

employment  of  counsel  for  parties  not  ground  for 823 

courts  always  open  for 824 

by  vacating  appointment 824 


1082  INDEX. 

REMOVAL— Continued.  Section 

of  receiver,  written  notice  of  motion  required  834 

notice  to  every  creditor  unnecessary 824 

decision  on,  not  appealable 825 

allowed  pending  motion  for  new  trial 825 

analogous  to  dissolution  of  inj unction 826 

removed  when  equities  of  bill  denied  by  answer 826 

substitution  by  consent 827 

removal  of  several  and  extending  one 827 

of  receiver  of  bank  who  was  shareholder  and  director 828 

in    creditor's    suit,    employment    of    debtor    to    collect    not 

ground  for  828 

compelled  to  make  restitution  on 829 

receiver  not  heard  in  opposition  to 830 

when  defendants  estopped  from,  by  their  own  agreement....  831 

diligence  necessary  in  application  for 831a 

suit  continued  by  successor 213 

REMOVAL  OF  CAUSE, 

right  to,  of  receiver  of  federal  court 60&,  395c 

RENTS,     (See  Real  Property.) 

receiver  to  collect,  may  be  appointed  after  decree 110 

receiver  of,  pending  action  for  divorce 146 

landlord  can  not  distrain  for,  when  goods  have  passed  into  re- 
ceiver's possession   156 

receiver  to  collect,  his  duty  to  move  for  attachment  in  interfer- 
ing with 167 

when  party  not  liable  for  contempt  in  collecting 167 

receiver  may  collect  rents  until  removal,  although  cause  is  abated  185 
action  by   receiver  to   recover,  notice  to   tenant  of  appointment 

necessary  223 

when  receiver  liable  for 273 

when  not  personally  liable  for 273a 

liability    for   stipulated,   or   reasonable,   on  adoption  of  lease   of 

principal     273c 

due  from  firm,  when  receiver  not  liable  for 281 

loss  of,  solicitor  acting  as  receiver  without  appointment  liable  for  284 

of  corporate  property,  right  to,  after  receivership 351 

vendor  of  lands  to  railway,  when  may  distrain  for 372 

claim   for,   against   railway   when  allowed  preference 394b,  394J 

of  debtor's  building,  receiver  allowed  on  creditor's  bill 417 

from  sub-tenants,  when  receiver  directed  to  pay  to  landlord 470 

receiver  over,  pending  ej  ectment 576 

after  verdict  for  recovery  of  lands 577 

of  leasehold  interests 578 

assignee  of  lease  not  entitled  to 579 


INDEX.  1083 

RENTS — Continued.  Section 

right  to,  when  receiver  extended  to  other  applications 583 

when  cestui  que  trust  entitled  to  receiver  over 584 

receiver  over,  not  allowed  in  mechanic's  lien  suit 586 

in  aid  of  proceedings  in  bankruptcy 587 

denied  in  case  of  marriage  settlements 591 

not  granted  because  of  difficulty  in  enforcing  legal  remedy  592 

granted  when  property  escheated  to  state  594 

appointed  before  answer  in  emergency 598 

in  case  of  exclusion  by  tenant  in  common 604 

receiver  allowed  over  moiety 605 

allowed  in  default  of  defendant  giving  security 605 

receiver's  right  to 618 

tenants  compelled  to  attorn  to 618 

right  to  arrears 619 

motion  for  tenants  to  attorn,  when  ordered  to  stand  over. . . .  620 

costs  on  620 

effect  of  order  on  tenants  to  pay  to  receiver 621 

effect  of  payment  to  third  person 621 

right  to  distrain,  practice  unsettled 622 

not  allowed  to  distrain  when  plaintiff  still  proceeds  at  law  623 

must  notify  tenants  of  appointment  before  bringing  suit  for  624 

attachment  against  tenant  for  refusing  to  pay 625 

must   be   discharged   before    receiver   can    distrain,    and 

vice  versa  626 

rights  of  third  persons  not  determined  on   627 

not  issued  pending  abatement  of  suit  by  death 627 

effect  of  permitting  defendant  to  collect  rents 628 

receiver  should  invest  rents 629 

rights  of  claimants  of 629 

who  entitled  to  rents  of  corporate  property    630 

receiver  continued   for  collection  of,   until  conveyances   ex- 
ecuted       631 

receiver  should  pay  rent  due  landlord 632 

of  mortgaged  premises,  receiver  of,  not  allowed  when  security 

adequate    642 

of  railway  company   642 

receiver  of,  refused  when  property  already  in  custodia  legis  642 

refused  when  improvements  destroyed  by  fire  642 

allowed   when  security  inadequate  and  mortgagor  insolvent  643 
mortgagor  entitled  to  rents  in  receiver's  hands  to  make  up 

deficiency 643 

express  pledge  of  rents  643 

when  insolvency  of  mortgagor  immaterial 643 


1084  INDEX. 

RENTS— Co«/!»«rrf.  Section 

of  mortgaged  premises,  insurance  and  taxes  643 

past-due  rents 643 

when  entitled  to  unpaid  rents  644 

liability  for  waste  of,  by  receiver 645 

paid    into    court,    mortgagor   not    entitled    to,    on    receiver's 

discharge  656 

when  owner  of  equity  of  redemption  entitled  to,  collected 

by  receiver  657 

receiver  of,  pending  appeal 665o 

right  to,  as  between  different  mortgagees 688,  689 

when  j  unior  mortgagee  entitled  to 688 

prior  mortgagee  entitled  to 688 

contrary  rule  in  Virginia 689 

assigned  to  junior  mortgagee,  prior  mortgagee  can  not 

have  receiver  of 690 

receiver    of,    allowed    on   bill    by   junior    mortgagee    to 
foreclose  and  to  compel  prior  mortgagee  to  exhaust 

other  mortgage  691 

receiver  allowed  over,  on  death  of  one  trustee  and  refusal  of 

another  to  act 694 

when  plaintiff  liable  to  pay,  of  receivership  premises 809o 

RENT  CHARGE, 

receivers  allowed  in  aid  of c 585 

REORGANIZATION  COMMITTEE, 

expenses  of,  of  railway 394&,  note 

REPAIRS, 

by   receiver,   rule   as   to    180,   633 

REPLEVIN, 

by  receiver,  will  not  lie  when  property  seized  under  paramount  lien    136 
against  receiver,  enjoined  when  brought  without  leave 256 

RIGHTS    OF  ACTION,     (See  Suits.) 

receiver  succeeds  to  those  of  original  party 201 

not  changed  by  appointment  of  receiver 204,  318 

of  receiver,  when  determined  by  statute 211 

limited  to  state  where  appointed 239 

of  receiver  of  corporation   313-342a 

over  national  bank 360 

in  creditors'  suits 453-^71o 

over  partnerships   539 

RINGS, 

receiver  appointed  over 432 


INDEX.  1085 


SALARY,     (See  Compensation  of  Receiver.)  Section 

of  public  officer,  receiver  refused 22 

of  school-teacher   22 

of  clerk  of  court 22 

receiver  appointed  without,  security  dispensed  with 118 

of  corporate  officers,  allowed  by  receiver  pro  rata 336 

when  not  allowed  for  period  covered  by  receivership 336 

SALE, 

application  of  proceeds  should  not  be  included  in  order  of  ap- 
pointment      100 

set  aside  for  undue  haste 112 

by  sheriff,  when  purchaser  not  in  contempt  for  refusing  to  sur- 
render possession  to  receiver 168 

to  receiver  by  himself  individually    193,  note 

"ty  receivers   191-199^ 

set  aside  for  fraud 191 

for  inadequate  price 191 

does  not  divest  existing  liens 191,  199o 

may  be  conducted  by  master  in  chancery  or  agent  for  receiver  191 

court  vested  with  power  to  sell  when  necessary 192 

may  be  decreed  though  interests  of  parties  not  yet  ascertained  192 

though  no  petition  therefor  filed 192 

sale  of  steamboat 192 

receiver  not  allowed  to  purchase  for  his  own  benefit 193 

the  rule  independent  of  question  of  fraud 194 

receiver  can  derive  no  benefit  from  foreclosure  sale 194 

nor  from  j  udicial  sale 194 

when  sale  set  aside  because  of  purchase  by  receiver 194 

purchase  of  annuity  by  receiver  set  aside 194 

order  for,  can  not  be  assailed  in  collateral  action 196 

fraudulent  action  to  set  aside 196 

to  meet  taxes,  evidence  should  be  clear 197 

of  personal  property,  discretion  as  to  sale  by  bulk  or  in  parcels  198 

when  set  aside  for  undue  haste 198 

in  bulk  or  parcels 198 

private  sale 198 

irregular  sale  198 

want  of  notice  of 198 

order  of,  appealable 198 

confirming,  appealable 198 

of  real  estate,  power  to  give  deed  implied 199 

confirmation  of  conveyance  by  the  court 199 

subj  ect  to  incumbrances  and  liens 199a 

title  of  third  person  not  divested  by 199a 

of  real  estate  of  partnership 199a 


1086  INDEX. 

SALE— Continued.  Section 

by  receivers,  subj  ect  to  dower  interest   199o 

caveat  emptor  1996 

confirmation  unnecessary  199^ 

when  not  refused 199^ 

what  amounts  to 199^-  j^Q^e 

no  redemption  from igg^ 

fraudulent  sale  by  receiver 199j 

must  take  place  at  time  designated  by  court 199^ 

of  corporate  property  does  not  need  corporate  seal 338 

not  set  aside  because  applied  for  by  creditor  who  was  also 

judge    338 

purchaser  acquires  no  right  of  action  against  former  officer  356 

when  shareholder  estopped   from  questioning  order  of  sale  356 

by  sheriff,  when  subject  to  receiver's  sale   423 

when  prior  to  receiver's  sale 424 

when  receiver  directed  to  stay 429 

by  receiver,  not  ordered  pending  appeal  as  to  jurisdiction 543 

SAVINGS  BANK.     (See  Bank.) 
SECRETS, 

concerning  manufacture,  not  disclosed  to  receiver 36 

SECURITY,     (See  Bond,  Recognizance,  Sureties.) 

usually  required  of  receiver  in  advance 118 

of  receiver  alone,  when  allowed 119 

may  be  dispensed  with  by  court 120 

dispensed  with  when  same  receiver  extended  to  different  cred- 


itors' suits 


120 


failure  to  give,  receiver  acquires  no  title 121 

omission  to  require  in  final  decree,  effect  of 122 

additional,  required  when  same  receiver  extended  over  real  estate  123 

assignment  of  mortgage  as,  held  good 125 

held  by  creditor  of  deceased,  receiver  not  entitled  to 157 

w^hen  defendant  allowed  to  give,  in  lieu  of  receiver  and  injunction  478 
SELECTION, 

of  receiver   63_81g 

importance  attached   to 53 

reference  to  master  under  English  practice 63 

same  under  New  York  chancery  practice 63 

by  master,  courts  averse  to  interfering  with 64 

grounds  of  interference 64 

by  court  below,  rests  in  judicial  discretion 65 

rarely  interfered  with  by  appellate  court 65 

grounds  of  interference  with 65 

may  be  interfered  with  to  prevent  injury  and  expense..  66 


INDEX.  1087 

SELECTION— Con^mM^rf.  Section 

of  receiver,  effect  of  relationship   67 

interest  with  defendant 68 

solicitor  eligible   68 

eligibility  of  one  of  plaintiffs 68 

person  unfamiliar  with  the  property  not  eligible 68 

distant  residence  considered  as  an  objection 69 

solicitor,  under  commission  of  lunacy,  ineligible 70 

in  the   cause,   ineligible 70 

master  in  chancery  ineligible 70 

barrister  eligible  70 

member  of  parliament 70 

peer  ineligible   70 

member  of  reorganization  committee 70 

creditor  of  insolvent   70,  72 

party  to  the  cause 70 

clerk  of  court  not  necessarily  receiver 71 

clerk  and  master  71 

of  receiver  over  corporation,  delicacy  of 72 

officer  ineligible    72 

relaxation  of  rule 72 

eligible  by  statute 72 

stockholder     72 

another  corporation  eligible 73 

of  trustees,  generally  ineligible 74 

when  trustee  and  executor  eligible 74 

next  friend  of  infant  ineligible 75 

mortgagee  and  trustee  eligible 76 

in  partnership  cases,  administrator  of  deceased  partner  eligible  78 

partner  eligible  540 

nomination  in  bill 79 

nomination  by  consent  of  parties 79 

stockholder  and  director  of  plaintiff  corporation  as  receiver 80 

mortgagee  of  West  India  estates  eligible 81 

objection  to,  must  be  made  in  apt  time  81a 

how  waived   81a 

SEQUESTRATION, 

receivership  considered   as  a    5 

of  effects  of  corporation,  not  done  under  general  equity  powers  288 

under  statute,  rights  of  creditors   297 

right  of  j  udgment  creditors  to 298 

SET-OFF. 

receiver  not  allowed  to  set  off  personal  claim  178 

to  suit  on  note  by  receiver  of  bank 247 

to  suit  by  receiver  of  insurance  company  on  premium  note 247 

in  actions  by  receivers  of  insolvent  corporations 248 

accruing  after  receiver's  appointment,  not  allowed 249 


1088  INDEX. 

SET-OFF— Cont!nued.  _     Section 

not  allowed  in  suit  by  receivers  of  corporation  to  recover  illegal 

dividends ^^^ 

counter-claim  not  allowed  for  amount  illegally  paid  for  notes 251 

for  rent  due  from  firm,  not  allowed  in  suit  by  receiver  of  firm  253 

when  allowed  to  suits  by  receivers  of  corporations 333 

not  allowed  to  suit  by  receiver  to  recover  illegal  dividends 333 

against  receivers  of  national  banks 364a 

defendant  can  not  set  off  judgment  against  receiver 464 

when  receiver's  compensation  not  subj  ect  to 796 

SHAREHOLDERS,     (See  Corporations.) 

77 
of  corporation  as  its  receiver '^ 

of  plaintiff  corporation  as  receiver 80 

when  receiver  not  appointed  on  behalf  of 29^ 

misconduct  of,  as  ground  for  receiver 293 

receivers  for  protection  of,  cautiously  granted 294 

not  entitled  to  relief  after  parting  with  interest 294 

acquiescence  or  laches  of,  a  bar  to  receiver 295 

in  behalf  of  minority,  when  receiver  not  appointed 295o 

when  receiver  appointed 295& 

action  by,  against  directors   295b 


when  demand  on  receiver  to  sue  is  unnecessary. 


29Sb 


demand  on  officers  and  directors  to  proceed 295c 

when  demand  unnecessary 295c 

when  refused  receiver  as  to  new  issue  of  stock 296 

of  foreign  corporation,  when  allowed  receiver  in  New  York 306 

suit  against,  for  subscription,  not  barred  by  appointing  receiver    309 

individual  liability   ^^''^ 

enforcement  of,  in  foreign  state 317?; 

the  same ;  receiver  as  quasi-assignee •  •  •  317c 

suit  against,  maintained  by  receiver  of  corporation   for  unpaid 

subscriptions     "^^^ 

defenses  to  such  actions 3_4o 

will  not  be  enj  oined 325 

fraud  no  defense  to,  when  all  parties  participated 325 

•when  estopped  from  questioning  receiver's  appointment  or  order 

of  sale  356 

of  national  bank,  receiver  may  enforce  liability  of ^ 360a 

may  have  receiver  over  railroad,  on  bill  to  set  aside  void  lease    366 

SHERIFF, 

receiver  compared  with ^ 

relative  title  and  possession  as  between  receiver  and 136,  138 

not  allowed  to  enjoin  receiver  from  suing  for  unauthorized  levy  141 
when  levy  and  sale  of  property  in   receiver's  possession  not  a 

contempt  of  court ^71 

receiver  may  move  for  judgment  against,  for  money  collected 228 


INDEX.  1089 

SHERIFF— Co7itinned.  Section 

sale  by,  when  purchaser  at  receiver's  sale  takes  priority 423 

when  purchaser  takes  priority  over  receiver's  sale 424 

when  purchaser  granted  receiver  and  injunction 613 

levy  by,  when  receiver's  title  subject  to 440 

when  a  contempt  of  court 443 

when  receiver  can  not  recover  value  of  property 469 

SLAVES, 

in  receiver's  possession,  defendant  not  responsible  for 160 

SOLDIERS, 

when  receiver  refused  over  mortgaged  property  of 653 

SOLICITOR, 

eligible  as   receiver 68 

under  commission  of  lunacy,  ineligible 70 

in  the  cause,   ineligible 70 

payment  to,  by  surety,  when  insufficient 132 

assuming  to  act  as  receiver,  liable  for  loss  in  collection  of  rents  284 

SPECIFIC  PERFORMANCE, 

vendor  allowed  receiver  on  bill  for 609 

vendee  allowed  receiver  on  bill  for 610 

insolvency  of  vendor  unnecessary 610 

STATUTE  OF  LIMITATIONS, 

as  against   receiver 126o 

possession  of  receiver  in  aid  of,  defendant  in  ejectment  can  not 

rely    on    134 

operation  of,  not  prevented  by  receivership 135,  184,  556 

payment  by  receiver  can  not  take  case  out  of 184 

effect  of  appointment  to  prevent  statute  from  running  in  favor 

of  stranger  184 

STATUTES, 

enlarging  jurisdiction  of  equity  over  corporations 287,  288 

construction  of  289 

STEAMBOAT, 

sale  of,  by  receiver 192 

when  may  be  operated  by  receiver 481 

STOCKHOLDER.      (See  Corporations,   Shareholders.) 

STRANGER, 

not  allowed  a  receiver 12 

can  not  nominate  receiver 12 

receiver  not  appointed  for  benefit  of 13 

may  apply  to  court  pro  inter  esse  suo 13 

can  not  object  to  receiver  employing  counsel  of  parties 217 

Receivers — 69. 


1090  INDEX. 

SUBSCRIPTIONS,  Section 

to  fund,  receiver  granted 35 

to  capital  stock,  must  be  enforced  by  receiver  according  to  ex- 
isting remedies   207 

of  insurance  company,  receiver  may  recover 212 

unpaid,  receiver's  right  of  action  to  enforce 224 

action    against    shareholder    for,    not    barred    by    appointing 

receiver    309 

may  be  enforced  by  receiver  of  corporation 324 

shareholder  not  entitled  to  injunction  against 325 

fraud  no  defense  when  all  parties  participated 325 

by  receiver  of  railway,  must  be  by  action  at  law 394 

SUBSTITUTION, 

of  receiver  in  lieu  of  plaintiff  on  terms 214 

what  not  a 214 

SUCCESSOR, 

to  receiver,  when  not  appointed  at  instance  of  defendant 39^ 

suits  to  be  continued  by 213 

not  bound  by  covenant  of  former  receiver 273& 

fund  liable  for  tort  of  receiver's  agent  although,  appointed 286o 

liability  of  receiver  enforced  against 397fe 

want  of  notice  of  appointment  of,  not  ground  for  removal 821 

SUIT, 

must  be  pending  to  warrant  receiver 17 

by  receiver,  failure  to  execute  bond  ground  of  nonsuit 121 

on  receiver's  bond,  when  right  of  action  accrues 129 

independent,  against  surety  on  receiver's  bond 129a 

against  receiver,  leave  of  court  necessary 139 

may  be  enjoined  for  want  of  leave 140 

independent   by   receiver   to    recover   property    in   possession    of 

stranger    145,  149 

by  receivers,  principles  governing 200-230 

in  some  states  regulated  by  statute 200 

regulated  by  court 200 

receiver  succeeds  to  rights  of  action  of  original  party 201 

what  receiver  must  allege  and  show 201 

must  show  leave  of  court 201 

can  not  be  maintained  on  obligation  paid  to  obligee 201 

will  lie  on  note  of  insolvent 201 

by  receiver  against  himself  individually 201,  note 

appointment  of  receiver  over  corporation  suspends   its  right 

of   action    201,  note 

courts  exercise  strict  control  as  to  bringing 202 

if  unauthorized,  receiver  may  be  directed  to  discontinue 202 

when  regularity  of  appointment  deemed  conclusive  in 203 

rights  of  action  not  changed  by  appointment  of  receiver 204 


INDEX.  1091 

sun— Continued.  Section 

by  receivers,  can  not  be  maintained  when  not  maintainable  by 

original   party    204 

same  defenses  available  as  in  suits  by  original  parties 205 

on  note  for  subscription  to  capital  stock 205 

judgment  in  action  by,  bar  to  subsequent  action 206 

freedom  of  action  by  receiver  in  management  of  case 207 

appeal  by  receiver   from  adverse   decision,   not   evidence  of 

bad  faith  207 

receiver  must  pursue  existing  remedies 207 

leave  necessary  before  bringing 208 

the  rule  applied  to  actions  of  ejectment 208 

to  actions  for  condemnation 208 

to  actions  to  enforce  stockholder's  liability 208 

leave  may  be  conditional 208 

on  appeal  bond,  when  receiver's  duty  to  sue  without  leave  208 
receiver  must  sue  in  name  of  original  party  in  whose  favor 

action  accrued  209 

the  rule  applied  to  receiver  of  corporation 209 

of  partnership   209 

over   real   estate 209 

contrary  rule  in  some  states,  receiver  allowed  to  sue  in  his 

own  name  210 

when  allowed  in  name  of  receiver  of  partnership 210 

of  bank 210 

to  recover  purchase  price 210 

allowed  in  name  of  receiver  under  statutes 211 

when  receiver's  right  of  action  determined  by  statute 212 

trover  by  receiver  of  bank  for  conversion  of  bonds 212 

suits  by  receiver  of  insurance  company 212 

on  death  of  receiver,  successor  substituted 213 

practice  on  213 

on  removal  of  receiver,  terms  imposed  on  successor 214 

what  not  a  substitution 214 

foreclosure  of  mortgage  by  successors  of  original  receivers  215 
employment  of  counsel  by  receivers,  should  not  employ  coun- 
sel of  parties 216 

limitation  upon  the  rule 217 

receiver  may  maintain  action  of  detinue 218 

judgment  in   favor  of  receiver,   bar  to  subsequent   suit   for 

same  cause  of  action 219 

effect   of  amendment    changing   character   of  plaintiff    from 

administrator  to   receiver 220 

distinction    between    suits   concerning   title,    and    concerning 

injuries  to  or  possession  of  real  estate 221 

to   set   aside   fraudulent  conveyance   made  to  defeat   decree 

for  alimony  221 


1092 


INDEX. 


SUIT— Continued.  Section 

by  receivers,  to  recover  usurious  payments  222 

rents,  notice  to  tenant  necessary 223 

balance  of  purchase-money 223 

to  enforce  unpaid  subscription   224 

when  defendant  can  not  object  to  irregularities  in  appoint- 
ment     225 

of  corporation,  latter  not  proper  party  plaintiff 225 

when    right   of  action   relates   back   to   beginning   of  princi- 
pal's title  226 

failure  to  execute  bond,  ground  for  nonsuit 227 

when  receiver  entitled  to  move  for  judgment  against  sheriff 

for  money  collected 228 

liability  of  receiver  for  costs 229 

receiver  may  garnish  plaintiff  in  suit  in  which  he  was  ap- 
pointed       230 

pleadings  and  proofs  in  suits  by  receivers 231-238 

receiver  must  allege  his  authority  in  traversable  terms 231 

stringency  of  former  rule  as  to  particulars  required  to  be 

alleged   232 

now  sufficient  to  allege  appointment  in  general  terms 233 

receiver  should  state  equities  of  judgment  creditors  whom 

he  represents  234 

when   defendant   estopped   from   denying  receiver's   right  to 

sue  in  that  capacity 235 

in  actions  by  receivers  on  premium  notes 236 

of  national    banks 237 

degree  of  proof  required  at  trial 238 

receiver  need  not  produce  transcript  of  all  proceedings   in 

which  he  was  appointed 238 

suits  by  receivers  in  foreign  courts 239-244a 

receiver  has  no  extraterritorial  powers 239 

rights  of  action  limited  to  his  own  state 239 

illustrations   of   rule   denying   receiver's    right    of   action    in 

another  state   240 

suits  allowed  in  another  state  on  principles  of  comity 241 

tendency  toward  more  liberal  doctrine 241 

action  maintainable  when  receiver  has  legal  title  or  is  quasi- 

assignee     241a 

receiver  of  corporation  allowed  to  prove  debt  in  bankruptcy 

in  another  state 242 

mortgage  given  to  receivers  of  another  state,  may  be  fore- 
closed in  state  where  premises  are  located 243 

assignment  by  defendant,  right  of  action  under 244 

designation   of  plaintiff   as    receiver,    when  a   descriptio 

personcE   244 

when  allowed  to  sue  for  property  in  another  state 244 


INDEX.  1093 

SUIT — Continued.                                                                                 Section 
suits  by  receivers,  jurisdiction  of  foreign  court,  when  not  pre- 
sumed      244^ 

defenses  to  suits  by  receivers 24S-253a 

same  defenses  available  as  if  action  were  brought  by  orig- 
inal party   245 

rule  applied  to  action  by  receiver  of  bank  against  depositor    245 
want  of  consideration  of  note  and  fraud,  when  not  available    245 

set-offs,  the  general  rule 247 

what  may  be  set  off  in  suit  on  notes  by  receiver  of  bank    247 

in  suit  by  receiver  on  premium  notes 247 

burden  of  proof 247 

assignment,  effect  of 247 

in  actions  by  receivers  of  insolvent  corporations 248 

demands  accruing  after  receiver's  appointment  can  not 

be   set  off 249 

counter-claim  allowed  for  services  rendered  receiver 249 

not  allowed  in  suit  by  receivers  of  corporation  to  recover 

illegal  dividends  250 

in   suit  to   recover  notes   illegally   transferred,  counter- 
claim not  allowed  for  amount  paid  for  notes 251 

judgment  against  receiver,  can  not  be  set  off  in  suit  by 

receiver  in  favor  of  creditors 252 

suit   by  receiver  of  partnership  against  purchaser,  set- 
off for  rent  to  firm  not  allowed 253 

notes  not  attached  in  another  state 253a 

suits  against  receivers 254-268a 

leave  of  court  necessary  before  bringing 254 

must  be  averred 254 

exceptions  to  rule 254 

conflict  of  authority  as  to  whether  leave  jurisdictional 254a 

presumption  as  to  leave 254a 

want  of  leave,  availability  on  appeal 254o 

in  collateral  proceeding ^ 254o 

court  may  fix  forum 254a 

dismissal  of  action  begun  without  leave 254/? 

usual  practice  by  petition 254b 

court  may  grant  leave  to  sue 2546 

trial  by  jury ,2546 

practice  on  petitions  of  intervention 254c 

leave  to  sue  receiver  may  be  revoked 254d 

may  be  conditional 254d 

when  not  revoked 254d 

court  may  permit  action  against  receiver  for  injuries  sus- 
tained by  his  negligence 255 

suit   against    receiver   of   railway,   no   defense   that   he   is   a 
public  officer   255 


1094  INDEX. 

SUIT— Covtinued.  Section 

suits  against  receivers,  receivers  not  personally  liable 255 

may  be  enjoined  when  brought  without  leave 256 

suit  for  trespass  not  enj  oined 257 

not  enjoined  because  matters  have  been  passed  upon  in  other 

proceedings     257 

receiver  of  debtor  need  not  be  joined  as  defendant  in  action 

against  debtor  258 

but  must  be  made  party  before  he  can  take  action 258 

must  file  plea 258 

as  party  to  appeal 258 

to    foreclosure    suit    259 

receivers  of  corporation,  joinder  of  as  defendants 260 

appearance  of  receiver  a  waiver  of  want  of  leave  to  bring  suit    261 

courts  will  not  enjoin  their  own  receivers   262 

relief  granted  in  receivership  proceeding 262 

mandatory  injunction  against  receiver 262 

receiver    may    bring    bill    of    interpleader    against    different 

claimants  proceedings  against  him 263 

receivers  not  allowed  to  waive  any  defense 264 

when  receiver  not  required  to  make  particular  defense 264 

when  receiver  may  appeal  from  orders  in  receivership  cause  264a 

can  not  appeal  from  administrative  orders 264^ 

nor  from  order  of  distribution 2fAb 

costs  against  receiver  personally  on  unauthorized  appeal....  264b 

leave  to   sue   receiver,   what  notice  necessary 265 

to  defend  ejectment  against  receiver 266 

receiver  not  entitled  to  costs  when  he  has  not  obtained  leave 

to  defend    267 

discharge   of   receiver,   effect   of    268 

when  receiver  concluded  by  judgment 268a 

by  receivers  of  corporations 316-333 

against  receiver  of  corporation  to  collect  tax 340 

by  receiver  of  national  bank,  what  must  be  alleged 361 

what  must  be  proven 361 

against   receivers    of    railways    395-398& 

independent,  by  receiver  for  property  of  debtor  claimed  by  third 
persons    457 

SUPERSEDEAS, 

not  a  matter  of  right   29 

effect    of,    on    receiver's    functions 29,  190 

on  receiver's  possession 136 

should  restore  property  to  defendant  190 

disobedience  of,  by  receiver  a  contempt 190 

pending  appeal  with,  court  may  make  administrative  orders  .   190a 


INDEX. 


1095 


Section 
SUPPLEMENTARY  PROCEEDINGS,  (See  Judgment  Creditors.) 

under  New  York  code,  receivers  in 401 

no  objection  that  property   is  claimed  by  adverse  claimants  413 
not  appointed  to  attack  assignment  which  may  be  set  aside 

by  creditor   414 

assignment  to  receiver  unnecessary   447 

title  vests  in  receiver  on  appointment  447 

rights   of  action   of  receiver    454 

SUPPLIES, 

furnished  railway,  creditors  not  entitled  to  priority  379 

SUPREME  COURTS, 

when  may  appoint  receivers  41 

SUPREME  COURT  OF  JUDICATURE  ACT, 

receivers  under  23 

in  aid  of  j  udgment  creditors   439a 

mortgagees  and  debenture  holders   652a 

SURETIES, 

of  receiver,  two  required  under  English  practice  118 

approval    of    126 

may    be    non-residents 126 

liability   of    127-133C 

held  strictly  to 127 

bond  may  be  vacated  as  to  one 127 

practice  on  so  vacating 127 

death  of  one,  new  one  required  128 

when  liability  becomes  absolute   129 

when  action  can  be  maintained  against   129 

independent  action  on  bond  against   129a 

suit  against,  on  death  of  receiver  130 

■when  concluded  by  order  on  receiver    130a 

not  liable  for  default  prior  to  bond 130a 

liability  for  interest  131 

when  relieved   from  paying  interest    131 

liable   to   costs   of  attachment   against   receiver   for  not   ac- 
counting      131 

surety  protected  by  injunction  after  paying  full  amount  due  131 

payment  by  surety  to  solicitor,  when  not  sufficient   132 

right  of  surety  to  be  reimbursed  out  of  balance  in  receiver's 

hands    133 

when  ordered   to   refund    133 

remedy    in    equity   against    133 

of  clerk   of  court   appointed    receiver    133a 

liability  of,  to  creditors  not  named  in  bond   133a 

not    liable    for    violation    of    duties    beyond    scope    of    ap- 
pointment      133& 


1096  INDEX. 

SURETIES — Continued.  Section 

of  receiver,  when  liable  although  bill  is  afterwards  dismissed 133c 

arrangement  with,  for  control  of  funds  274 

of  administrator,  refused  receiver 721 

SURVEYOR.     (See  Land  Surveyor.) 


T. 

TAXES, 

when  receiver  refused  over 32 

lien  of,  not  affected  by  appointment  of  receiver 138 

how  enforced  against  receiver   140a 

when    receiver   may   enjoin    140a 

remedy  at  law  not  a  bar  140a 

liability   of    receiver    for    140a,  note 

sale  by  receiver  for  pasmient  of  197 

when   receiver  can  not  enjoin    318 

against  railroad  company  in  hands  of  receiver  370&,  3946 

taxes  on  leased   line,   when   allowed   preference   in   railway    re- 
ceivership         394m 

municipal,  receiver  refused  for  collection  of  403o 

on  mortgaged  property,  non-payment  ground  for  receiver 672 

when  receiver  may  enjoin  collection  of  753 

unauthorized  payment  of,  when  allowed  in  account 798 

payment  by    receiver    gllo 

TENANTS,     (See  Rents.) 

enjoined    from    bringing    trespass    or    replevin    against    receiver 

without  leave  of  court  256 

can  not  enjoin  receiver  from  turning  out  of  possession 596 

compelled  to  attorn  to  receiver   618 

when   receiver  authorized   to   relieve    731 

TENANTS  IN  COMMON, 

of  personalty,  courts  averse  to  appointing  receiver  20 

of  realty,  receivers  as  between    603-608 

courts  averse  to  interference  603 

when  receiver  denied   603 

exclusion   by  co-tenant,   ground   for    604 

insolvency  as  ground  for 604 

may  be  allowed  over  moiety  605 

inj  unction  allowed  605 

allowed  in  default  of  defendant  giving  security  605 

equitable  tenants  in  common    605 

allowed  in  case  of  colliery   606 

actions    for   partition    607 

notice  to  under-tenants  not  to  pay  rents  to  co-tenants 608 


INDEX.  1097 

TENANT  FOR  LIFE,  Section 

receiver  granted  against 572 

THEATER, 

receiver  not  appointed  to  manage  36 

partnership  in,  when  receiver  appointed 513 

TIME, 

of  appointment,  formerly  after  answer  103 

modem  practice  before  answer 103 

grounds  of  interference  before   104,  105 

modern  English  practice  adopted  in  this  country 105 

strong  ground  required  for  receiver  before  answer 106 

not  dated  back  by  relation  108 

may  be  made  at  final  hearing 109 

the  same,  although  bill  does  not  pray  receiver 109 

may  be  made  after  final  decree 1 10 

TITLE, 

not  changed  by  appointment  of  receiver 5 

dispute  as  to,  receiver  reluctantly  allowed    11 

of  receiver  of  state  court,  as  affected  by  subsequent  bankruptcy..  52 

receiver  does  not  acquire,  until  bond  executed 121 

vests  back  to  original  order  of  appointment  136 

does  not  take  effect  back  to  beginning  of  action 136 

of  receiver,  not  divested  by  order  of  court  when  he  is  not  a  party  161 

not   determined    on   proceedings    for   contempt    172 

to  real  estate  of  corporation,  not  divested  by  receiver  pendente 

lite    302 

vests  in  receiver  on  dissolution  of  corporation  303 

of   receiver   in   creditors'   suits    440-452 

subject  to  prior   liens    440 

not  better  than  that  of  debtor 440 

takes  no  title  to  exempted  property 441 

exemption  extends  to  insurance 442 

effect  of  assignment  as  vesting   443 

what  passes  to  receiver  under  assignment 444 

right  of  action  for  tort  does  not  pass 444 

when  debtors  compelled  to  make  assignment  446 

receiver  acquires  title  to  debtor's  property  under  New  York 

code  by  virtue  of  appointment    447 

superior  to   that   of  judgment   creditor  subsequently   levying  448 

when  not  defeated  by  delay  in  taking  possession  448 

choses  in  action  as  between  receiver  and  purchaser 449 

trust  fund,  when  receiver  not  entitled  to  450 

takes  ntle  to  estate  by  curtesy 451 

acquires  no  title  when  debtor  dies  before  appointment 452 

of  third  parties,  not  determined  on  summary  application 457 

to  real  property,  not  affected  by  appointment  of  receiver 556 

receiver  not  allowed  in  contest  concerning 557 


1098  INDEX. 

TOLLS,  Section 

of  bridge  company,  judgment  creditor  allowed  receiver  over   ..     300 

of  common  carrier,  receiver  over  380 

different  mortgagees  of,  right  to  receiver  as  between   382,  385 

when  not  allowed  preference   ..383,  385 

TORT, 

independent  suit  for,  against  receiver  254& 

joinder   of   parties   in    254o 

liability  of  receiver  for   ^'' 

damages  for,  of  receiver's  agents,  when  a  charge  on  fund  286a 

right  of  action  for,  does  not  pass  to  receiver 444 

TRESPASS, 

action  of,  against  receiver,  enjoined  when  brought  without  leave    256 
when  receiver  liable  in,  for  taking  mortgaged  property  277 

TROVER, 

can  not  be  maintained  by  receiver  of  partnership  in  his  own  name  209 

by  receiver  of  bank,  for  conversion  of  bonds   212 

for  promissory  note,  by  receiver  of  corporation 316 

TRUST  DEED, 

securing    railroad    bondholders,    prior    jurisdiction    of    United 

States  courts  maintained  54 

securing  illegal  bank-notes,  receiver  on  bill  to  set  aside 293 

TRUSTEES,     (See  Trusts.) 

distinguished    from    receiver    1 

eligibility  of,   as   receivers    74-76 

generally  ineligible    '^ 

when  eligible   '4 

mortgagee,  also  trustee,  eligible  76 

in  bankruptcy,  incompatible  with  receiver  of  debtor '^^ 

receiver  may  be  appointed  against,  after  decree   HO 

beyond    jurisdiction    of    court,    when    receiver    allowed    without 

•  117 

notice    ^^' 

in  nature  of  receiver,  can  not  sue  in  his  own  name  209 

may  be  sued  without  leave  of  court  254 

under  assignment   for  creditors,   refusal  to  act  ground   for   re- 

412 
ceiver   ^^^ 

mismanagement  of,  receiver  granted   412 

of  foreign  mining  property,  when  receiver  granted  against 503 

of  religious  society,  receiver  refused  over  real  estate  in  posses- 
sion of  5"^ 

dissensions  among,  ground  for  receiver  to  secure  rents  584 

death  of,  or  refusal  to  act,  ground  for  receiver  694 

bad  habits  of,  not  alone  sufficient 695 

action  for  removal  of,  receiver  allowed  pendente  lite   697 

fraudulent  conveyance  by,  receiver  allowed  699 


INDEX.  1099 

TRUSTEES— Continued.  Section 

appointment  of  new,  receiver  ordered  to  surrender  to 704 

pension  held  by,  receiver  appointed   705 

TRUST  FUND, 

of  insurance  company,  mismanagement  ground  for  receiver....     304 

when  receiver  of  debtor  not  entitled  to  450 

TRUSTS, 

receivers  in  cases  of   692-736 

principles  governing  the  relief  692-705 

referred  to  general  jurisdiction  of  equity  over  trusts 692 

receiver  only  appointed  against  trustee  for  good  cause    693 
death    of   one    trustee    and    refusal    of    another    to    act, 

ground  for  gg4 

bad  habits   of  trustee  not  alone  sufficient    695 

vested  in  state  officers  by  law,  equity  averse  to  receiver    696 
principles    governing,    receiver    allowed    pending    action 

for  removal  of  trustee    597 

fraud,   misconduct,   breach   of  trust    697 

mingling    trust    funds    with    private    funds,    when    not 

ground  for   g9g 

granted  on  bill  by  cestui  que  trust  to  set  aside  convey- 
ance by  trustee   for  fraud 599 

when    devisee   allowed    receiver   as   against   husband   of 

deceased   wife    7Qg 

refused  in  case  of  trustee  under  contract  for  public  works    702 
appointment  of  trustee  as  receiver  not  usually  allowed    703 

when  allowed    7Q3 

receiver  ordered  to  transfer  estate  to  new  trustees  when 

appointed    704 

receiver  allowed  over  pension  paid  by  trustee 705 

receivers  over  executors  and  administrators  706-724 

courts  averse  to  granting    7Qg 

relief  based  on  doctrine  of  quia  timet   706 

not  allowed  on  slight  ground   [  "  "  *     yQ-j 

on   information  and  belief   yQy 

waste  and  abuse  of  trust,  ground  for  [  [     708 

allowed  before  answer  7qo 

poverty  no  ground  for   7Q9 

insolvency  and  misconduct  ground  for 710 

bankruptcy  ground   for   7I  j 

removal   from  state,  ground  for   7J2 

allowed  in  England  though  estate  in  foreign  country 713 

executors  in  foreign  country 713 

allowed  pending  controversy  concerning  probate 714 

judgment  creditors,  when  allowed  receiver  against   715 

when  denied  receiver  71g 


1100  INDEX. 

TRUSTS— Continued.  Section 

receivers    over    executors    and    administrators,    not    allowed    to 

interfere  with  administration    716 

receiver  over,  in  personal  capacity,  not  entitled  to  rents  in 

representative    capacity    717 

death  and  refusal  to  act,  ground  for  718 

misunderstanding  between,  not  ground  for 718 

allowed   when   plaintiff   equitably   interested   in   realty   with 

deceased    719 

court    will    not    examine    executor's    account    on    application 

for 720 

surety  of  administrator  denied  receiver  against  721 

allowed  against  administrator  in  behalf  of  ward  722 

on  removal  of  receiver  executors  again  ordered  to  act 723 

appointing  receiver  does  not  remove  executor 724 

receivers  over  estates  of  infants  725-732 

relief  based  on  doctrine  of  trusts   725 

granted    on    mismanagement    of   estate   by    husband    of   ex- 
ecutrix     725 

granted  when  executor  has  absconded  726 

refusal  of  trustees  to  act,  not  granted  on  refusal  of  one  of 

several    727 

granted  on  refusal  of  one  of  two 727 

granted  over  goods  in  possession  of  mortgagee  728 

eligibility  of  receiver,  next  friend  ineligible 729 

trustee  and  executor  ineligible  729 

when    eligible    729 

liability  of  receiver  for  interest  on  funds  of  730 

when  authorized  to  relieve  poor  tenants 731 

not  discharged  on  one  of  two  infants  attaining  majority 732 

receivers   over  estates  of  lunatics    733-736 

when   appointed    733 

required  to  surrender  to  administrator  733 

relief  discretionary    734 

refused  in  case  of  rival  claimants 734 

solicitor  ineligible  as  735 

may  be  called  to  account  736 

reference  to  master  to  ascertain  condition  of  estate 736 

TUNNEL, 

receiver  for  management  of,  between  railways 368 

TURNPIKE  COMPANY, 

receiver  over  tolls  of 382 

as  between  different  mortgagees   385 

U. 

UNFAIR  COMPETITION, 

when  receiver  may  enj  oin 753 


INDEX.  1101 

UNITED   STATES   COURTS,     (See  Courts.)  Section 

powers  of,  compared  with  state  courts  50-62a 

retain  jurisdiction  if  first  acquired   50 

jurisdiction  in  bankruptcy,  subordinate  to  prior  receiver  in  state 

courts     51 

receiver  of,  when  guilty  of  contempt  in  interfering  with  receiver 

of  state  court   , 51 

usually  recognize  prior  jurisdiction  of  state  courts   52 

exclusive  jurisdiction  asserted  in  proceedings   against  insolvent 

corporation     53 

foreclosure  of  railroad  trust  deed  in,  when  jurisdiction  exclusive  54 
will  not  entertain  bill  for  account  against  receiver  of  state  court  55 
conflict  between  United  States  and  state  courts  ground  for  re- 
ceiver     58 

receiver  of,  beyond  control  of  state  court 59 

action  against,  in  state  court  60 

action  by,  when  maintainable  in  federal  court  regardless  of 

citizenship  and  amount   60a 

action  against,  when  removable  regardless  of  citizenship  and 

amount    60b 

receiver  of  state  court  not  granted  writ  of  assistance  against  61 

no  greater  rights  of  action  than  receiver  of  state  courts   . .  62 
Supreme  Court  of  United  States,  power  to  review  decision 

of   state    court    62a 

over  railway,  judgment  against,  not  enforcible  by  state  court  397 

on  creditor's  bill,  can  not  sue  in  another  federal  court 471 

USURY, 

suit  by  receiver  to  recover  222 

receiver  of  corporation  can  not  plead,  when  corporation  could  not  315 

defense  of,  in  case  of  receiver  in  foreclosure  suit 664 

V. 

VACANCY, 

application  to  supply,  may  be  made  in  chambers 96 

VACATION  OF  APPOINTMENT, 

distinction  between,  and  "removaJ"  and  "discharge"  820,  note 

VENDEE.     (See  Purchaser,  Vendor.) 

VENDOR, 

of  real  estate,  denied  receiver  in  action  to  rescind  contract 573 

receivers  as  between  vendors  and  purchasers    609-617 

when  vendor  entitled  to,  on  bill  for  specific  performance   . .  609 

when  vendee  entitled  to 610 

when  vendor  entitled  to,  in  suit  to  recover  possession   for 

non-payment    611 


1102  INDEX. 

VERIFICATION,  Section 

on  information  and  belief,  when  insufficient    89 

may  be  waived    89 

VESSEL, 

lien  on  freight  and  earnings  of,  receiver  to  protect  408 

exclusion  from  profits  in,  ground  for  receiver 528 

VOUCHERS, 

receiver  must  present,  with  account  798 

W. 

WAGES, 

of  receiver's  employees,  liability  of  plaintiff  for   389a 

revision   of,   by   court    393& 

when  preferred   312c,  394d 

WARD, 

allowed  receiver  against  guardian 722 

WASTE, 

as  ground  for  receiver  4,  9,  11 

duty  of  receiver  on  commission  of  634 

inj  unction  against    634 

loss  by,  of  receiver,  when  borne  by  plaintiff 645 

by  executor,  ground  for  receiver   708 

WHARFAGE, 

in  front  of  mills,  receiver  entitled  to 158 

WIDOW.     (See  Dower.) 

WIFE.     (See  Husband.) 

WILL,     (See   Devisee,   Heirs-at-Law.) 

receiver  pending  contest  over   46 

action  to  enforce  trusts  of,  receiver  appointed  after  decree 110 

interest  of  devisee  under,  receiver  can  not  reach  by  motion 466 

when  receiver  appointed  over  realty  in  action  to  enforce  trust  of  569 

litigation  to  revoke  probate  of,  not  ground  for  receiver 701 

WRIT  OF  ASSISTANCE, 

not  granted  to  receiver  of  state  court  against  prior  receiver  of 

United  States  court 61 

not  granted  to  recover  property  in  possession  of  stranger  under 

claim  of  title  149 


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